Universal lockdown and social distancing are having a dramatic impact on consumer behaviour. Driven by huge economic and emotional impact, we’ve all had to very quickly become accustomed to changes in habitual practices and every-day routines – but what effect has this had on the way we engage with brands?
The global spread of Coronavirus has presented numerous challenges for brands and retailers alike. As people have systematically taken protective actions against the virus – safeguarding against health and future financial concerns – their behavioural adjustments have already demonstrated seismic shifts in consumerism worldwide; from the initial, occasionally frenzied, bulk-buying of toilet roll and hand sanitisers through to a sharp increase in beauty, entertainment and alcoholic beverages as periods of lockdown continue.
Consumer decision-making and behaviour
Ipsos explain that consumer decision-making and behaviour can rapidly adapt based on a range of individual and contextual characteristics, because when we perform familiar activities, we create a world of certainty around ourselves, with established traditions and routines that allow us to simplify decision-making.
In psychological terms, we build up a series of Heuristics: pre-determined decisions based on previous experiences that make our lives much easier.
As an example, have you ever been to a restaurant and decided what you’re having without even looking at the menu, because you’ve either enjoyed it there before, or suddenly got #FoodEnvy seeing something someone else had ordered?
These heuristic impulses are designed to make our lives much, much simpler.
However, when something like Coronavirus is thrown into the mix, our heuristics get thrown out of the window and in turn, many of the mental shortcuts of our decision making process.
This has resulted in humans across the world feeling increasingly unstable in their own environments and – as the virus has spread – so has instability and uncertainty.
Contextualising human behaviour
Social Contagion – the idea that the emotional shift is more contagious than the disease itself – describes a pretty natural, herd mentality-style survival mechanism: people in America see footage of people in Australia buying all thetoilet roll and subsequently go out and buy all the toilet roll too – even if they don’t know why they’re buying so much toilet roll!
This hilarious social experiment is a perfect example of this in action:
Suffice to say these types of behavioural responses during times of high anxiety and uncertainty are both short and fleeting, in most cases, once more information is obtained and we have time to fully digest and process the situation we find ourselves in, the panic and sometime irrational decision making tends to fade.
In describing this existential anxiety, Anirban Mukhopadhyay, Chair Professor of Marketing at Hong Kong University of Science and Technology, said as long as the coronavirus threat was still present, people would remain fearful to some extent:
“Human beings adapt to events and stimuli over time,” Mukhopadhyay said. “Research has shown that even people who win lotteries tend to return to their earlier levels of life satisfaction after some months, as do people who have to have amputations.
“So even if the source of the fear does not go away, we learn to live with it.”
In terms of consumer behaviour, way from the obvious, universal decline in sales on big ticket items such as homes, cars, vacations and luxury items, we have seen this shift away from initial panic buying, towards more considered purchases that support a more comfortable and self-indulgent existence as we come to terms with this on-going lockdown situation. A recent report by Agility PR suggests that consumers (US) are focusing on two tiers of consumable products, deemed as ‘Survival’ and ‘Sanity’ tiers:
Comparably as the crisis maintains its strangle-hold in the UK and some incomes begin to take a hit, a McKinsey consumer survey claims that consumer optimism is declining and the British are worried about public health and growing increasingly careful about their spending.
They expect to spend less in most categories, though grocery and home entertainment are not among them, also settling in for what is generally thought to be a long haul before things return to normal, with expectations of spending more time on connecting digitally and home entertainment.
What history tells us
Consumer experts tell us historical events such as the 2009 global financial crisis, the Great Depression that started in 1929 and the September 11 terrorist attacks give some clues about how and when global consumption might recover.
However, the complexity of this crisis, the number of variables and its magnitude make this consumer recovery a difficult one to predict.
During a pandemic, people are without doubt experiencing acute anxieties as they increasingly feel their sense of control has disappeared. And unlike other recent global crises such as the 9/11, the coronavirus is less a one-time sharp shock to the system and more of a rolling source of anxiety that could retreat and resurface repeatedly.
So what does it all mean for brands?
Within these unstable times and environments, there is a role for brands. While many of us long for a world outside of lockdown, some new behaviours and habits have arisen that provide clear opportunity for brands and retailers.
It’s clear that history provides evidence that brands can grow during times of crisis.
There are several enduring examples from the Great Recession, where brands like Netflix, Lego, Amazon, and Domino’s courageously expanded their horizons through investment, transparency, innovation, customer focus, alternative experience and pricing models.
While their competitors chose to bed-down and weather the storm, these brands pursued consumers in the right way and delivered value in a time of uncertainty and behavioural change.
It seems natural for brands to go into cost containment mode in times of distress, patiently waiting for the storm to subside.
However, against a backdrop of justified feelings of fear and uncertainty, COVID-19 provides a unique window where brands can earn trust by maintaining presence and delivering relevant value.
Wise leaders who are willing to be actively present and can adapt products and services that enrich people’s lives today, stand the best chance of emerging from this challenging period of behaviour change with stronger businesses and a more committed, trusting customer base.
Look to these behavioural changes to understand why and how these shifts will impact future decision making. By understanding the strength of habits being formed during the pandemic, better yet focusing on the triggers that surround the habit, you can inform strategy and work to influence the ways that consumers interact with your brand both now and in the future.