Covid begets change: Will this temporary lockdown morph the consumer?

Image: Shutterstock

The Covid-19 pandemic has created a dramatic change in the way we were leading our lives. People have completely transformed the ways they work, eat, learn, buy, and engage socially. In India, we are cooking and eating most of our meals at home, our screen time (TV and mobile) has increased, and we are connecting more with our friends and family. Other changes include a spike in animal adoption and baking activities in the US. In times of social isolation, uncertainty and fear, food, family, and pets can lead to feelings of enhanced comfort and security.

But how many of these behavioral changes are we likely to sustain after the pandemic ends?
The lockdown has forced us to slow down mentally. Some of us who have the luxury of assured livelihoods and the purchasing power has suddenly found time to ponder and introspect. Ordinarily, self-reflection fosters self-insight and is an essential ingredient in self-knowledge. Maybe this self-reflection compels us to rethink who we are as individuals and as a society, leading to some permanent changes in the way we consume. Compared to our busy and frenzied lifestyles, we now have a flexible schedule, chores that can wait, and quieter moments. Moreover, we face logistical constraints on the supply side. These factors have already led us to make modifications in the way we consume products and interact in the marketplace.

Some interesting trends have emerged as consumers are reconsidering their consumption sources and re-negotiating their communication modes. First, consumers have become increasingly sensitive to their health and are making behavioral changes to protect and enhance their well-being. Second, they are exploring new modes of interactions to engage and connect with each other and the marketplace.

Wellness, Organic & Local Products: The pandemic has put health and wellness in the center of our thoughts, actions, and lives. Wellness, as a category, was witnessing favorable growth even at times when consumers were making fewer discretionary purchases. It seems that this growth will sustain in times to come, and it is likely to remain an essential area of consumption for many. Pharmaceutical companies like Himalaya, e-marketplaces such as Grofers and Milkbasket, as well as new-age ayurvedic health brands like Auric, have seen a surge in sales in immunity tablets and herbal teas. Spending on wellness products provides one way to the consumers to be proactive amidst the uncertainty. COVID-19 has reminded consumers of the frailties of our public health system. That is something that is not in our control, but spending on wellness transfers some psychological control back to the consumer. A recent consumer sentiment survey by McKinsey showed how the Chinese consumers were beginning to spend on fitness and wellness, apart from necessary expenditures.

With health at the center of consumer’s consumption decisions, organic foods might have more appeal. The consumption of these foods has been increasing in the past few years. Even the 2008 financial crisis could not dampen its growth in the US. The pandemic may, if anything, accelerate its growth as consumers perceive them to be more nutritious. However, the economic downturn does pose risks where consumers might be forced to shift to cheaper options due to declining incomes and supply-side constraints.

With the lockdown, locally produced products and shops have become a necessity. The lockdown has made many consumers rely on their local kiranas, which have emerged as bastions of their residential communities. These local stores understand the consumer needs better and can respond with quicker and more singular actions. One of the new normal might be that consumers might also want to continue to consume products that are local and come from local shops. Even before the Covid-19 outbreak, a Nielsen survey found that 11% of global consumers said they only bought products manufactured in their country while an additional 54% “mostly” bought local products. There is evidence in the consumer psychology literature that shows that closer a product is to the source of its origin, higher is its perceived value or favorability in the minds of the consumer. COVID-19 could change consumers’ preferences for locally sourced and delivered products.

Since the pandemic has put health on the front end, it seems that consumption wellness, organic, and local might witness a “new normal.”

Health Insurance: Often, uncertainty and negative emotions lead consumers to defer decisions. However, fear is one of those discrete emotions that drives consumers to act and pay attention to the options available. We see firms trying to leverage consumer emotions in these uncertain times and highlight and the need to have health insurance, with the hope of consumer action in the form of enrollment to health plans. Health insurance player, Max Bupa has launched an integrated campaign #IgnoreNahiInsureKaro, as an advisory to consumers to stop giving excuses for not getting health insurance, and instead give their health the security it deserves. In the last few weeks, we have increasingly witnessed how the migrant, daily wage, and informal sector workers have struggled. The sensitivity to their struggles may lead to growth in startups (e.g., Gigibenefits), which aim at providing health insurance and small saving options to domestic/informal workers. Both small employers and informal sector employees may see value in investing in such products. Overall, we will probably see a rise in health insurance subscriptions.

Digital Media: With physical and spatial distancing, people are staying in their homes away from offices, schools, restaurants, malls, movies, and concerts. Gatherings and events have been canceled for the foreseeable future. This social isolation is against our nature, and so we have witnessed a surge in the use of digital mediums to connect and interact. Consumers’ engagement with digital media has drastically shifted. Rural India saw a 100% spike in data consumption during the beginning of the lockdown period. The number of subscribers for fiber to the home has also seen a surge. Such increases are also seen in urban spots with an increase in work from home options. 

The next automatic question is, what are Indians doing online? Consumers are actively searching for courses offered digitally. Schools and universities have moved online with virtual classes. Delhi Government is in talks with Khan Academy to provide online classes for class 12 students. Consumers are also going online for cooking recipes, fitness videos, and gaming. Apps such as Zoom and Houseparty have become common nomenclature. Even digital novices (older consumers) are exploring newer technologies and apps. Overall, there have been some interesting changes in behaviors as consumers navigate online.

Telemedicine: Mostly, consumers have valued physical or face-to-face interactions with their physicians as they have the lay beliefs that these involve more effort, richer social cues, and higher stakes. While in lockdown, panicked Indians searched for options to seek medical advice on COVID related symptoms. They realized that they did not need an actual face-to-face visit to a doctor’s office and made the complex transition from face-to-face interactions with their physicians to telemedicine. Startups like Practo, Portea, and Lybate, which facilitate remote medical checkups online and via phones, are witnessing substantial traffic increases. The surge in traffic for telemedicine made the government swiftly release new guidelines for telemedicine. With the consumers already exploring virtual and online options, these times provide an opportunity for firms to make these virtual medical interactions seamless and almost mirror physical visits so these trends do not decrease and consumers sustain their positive attitudes towards these virtual interactions even after the crisis. Diabetes care and management app BeatO is trying to emulate the real-life experience by giving patients the option of adding their regular doctor to the platform.

Digital Banking and Online Payments: Further, the reduced physical access to banks has also moved consumers towards online banking and the use of digital wallets to transfer money. The shift towards these options may sustain even after the lockdown ends. Not just consumers, we will also see brick-and-mortar local retailers accelerate technology adoption. Players like Flipkart and Zomato are already partnering with these local stores to deliver efficiently. The small retailers will likely use the current momentum to ramp up the use of technology to deliver at home and expand online payment choices. 

While some of these trends may plateau or not see such a steep rise once the lockdown ends, what will remain and evolve is the way the Internet is leveraged in our daily life to interact with each other for learning, work, shopping, and so on.

What we hope will change for the better? This temporary pause has given us time to be intimately aware of our good and bad and probably seek our ideal selves that is closer to nature, more pro-social, and connected to society. There is an emerging discussion about living in more harmonious ways with the earth. We are currently witnessing a massive drop in pollution levels. Maybe we emerge greener, cleaner, and more altruistic. However, pollution drops in the previous crises such as World War II, the Great Depression, and the 2008 economic crisis were followed by a significant spike in emissions. Maybe this pause is merely as temporary as the previous ones. Human memory is often fleeting. Things are forgotten and relegated to oblivion, which allows us to move forward. However, our onward journey becomes meaningful only when we embrace some lessons from past crises.

We hope that this crisis is different and that it will create a “new normal”- a normal that is more sustainable and equitable. Once the economy bounces back, even though we might drown again in our busy schedules, we consciously decide to steer away from the ‘pre-COVID’ normal. We hope that this time we have a story to share of how we rebuild an economy that was more humane and connected.
 
Nirajana Mishra is a Doctoral Student at Questrom School of Business, Boston University and Akshaya Vijayalakshmi is an Assistant Professor at the Indian Institute of Management Ahmedabad.