When I stepped out for some essential shopping yesterday at the local grocery store, I bumped into my neighbour an avid online shopper in the queue ahead of me.
I was surprised because I know that usually, he buys everything from grocery to medicines and electronics online.
Before I could say anything, he pre-emptively told me that all the delivery slots are full for most online grocery providers for the next few days and hence he had come down there to buy some stuff.
Yes, this is so true. Most online retailers who delivery grocery and household items have their delivery slots full due to the tremendous demand amidst the current lockdown.
Welcome to the new world of changing consumer behaviour.
As amid Covid-19 lockdown goes on, consumers have started living with changes. At the same time, for some customer-centric businesses like restaurants, airlines and gyms, it may never be business-as-usual at least for some time.
A recent survey by McKinsey & Company reveals that 67 per cent consumers are likely to reduce spending, as over 52 per cent feel insecure about their jobs, and 85 per cent were deeply concerned for their family's safety. As a result, they were more inclined to spend on hand sanitizers, masks, and immunity boosters rather than on fashion, travel or eating.
To understand the changes in consumer behaviour amid Covid-19 on consumption, travel, entertainment, etc., we conducted an exhaustive survey on 765 participants. I will also be sharing the outcome of the survey with you ahead.
In one of earlier article we had a detailed look at how life and equity investing will change post Covid-19. You can check out the article here.
Let’s first take a detailed look at how consumer behaviour has changed drastically in the last few weeks:
More spending on grocery and household supplies
The sudden nationwide lockdown announced on March 23rd caught most people unaware. Despite PM Modi’s assurance on television that all essential items will be available as usual during the lockdown period, people panicked and started panic buying of grocery and food products.
While panic buying is no longer there, consumers are spending more on basics such as groceries and household supplies. It is also seen that consumers are also not shying away from other brands in the absence of their regular brands. To give you an example, during the lockdown, stocks of Maggi, the market leader in instant noodle category with over 60% market share got sold out quickly. In the absence of it, Yipee another instant noodle brand, has become a huge hit with stocks of if flying off the shelves quickly.
Based on our survey, 86.5% of respondents replied that they have stocked up on food grains, pulses and wheat flour by over 1.5 to 3 times their normal requirements., while 43% stocked up tea, coffee and sugar more as compared to their normal requirements.
Increase in demand for hygiene and healthcare products
Sales of hand sanitizers, disinfectants and floor cleaners have witnessed a drastic rise during the lockdown period. So has the demand for health care supplements like Chyawanprash, multi-vitamin tablets and immunity-boosting products. Even in a world post-Covid-19, the need for such products are likely to continue as the importance of good health takes precedence among consumers.
63% of respondents in our survey stated that they have now started using handwash and hand sanitizers more and more on a regular basis than ever before. Again, in this category, in the absence of their regular brands, consumers are trying out new brands. For example, in the disinfectant category when established brands like Dettol and Savlon ran out of stocks, consumers are trying out new unknown brands which are readily available.
Less preference for dining out and out of house entertainment
The restaurant and movie theatre businesses have a taken a massive hit due to the current lockdown. Even in a world post-Covid-19, consumers are likely to shun eating out or visiting a movie theatre as it would be challenging to practice social distancing in such places. In the case of a Wuhan restaurant, the virus travelled through the air conditioner duct at the restaurant and infected three families sitting in the vicinity of each other who never engaged with the other. The emergence of such cases will inevitably change the dining patterns of people in the post-pandemic world.
In our survey, 51% respondents said that they will wait at least for a month to visit multiplexes after the current situation normalizes.
Business/ leisure travel and vacations may decline
With the nationwide lockdown in place, the travel and hospitality industry has taken a huge hit. However, even when the situation normalizes, people are likely to choose local holiday destinations which they can drive to rather than flying.
71.2% of respondents in our survey said that they would prefer to wait for at least a month to resume their travel outside the city once flights and trains resume services.
More preference for online shopping
Online shopping, which was earlier considered as a secondary channel for shopping, has taken the lead over physical shopping amidst Covid-19 pandemic. Buying necessities and food items have become the first preference for most people with fashion and other unnecessary shopping taking a backseat.
As the recent Mckinsey study in China suggests, consumers are more likely to prefer online shopping over physical shopping in crowded supermarkets or shopping malls for groceries and personal care even post Covid-19 world.
To summarize, Covid-19 has changed consumer behaviour. It has completely changed the way we shop, our travel and entertainment choices. Even when the malls and supermarkets open few weeks or months down the line, it will take some time for shoppers to shift back from convenience and safety of online shopping to the traditional way.
To encash on this unprecedented demand, even big offline supermarket chains such as Metro Cash and Carry, Big Bazaar and Spencer’s Retail, have spruced up their efforts to serve customers online.
Post 9/11, there was a considerable paranoia about flying, resulting in passenger traffic decline of over 30%. However, things went back to normal after a few years and air travel peaked by 2004.
As our country progresses along the contagion curve, there may be a shift in both how people shop and what they shop back to the way it was earlier. Only time will tell. As of now, digital shopping looks like a clear winner.