“Post-Covid World” is about inconspicuous changes that model the face of the future. These grains can be lost in a heap of terrible details about deaths and deprivations, which are formed the current picture of the day. We believe that very soon the time to put down the armor and take up the ordinary life will come. What things will be in demand in the world after the pandemic? What skills will be important to you to find your place? Previous notes of the series, “Sharp thorns of the New post-virus World” and “Would the post-Covid humanity become more disjointed?”, are available here.
We continue our research on how the world is changing in the Raging 2020s, which turned out to be years of a pandemic for the majority of the world’s population unexpectedly. “2020: this year must be reinstalled because this version is a virus-infected” – of course, it’s just a joke. However, 2020 is really able to change a lot in our daily lives. “For all its horror, the pandemic may change our habits when nothing else could,” Simon Kuper from the Financial Times writes, we will return to discuss his opinion soon.
Many global analysts closely monitor how consumer behavior has changed due to the coronavirus. They want to help businesses. Among them such companies as SimilarWeb, and GlobalWebIndex, and McKinsey, and even the Boston Consulting Group, which has become widely known among people outside the United States because of its sensational study on the duration of lockdowns (in the end of March, it recommends a lockdown until September in India, and this terrifying forecast caused a shock reaction).
Unfortunately, such studies couldn’t say much on what will happen with a consumer’s behavior after the pandemic ends. For example, among people from 13 countries surveyed by GlobalWebIndex, “almost 40% said they would make the purchases they have delayed only after outbreak decrease or it would be over in their countries. But close to 20% said they would wait until the outbreak would decrease or it would be over globally” (the survey fielded March 16-20, 2020, among internet users aged 16-64). The data like this is absorbing, but it’s just people’s views on what they will do, and their opinions could change many times.
At the same time, humanity is like a fish shoal when a crisis occurs, but turns into a flock of birds when it comes to the future. We are looking for deeper and safer places at the bottom when the world is going to hell, but in our dreams we want to fly. “Although near-term sentiment remains bleak in many other parts of the world, consumers’ longer-term outlook is not universally gloomy—at least not yet. For example, in emerging markets, many consumers say that they believe the economy will improve within the next 12 months,” BCG consumer sentiment survey shows, which has been taken on March 22 – April 2, 2020, among consumers in four countries.
As explained, 83% of the Indians, 87% of the Indonesians, 86% of the Filipinos and 79% of the Thais believe that the world is in serious danger, but… 79% consumers in Indonesia, 68% in the Philippines, 58% in India and 44% in Thailand “remain optimistic about their economy in the long term.” 84-85% of respondents “have changed daily lifestyle due to the virus.” But the same people believe that national economic will get better within the next year. Isn’t this state of mind fantastic? “Listen, things are getting worse, but in a year they’ll definitely be better.” Only Thais seems to be saner people, but the Thai economy depends to a large extent on exports and tourism.
However, let’s return closer to nowadays. 63% of consumers in Brazil and South Africa, 58% in Germany, 54% in South Korea, 49% in Italy and India, 48% in Spain and onwards, up to 29% in the UK, expect their income to decrease over next 2 weeks, McKinsey & Co. consumer pulse survey shows, conducted globally between March 15 and April 6, 2020.
These ‘2 weeks’ have already passed, the situation has not improved, so there are no more reasons for optimism. McKinsey’s figures confirm the above data by BCG on the dominance of consumers’ pessimism in the short term. However, there is a gap for the sunlight in the lurid thunder-clouds of expectations.
In China, where the pandemic has been defeated (but this is not for sure, sorry) and recovery has begun, 37% of respondents expect incomes to fall, and 30% of respondents expect incomes’ growth. More than 75% of consumers globally expect the impact to be felt for more than two months, and about 50% expect the duration to be for more than four months.
“Consumers cut most of their spending over and above the vital. Some of the categories such as restaurants, apparel, footwear, accessories, travel, and entertainment out of home show the most precipitous decline… Chinese consumers begin to spend more across a few categories outside of basics, including pet-care services and fitness and wellness. Their shopping habits before, during, and after the Covid-19 peak show that shopping behavior after the peak resulted in more than 30 percent lower traffic but the sizes of a basket for food purchases enlarged, traffic and consumption for apparel and department stores depressed (40 to 50 percent below pre-Covid-19 levels),” McKinsey survey illustrates.
Either complete victory over the pandemic takes 18 months or 24 months, so, why are we quoting all these figures, which will become not relevant in a month?
Listen, we hope for your understanding: there won’t be a quick transition to the Brave New World after the pandemic. If you don’t trust our assessment, you might believe the world’s foremost virologist Ian Lipkin, who consulted on the plague movie Contagion.
“Large public events, sports events, theatres and going to the movies must remain banned. This virus thrives in close proximity but at least you can get to a situation where people can get back to work as long as they protect themselves and try to practice physical distancing,” he told India Today.
Aggressive testing and isolation of clusters, – these are two strategies that India needs to implement to move out of the lockdown, he added.
A global consumption might recover when people return to the streets. But “the complexity of this crisis, the number of variables and its magnitude make this consumer recovery unprecedented and difficult to predict,” Cissy Zhou and Mark Magnier from South China Morning Post noted.
“The coronavirus pandemic has completely changed patterns of consumer behavior all over the world. People are afraid, and when people are afraid, they go into survival mode,” Jesse Garcia, a Los Angeles-based consumer psychologist, said. It could take more than two years for American consumers to feel secure enough in their jobs and gain enough confidence “to fully open their wallets,” Charley Ballard, an economist at the Michigan State University in the US, estimated.
Survival mode firstly turned on such a dangerous for economics phenomenon as ‘panic buying’ ahead of announced lockdowns. Empty shelves (without toilet paper, face masks, hand sanitizers, non-perishables, etc.) all over the world is a monument to inescapable mankind’s characteristic, which no government has learned to deal with.
How to prevent panic buying during the pandemics? Experts from The Asian Vision Institute, a think tank based in Phnom Penh, write in The Khmer Times, that ‘games theory’ might help. You shouldn’t allow to buy goods in quantities exceeding the quota; you must distribute essential goods for free from govt stocks; you should regularly inform public what to do during an epidemic. Nothing complicated, right?
Ok, we went through a period of panic – it was short. People understand that in the coming weeks their income will shrink due to routine movements and all non-essential deals should be severely restricted. So, survival mode dictates them to turn on their thrift. Of course, they use the easiest way to compare prices at least ten prices or one hundred prices for the same or very similar product. Here, it’s all about e-commerce.
By the way, a small digression. A few people understand that e-commerce also reduces environmental impact. “As for shopping, even before the coronavirus we were shifting towards a world where the shop comes to you. That movement just accelerated, possibly forever,” Simon Kuper writes.
Coronavirus lockdowns show humanity how our Earth could be saved and healed, he believes. Figures are terrible: every year 1.1 million people die from air pollution in China. The fall in pollution during the country’s lockdown in January and February “likely saved 20 times more lives in China than have currently been lost due to infection with the virus in that country”, calculates Marshall Burke of Stanford University.
Lockdowns also present us the right way for trading. “It’s much greener for a supermarket to send an electric van (or a cargo-bike) to 100 homes in a neighbourhood than for all those people to drive to the supermarket. Some could ditch their cars,” Simon Kuper notes.
As soon as the social distancing economy started, the effect between offline and online stores is increased, Michelle Pruett from Criteo said. Online sales of retailers with both brick-and-mortar and online stores in the US were well over double their January levels, hitting an increase of 133%. Well, what sales are skyrocketed? Some positions look like a surprise. Hand sanitizer has been flying off the shelves, but not only this product.
For the week between March 30 and April 6, sales of webcams went sky high in France (+1830%) and Australia (+1083%), compared to the first four weeks in January. They also rose in the US (+458%), Brazil (+437%), Germany (+693%), Poland (+379%), the UK (+258%), and Russia (+109%).
Quarantine outfits is the next lucky devil. Sleepwear & loungewear sales rose in Australia (+184%), Brazil (+126%), Korea (+80%), and Italy (+79%), compared to January.
Hair salons and barbershops are temporarily closed under lockdown globally. You guess what? Shaving and grooming items spiked in Turkey (+312%), Portugal (+250%), France (+167%), Italy (+166%), the UK (+138%), Poland (+118%), Australia (+79%), Spain (+64%), Germany (+62%), Brazil (+31%), and Russia (+27%), compared to the first month in the year. In the US, sales of Hair Clippers & Trimmers went up by +241%.
To not overload you with a detailed list further, let us tell you in brief. Among items that skyrocketed due to lockdowns in many countries: pets’ supplies; baking items; video gaming equipment; outdoor furniture like folding & outdoor chairs, stools and tables, furniture covers; and exercise bands, of course.
A few words about the baking. The overnight rise of stress-baking and cooking is going around the world, Bhavan Jaipragas and Tashny Sukumaran from SCMP reported: “Food may be occupying more than its usual share of head space among Malaysians, Singaporeans and Thais, as culinary adventures serve as an escape from weeks of being cooped up at home.”
Beyond that, initiatives to help food vendors hit by the economic shutdowns in the South-East Asia “show how the crisis may be reshaped – in a positive way – our relationships with food and people involved in food production.”
The value of food, its quantity and quality increases extremely during the crisis, and we will return to this topic. Therefore, people create alternative online platforms for small food merchants, including cross-border b2b platforms like in Thailand; offer its vehicles for food delivery that is cheaper than traditional delivery services; or even begin to exchange home-made food, as in Malaysia.
So, people equipped with everything necessary for a long stay-at-home. At the height of the crisis, consumers’ behavior takes on quite a different turn, as the figures show. There is more fear and thrift among us. Some spends has been completely (temporally) abandoned: travel and expensive purchases. But high hopes for the distant future are also present.
However, if people buy, how and where they do it? What is the routine route home-shop-home in the world of the pandemic? What things will people never buy again the way they did before?
We try to illustrate this issues in the next essay.
Keep reading us, bringing closer to yourself the wonderful “Post-Covid World”.
Russian version of this article is available here.