Consumer Behavior During Covid-19 Pandemic
Since early 2020, the agenda of global economy is dictated by Covid-19 pandemic. Initially the impact of virus on the global processes was hard to predict, because due to Ebola virus that was discovered some years ago everybody hoped it to be a short-lived impediment. Initially economy followed its normal path, however, as the virus kept on spreading, many businesses worldwide pushed the stop button. It happened very quickly, therefore many companies and employers were subject to risk.
According to the research of McKinsey, only one-third of employees in the world is capable of distant work. Given that companies do not have certainty about future developments and duration and rapidness of the virus spread, part of people across the globe are facing short-term unemployment, dismissal or cut of their working hours and salaries.
The largest European credit management company Intrum reported that the countries less affected by Covid-19 crisis are Denmark (23%), Norway and Sweden (30%), however the crisis hit Greece and Romania (67%) and also Poland (62%) the hardest.
Due to the harsh restrictions and lockdown both in developed and developing countries the consumption level has dropped. Many residents have low level of savings and great deal or uncertainty about future, forcing them to prioritise spending and to choose what to buy and what not to buy.
Crisis brought about by Covid-19 has its bearing also on the cargo shipment industry. Unpredictable changes have stopped the work of warehouses due to possible infection or because suppliers have closed their businesses. The rapid changes have impacted also consumer behaviour trends, which have affected cargo shipments both in import and export.
What consumer behaviour trends have developed during Covid-19 pandemic?
Covid-19 crisis has essentially changed how, when and where we shop and what we buy. In the light of several studies, we can conclude that there are several consumer behaviour trends.
• Rapid development of e-commerce
Consumers spend most of their time at home. Everything digital has become more important than ever. It is because distant work, education and shopping has grown. It can be observed also from rapid increase in promotions of remote meeting tool “Zoom”. And, according to data from McKinsey, one-third of U.S. residents have tried shopping with door-to-door delivery or by using pick-up stations since the onset of crisis.
• More emphasis on price, quality and brand value
Confusion and ignorance of people have taken its toll. Consumers are more considerate at making their purchases, evaluating the necessity, value-to-price ratio. An important criterion in a purchase decision is company's added value – lower price, larger size or more advantageous delivery. Value is the new black, if we are to rephrase it.
• Growing popularity of local manufacturers
This trend could have emerged because the consumers so far were used to receive the product in much shorter time span. Before Covid we could go to a shop and buy a product in seconds and then return home. With increasing demand for online shopping, cargo deliveries from other countries may last for days and even weeks. Currently the consumers globally support local producers more actively, thus receiving the product faster, because cargo can be delivered by local carriers without worrying about the impact of international restrictions.
• Larger baskets = less frequent purchasing
A trend that reduces delivery costs or duration of stay in public places. Consumers increasingly often choose to make bigger purchases that provide for longer in order to shop more seldom. I increase in demand for food delivery to home can also be observed. This trend is expected to be short-term until shopping in person is safe again. After the crisis it could also impact exacerbation of competition between the delivery companies.
What are the most demanded product groups in different countries of the world?
As people spend more time at their homes, demand for goods related to home activities increases. Of course, since restaurants and bars are closed, food consumption volume has increased. It is observed that consumers prefer to buy a larger amount of food for a longer period.
Data from McKinsey study show that American residents increasingly demanded more foodstuff, toys and household goods. A wish of consumers to engage themselves into activities during pandemic has translated into growing demand for garden items. An explicit reduction in demand for tourism and transport items as well as new clothing and accessories has been observed.
Interestingly, in China and India, demand for beauty products and fuel was not decreased anymore during September, whereas the situation in USA and other European countries was quite the opposite. In India and China, the major drop was observed in demand for jewellery, however also in this category the demand was higher than in other countries.
McKinsey’s data reveal that the amount of planned expenses during Christmas holidays was lower in all countries, except China. Residents in China planned to spend for holidays even more than in other years. It may be due to the fact that the recovery period in these countries has started earlier than in the USA or other European countries.
The Floship study about behaviour of Amazon consumer shows that demand for fitness products has increased so that the consumers could further keep themselves in a good shape through being physically active. Also increase in TV and video games consumption has been rather large. And quite logic, along with the spread of virus, the demand for goods such as disinfectants, face covers, and other hygiene products has grown globally.
What are the conclusions?
The impact of Covid-19 virus increases constantly however it is region-specific. In some countries transition to digital communication is successful, whereas some shows a wish to get back to normal. No one is 100 percent sure what to expect. We can only guess and make conclusions according to studies available. One part of existing trends will stay, for example, distant work and education will gain popularity.
It can be assumed that prices will have more impact on the consumer choice while the economic situation will not improve globally. Online shopping for products groups which we used to touch could be important also in future. According to portal “Business Insider”, Macy’s, Adidas and Modcloth are offering an option to try on clothes virtually before shopping them online. It shows – the more IT innovations are introduced, the easier we will overcome the Covid-19 crisis. As consumers start to understand how easy online shopping is at the comfort of their home, it may become a long-term habit.
Transport and logistics sector
Yes, the digital is the new reality, however not everything in this world can be 100% digital. Importance of transport and logistics sector is emphasized during Covid-19 pandemic because it is the bloodstream of any economy. Product delivery goes on between cities and countries and at international level. Inland cargo carriage, sea container deliveries, carriage by air and rail are still the main types of delivery routes. Autonomous way of delivery, such as drone, is being developed gradually.
If some time ago the consumers did not mind waiting for several weeks until receiving the goods, then now, in times of extraordinary situation, the impatience has grown. We can predict that the role of warehouse development is going to grow, because demand for many goods, such as facial masks, disinfectants, has become not only large but also extremely necessary for the society during Covid-19 pandemic.
Transport and logistics sector must go a long way to adapt to the global changes due to the new habits of consumers. Demand for certain goods is very unstable and even unpredictable – just like there is no clarity about the virus spread. Several companies are in a standstill due to lack of work tasks. However, for others demand for services and products has only grown. Despite a general drop in demand for sales, it is always possible to introduce innovative solutions and develop transport and logistics sector. The carriers must be ready for the new reality by providing also online services.
The only thing we can be sure of – we must be ready and 100% focused, because the winner is the one who is resilient and skilled enough to adapt to any circumstances.
Transport and logistics company SIA Vervo follows up the latest trends of industry. We offer all kinds of international cargo carriage regardless of cargo location.