As researched by Shotton (2020), with every new life change, there’s a huge percentage of the consumers that change their brand preferences. Life changes could be anything from getting married, to shifting to a new home, landing a new job, considering these circumstances, you can call this pandemic, pretty life changing.
Introduction to the pandemic
The global pandemic had disrupted many lives across the globe in just a matter of weeks. Several countries had introduced lockdowns due to the novel coronavirus spreading far and wide and becoming a pandemic. With the lockdown in place, it meant the government had restricted public gatherings and the front line workers, running around trying to provide relief for the people who remained indoors.
Ever since the novel coronavirus pandemic was uncovered in early February, lives across the world had been severely affected. Countries introduced lockdowns, people fell sick and other restrictions were made mandatory. Frontline workers had been working within their capacity and beyond in order to retain a sense of normalcy and provide relief to victims of the virus. As an extension of the lockdown, most countries agreed to restrict foreign tourists to prevent any further spread of the pandemic. This lockdown also led to shutting down of many small to medium size businesses, while larger corporations suffered severe losses which further led to the shutting down of many retail outlets.
With people restricted to their houses, they kept themselves occupied either trying to work or study, there were some people who had the luxury to catch up on their favourite series and families. Social distancing, virtual meetings and online streaming had become a part of our lives, of our new normal. With gaining more than 13 million users and 4 million users, apps like Zoom and Houseparty grew in popularity (Mediatel).
Newton’s Law
According to Newton’s First Law of Motion, Every object will remain at rest or in a uniform motion unless there’s an external force of action that complies to change the state of motion. For example: Once force is applied can the moving ball change the course of action. Richard Shotton has interestingly linked this Law with that of consumer behaviour. Consumers are accustomed to their daily routines, and they are afraid of changes. Unless there’s a new routine or activity in the day they wouldn’t want to change. For Example: When a consumer walks to a grocery store, to purchase a packet of bread they already have their choice of bread on their mind. Unless there’s an alternative like the preferred choice is out of stock or the competitor’s have discounts, the consumer would then have to make a choice. In this scenario, the global pandemic was a huge change consumers had to deal with.
Industry during the pandemic
The period of slowdown, (that is when the industry takes a pause) shows a ton of potential in people to become chefs, as they spend significantly more time in the house. The grocery segment which includes frozen food, alcohol, baby food and other beverages along with others was booming, we can see a 6.3% increase in the sector (Mintel). While the non-grocery retail like tourism, entertainment, clothing and electronics have all seen a decline in their sales along with a halt in production and manufacturing. The forecast says that the non grocery sector is to see a decline in sales by 19.7% in 2020 (Mintel).
The above figure showcases the sale of edible groceries during the coronavirus pandemic, in the United Kingdom in the first week of March when compared to mid April. The sales of baby food and care was 18.7% in March which declined dramatically to negatives in April. On the other hand, Alcohol consumption was only 3.2% in March but grew to about 29.8% in April, this was because alcohol helped consumers cope with stress. Alcohol consumption among households had increased drastically during the pandemic due to the stress levels of working or schooling. The 5 pm virtual drinking is becoming the new age cocktail party that people look forward to.
Brands during the pandemic
Amidst the pandemic, brands tried to contribute to society. Tesla, the electronic car manufacturer had stopped manufacturing their cars and used the car parts to build ventilators to aid the medical industry. Luxury brands like Gucci and Yves Saint Laurent had manufactured masks that were to be donated to workers. Estée Lauder had employed volunteers to produce hand sanitizers and L’oreal decided to produce hydro-alcoholic gels for food distribution channels, hospitals and nursing homes. (Forbes). By doing this not only did the brand work on giving back to the society but also building their brand salience.
While these bigger brands contributed to society, there were other brands that faced challenges. Aldo, a Canadian footwear brand had to close down 5 of their retail stores, and 8 more of them are under administration, awaiting new ownership. Debenhams, a UK-based retailer, has witnessed 20 closures of their retail outlets. The retailer employs more than 22,000 individuals, and it was the second time it has been called into administration in the last 12 months. The brand is yet going to survive as they have struck a deal to reopen 120 stores across the country. (Business Line)
There are brands that did see a lot of success as well during this dull time. As on March 12, 2020, Amazon’s stock price was closed $1,676.61. In the matter of 4 months the brand valuation is nearly $1000 higher (Forbes). Applications like TikTok had hugely benefited, with 5.4 million users in January to 12.9 million in April (Mediatel). Similarly, Netflix added nearly 16 million new subscribers just in the first quarter of 2020 (Forbes). With everything moving online in the span of days, fashion retailers were deprived of their physical stores that provided an experience to consumers that was to be their USP. But studying this trend, brands like John Lewis and Dixons Carphone had launched virtual trials on zoom-like platforms, where the customers could access opinions from expert sales personnel, even when not physically present. (Mintel)
Lush, for instance, has gained favorable publicity for inspiring customers to come into the Lush stores and wash their faces, as well as the dedication of supermarket giants and help the elderly by dedicating opening hours. (WARC)
Retailing
In three months to May 2020, that is from February, the volume of retail sales has decreased by a record of 12.8%. This has been a decline across different stores (ONS).
The figures showcase the growth in the value of sales on online retail from February 2018 till May 2020. Highlighting February 2020 wherein we see food stores are seen exponentially growing from 123.8 to 275.2 in May 2020. The department stores have been increasing through March and April but now are declining. The clothing and footwear stores on the other hand, was declining since February, but now seeing a lift in their sales.
Consumers behaviour during the pandemic
The change in consumer behaviour was more readily noticeable in the growth in spending on goods that satisfy basic needs during self-isolation, such as food, toilet roll and beer, or that help us preserve a sense of everyday life from our households, such as exercise and home office equipment (WARC).
As the chaos began, shoppers loaded up on medicines in the first week of March, with sales of children’s medicines growing by a massive +124 percent (Nielsen). Captify search data recorded an increase of 728 percent in FMCG-related searches and an increase of 300 percent in searches around ‘bulk buying’ and ‘multi-packs’ as of 15 March 2020 (WARC).
With stores closed, the online shopping platforms had become prominent among consumers, 36% of consumers were shopping online in mid April when compared to 41% that were surfing around the first week of June. (Mintel)
As per Mintel’s Covid tracker, a member of the consumers’ family or the consumer themselves have been granted absence of leave, at the same time there is a significant rise among consumers that are in the age bracket of 16-44, about 29% out of this group majority are 16 -24 year olds about 31%. 11% of 16 – 24 year olds have also lost their jobs only due the pandemic. (Mintel) This financial situation has hit the younger shoppers hard. Retail brands with a younger consumer base, may have a challenge especially when consumers are under such financial pressure.
Amidst the quarterly decline in GDP in the UK because of COVID -19, it has been found that 43% of the consumers are cutting back on their non- essential spending. (Mintel.) This could only mean that the value of the products would increase. This is a common feature of recession. Even after the last slow down, it gave rise or accelerated the growth of value – led trends. Brands like Hyatt, Disney, Microsoft are examples of value-led brands that developed after the recession. The discounters for both food and non-food segments had seen a significant growth after the Great Recession (1930-31).
Labour productivity was another concern for industries, being measured for the output per hour, it fell by 0.6% in the first quarter (January to March 2020). Overall output per worker fell by 3.1% in the same period, as many resorted to work from home or leave of absence due to the chaos in pandemic. The increase in the ratio of unemployment was driven by the falling demand (ONS).
Marketing and the pandemic
It was one thing that many brands were failing through this uproar, but others had to fight to survive. Innovation and creativity were the need of the hour. Chicago-based Terraboost Media, out of home advertising agency, was one such company that showcased their creativity and innovation with keeping in mind the pandemic. They had come up with 72,000 hand-sanitizing billboards that dispense wipes or a dose of sanitizers along with its advertisers message. These boards were placed outside supermarket chains, grocery stores and pharmacies. The agency plans to place 150,000 such kiosks by the end of the year nationwide. It is estimated that over 126 million people engage with these hand sanitizing billboards and thus making over 3.7 billion impressions. 94% of the shoppers have a positive experience about this product (Forbes).
Taking the pandemic into consideration, the graph below shows the spending on advertising worldwide. There’s a forecast of 691.7 billion U.S. dollars in 2020, some 20 billion dollars lower, due to this the following years predicting could be lower around the same amount. Advertising includes platforms such as digital (mobile, desktops, applications), print (magazines, newspapers), Out of Home, radio, television and directories.