The Economic Effect of COVID-19 On Consumer Spending
By Cathleen Makhetha
Much of the globe has been severely affected by the 2020 Covid-19 pandemic. The lives of consumers and service industries has had to take a massive step back and reassess strategies pertaining to overall stability and smart financial spending habits.
Factors such as the hard lockdown and curfews have exacerbated the ebb and flow of consumer behaviours, their relationship with the products they purchase, as well as the channels they have been thrust into using in order to purchase essential items safely.
As marketers, it is important that we consistently keep up-to-date with these changes in order to understand their impact on our businesses. Additionally, determining how our clients can also remain profitable in this realm of uncertainty. Some key factors on changing consumer behaviours include:
1. True value in times of Covid-19 lies in things that work
In this transitory phase, consumers have based their shopping habits on how well a supplier’s products and services work. In a study conducted by McKinsey & Company, it has been highlighted that consumers in the time of now, wish to enjoy the luxury of basic stability found in everyday activities. This plays a vital role in where consumers decide to shop, where to engage with certain platforms and where not to go. ‘Best Buys’ and hard-sell sales activities are trumped by the consumer’s trust in the supplier.
We have also seen the significant popularity in online shopping applications such as Bottles app by PicknPay; Takealot and the Mr. Delivery app that houses a myriad of food retailers such as Checkers, convenience stores such as BP & Fresh Stop, and restaurants catering to the varying palettes and tastes of our consumers.
2. Consumers are not willing to negotiate on safety
On the notion of trust – the consumer experience has to be a 360-degree interface, requiring things that are convenient, easy to use and safe to pay for (online and in-store). These assist consumers to build trust and maintain loyalty to their suppliers’ goods and services.
Not only is it about the convenience, but also trusting secure online payments, as at any given time consumers have two or more of these kinds of apps on their devices. This means that the more choice the consumer has – the less likely they will be to return to an app that has glitches, low stock, long turnaround times or is not very user-friendly.
In this time, businesses were and still are required to flex their digital arm while handling emotional strongholds with kid gloves. In this regard, empathy and understanding proved to be more important than hard selling products that have little to no digital innovation to protect consumers’ card details, their experiences or interactions in-store.
3. Promises were tested
In keeping up with social media, promises were tested in terms of how agencies and businesses are able to manipulate their social media platforms to connect and engage B2B and B2C online markets.
Having data capabilities is not enough to keep up with new consumer spending habits. Businesses should look to pair adequate knowledge of their systems with highly intuitive skillsets to analyse data at a micro and meso level. The highly intelligent consumer markets now more than ever scrutinise every promise made, and every service standard expected. ‘60-minute delivery’ structures and ‘5-7 working day’ guarantees were dismantled on social media public domains among others if they failed to uphold their key marketing communications. Due to understanding that the consumer still holds power in how they choose to spend their finances, driver tips, return logins and WOM recommendations played a crucial role in how consumers get more bang for their buck and hold businesses accountable.
Increased business exposure is needed to build mutually beneficial business partnerships. This will happen through content that is useful, insightful and pioneering. The cornerstone of a successful business in the times of a rife global pandemic is through trust and loyalty, all the things that cannot be so easily measured. Expertise on how to use consumer-based interfaces is a key factor worth investing in as the pandemic and its effects will be here to stay for a much longer time than anticipated.
4. Fuller experiences are the name of the game
During the past year, staying home in quarantine has not only helped curb the Covid-19 spread but has forced us to live inside our houses… and our own heads. This is true for our consumers and how they have acted and reacted to our communication messaging.
Many consumers that were on the fence have moved from the ‘Free trial’ motive of getting to know a platform, to engaging in the full experience. Looking at the opportunity cost, petrol money was invested in paying for fuller digital experiences; whether it be Netflix, Hulu, Amazon Prime to Spotify and choosing the best WIFI enabling network. Smarter homes ensured that consumers were willing to accept a fuller service for a reasonable price because of what it could afford them in the duration of lockdowns and working-from-home experiences.
Even though this placed a lot of scrutiny on how well these products work, we have had the luxury of understanding what our consumers have needed during their time at home.
5. Is bypassing the “system” still a thing?
Going to the movies with family or painting the town red with friends has always been an enjoyable experience. Each one has a ticket to entry and has afforded the admission to have a good time regardless of what it was. Now, being a more digitised nation by circumstance, many businesses have offered and lent themselves to hosting webinars, talks, industry conferences and public domain discussions.
This has significantly changed how many people have access to information. It really is not what we thought or expected. It is not the uptake of earning digital platforms that was the boom, but rather the sharing of an ‘entry’ into our visual arenas of information.
In the beginning, consumers had gotten resourceful in sharing accounts – if one has DStv they will swap login information with another who has Netflix and so on to minimise costs and maximise entertainment experiences.
We can safely say the same has been happening with meeting details and subscriptions on virtual talks, paid therapy and doctor consults. Although it has not been an open topic of discussion – privacy has played a big part in how and when consumers pay for access and who they choose to share it with. One can even record their meetings for their personal reference and to share with others.
We have, in real-time, experienced the death of #AdmitOne or #PerHead and we have to come to grips with our consumers being everywhere as a shared body of influence with their loved ones.
6. Safety in numbers? Or safety in accounts?
Our consumers always enjoy having the upper hand in new ways of paying for their digital interactions and experiences. This means they will be highly aware if they are being scammed or being taken advantage of with regards to certain transactions taking place on their accounts thanks to geo-tagging and location-based information sharing.
For example: Paying for items with hidden fees or immediate transactions. Consumers would rather message the said recipient and save on the cost of banking fees as every Rand counts, even more so than before. Similarly, there has been a new innovation of paying for entertainment on one account that affords you everything in one arena. This is one to look out for – understanding if consumers want one fixed account being debited to share login details, or many accounts being paid by the main customer being shared among their loved ones.
In looking at how the landscape has changed itself, it is up to us as marketers to rebuild the trust between our consumers and what our services mean to them. The new, unknown and recommended does not stand a chance against the old trusted platforms that have been recommended by our peers. From a heightened ‘connection’ perspective – we should do our due diligence in being part of the everyday conversations that consumers have with each other when they are looking for trusted ways of being financially savvy in the new normal.