How has COVID-19 impacted consumer behaviors & organizational responses

From panic buying to online shopping, the COVID-19 pandemic has disrupted consumer behaviors during very short period of time.  Since I teach Consumer Behaviors in the online environment in our graduate program, I would like to discuss the emerging consumer behaviors, analyze the underlying factors that drive the behavioral changes, and provide suggestions about organizational response strategies.  So far, four consumption trends have emerged.

Emerging consumer behaviors

Foremost, online shopping is significantly increasing.  There is a surge in e-commerce in the midst of the COVID-19 pandemic.  As Mike O’Brian noted, U.S. e-commerce sales surged in a number of categories in March.  Specifically, e-grocery sales doubled between March 13-15 compared to March 1-11.  Overall e-commerce sales have increased 25% in the same comparison, according to new data from Adobe Analytics.  Based on my research experiences, I think consumers’ motives for shopping online amid the current global health crisis are different from the pre-pandemic time.

My previous focus group interview findings suggested the two underling reasons for consumers to choose to shop online are convenience and economic motives.  Some participants feel it’s convenient to shop online because they can place an order anytime, anywhere.  Other participants like the online-only deals.  It’s easier for them to do price and product comparisons online.  But, ever since the outbreak of COVID-19, consumers either choose to, or are forced to, shop online because of safety motives.  In order to avoid the crowds, many people would rather shop online.  Some consumers are afraid of getting the virus at the grocery stores.  A survey conducted by Brick Meets Click and ShopperKit in March suggested that 26 % of participants purchased grocery online for the first time in the past month.

Specifically, 39% percent of participants aged 60 and older said they were using online grocery for the first time.  To respond to this trend, companies which have never sold products online may build e-commerce sites on secure platforms, to help consumers get the products they need during the social distancing period.  Even after the crisis is over, some consumers may still stick to online shopping.

Driving behavioral changes

Panic buying has been an unanticipated reaction.  The most obvious example is that people are crazy about stocking up staples, such as toilet paper, non-perishable food, and cleaning products.  In other words, people suddenly purchase higher quantity of products than what they actually need.  Some people even pile up the whole closet of toilet paper.  Although manufactures, such as Charmin, work hard to produce more toilet paper, the capacity of manufacturing has reached its maximum.

Why do consumers engage in panic buying behaviors? The underlying factor is emotion.  People can have a number of negative emotions, such as fear, anger, anxiety, uncertainty, helplessness, and insecurity, when they are in a crisis.  Some people feel they need to hold on to something to make them feel secure.  They also feel uncertain about whether the products will be available when they need it.  Uncertainty creates anxiety.  Consumers’ panic buying and stocking up behaviors create a void for other people who need the necessities.  In response to this, retailers, grocery stores, and online vendors should set limits, for example Whole Foods has no more than two per customer for scarce items. Online vendors may add a – Notify me when it’s back – button to the sold out items.  Consumers can click this button and provide their email address to the vendors.  When these items become available again, they can immediately place an order online.

Responding through organizational strategies

In these new times, popular product categories are shifting.  Nielsen has identified 6 key consumer behavior thresholds tied to the pandemic and impacting the markets.  These are (1) proactive health-minded buying, (2) reactive health management, (3) pantry preparation, (4) quarantine preparation, (5) restricted living, and (6) living a new normal.  As we progress through these 6 stages, the popular product categories are changing.  In stage 1 and stage 2, health and safety products, such as face masks and hand sanitizers, are being purchased far faster than they can be produced and restocked.  In stage 3, consumers begin developing stockpiles of food and emergency supplies.  In stage 4 and 5, there is increased online shopping and decline in store visits.  In stage 6, people return to daily routines, but operate with a renewed cautiousness about health.

Overall, consumers are still spending or even spending more on some product categories, such as protective healthcare products (e.g., face masks), and staples (e.g., non-perishable food, household supplies, personal care items). Maslow’s Hierarchy of Need Theory may explain this phenomenon.  As Maslow noted, five hierarchically arranged human needs (from the lower level to higher level) exist: physiological, safety, love and belonging, esteem, and self-actualization.  Before higher level of needs (e.g., social and psychological needs) are satisfied, lower level of needs (e.g., physiological and safety needs) must be met first.  This may explain why consumers aggressively purchase protective health items and necessities.  To respond to this, some companies are using their existing factories and equipment to manufacture the items in need.  For example, clothing companies like Prada, Gap, Eddie Bauer are using their factories to produce face masks.

Finally, consumers will become more price conscious.  The pandemic and the subsequent economic recession have created or will create financial hardship for many consumers.  This will require consumers to reduce their spending for a while.  That’s why there is a sharp decline of consumer spending on clothing, cosmetics, and luxury goods.  Brands which sell products in these categories may consider offering discounts for existing products and adjusting their pricing strategies in the future.

A recent survey result suggested that 88% of consumers wanted cost-saving promotions from brands.  To go one step further, luxury brands may be more flexible and use their facilities to produce hard-to-find products in the midst of the pandemic.  For example, LVMH, which owns high-end fashion brands like Louis Vuitton and Fendi, will be re-purposing its perfume production lines to start making hand sanitizer as a response to the COVID-19 outbreak.

In conclusion, the pandemic has dramatically changed consumer behaviors.  Many companies are wondering whether these consumption behaviors will persist after the pandemic is over.  Take online shopping for example, some consumers may get used to this method and stick to the new normal.  However, others may return to brick-and-mortar stores.  Compared with in-store shopping, the social component, such as shopping with friends together or chatting with store associates, is missing in online shopping.  In addition, some consumers prefer to try on the clothing products and physically see and touch the products. Thus, these consumers will shop in stores again when they feel it’s safe for them.  When companies reopen the physical stores, they should implement safety measures, such as limiting the number of customers and providing customers masks and hand sanitizers in the front door, to protect their customers and employees.

Because various internal (e.g., personality, emotion, motives) and external (e.g., social, cultural, economic) factors can affect consumer decision-making and purchasing behaviors, the consumption trend is still evolving.  Therefore, companies need to continuously track the trends both during and after the pandemic.  For example, companies can monitor customers’ social mentions and conduct market research (e.g., survey) to listen to the voice of customers (VOC) to better understand customers’ needs and concerns.  By doing so, companies can adjust their marketing 4Ps (e.g., product, price, place, and promotion) to better serve their customers.  How long it takes for the economy to recover will be heavily dependent upon consumer spending.  Thus, it’s important to understand consumer behaviors and continuously track the evolving consumption trend.

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Posted by Ming-Yi Wu, Faculty

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