Since COVID-19 entered our lives at the end of February, there have been several changes in the behavior of all of us as consumers. Some of these are temporary, due to the imperative to adapt to the situation, but some will tend to become permanent behaviors over time. There is a lot of change not only in consumer behavior, but also in the retailing area. Especially the sales channels that realized the importance of digitalization, accelerated their investments in this field.
Let us take a brief look at the changes in the fast consumption market after COVID-19, by discussing the global developments and events in the world first.
In Europe, which was most affected by the crisis in the first place, we see a clear line between Northern and Southern Europe. In fact, the markets in both Germany and the UK are surprisingly good at dealing with this crisis. When we look at the performance of 2020 – 3 May (18 weeks), it is remarkable that England and Germany grew by 1.3% compared to the same period of the previous year.
In contrast, markets in Italy, Spain and France fell between -8% and -11% over the same period. A drop of -2% in total for these five major European markets is perhaps not a shocking scenario, but also points to uncertainties as we move to new normal.
To better understand these uncertainties, we can take a closer look at the underlying reasons why consumers change their behavior, and more clearly identify the situation at different stages of the crisis.
Panic Phase: Preparing to Eat and Work at Home:
While urgent purchases took priority, other products dropped from the radar of the consumer. According to a survey in Spain, 88% of the consumers confirmed that their shopping habits have changed. While products related to Office needs and Information Technologies peaked in demand, products such as washing machines, smartphones and even TVs generally did not enter the technology and consumer durables shopping lists. It was not just the office that moved into the home – the necessity to eat at home triggered subsequent reactions. In many countries, buyers have stocked up on basic consumer and FMCG merchandise, and supermarket shelves got emptied quickly. The best example of this is that the freezer sales in Germany increased by 185%.
In this period, the most purchased products were led by Webcams, Monitors, Printers and computer accessories such as Keyboard and Mouse. Of course, besides working at home, distance education also had a big impact.
Adaptation Phase: Focusing on domestic life:
Consumers who could not go to restaurants, cinemas, clubs, and do outdoor entertainment activities have turned to technology and durable goods to find other ways to make the most of a home-limited life. The sales of game consoles, which offer entertainment at home, suddenly exploded. Subscriptions from content providers like Netflix have gone up to 10 times in an instant. Big screen TV sales increased significantly compared to the same period last year. Consumers who could not go to barbers and hairdressers turned to personal care devices at home; shaver, hair cutting tools sales rose at once. The obligation to do food and cleaning at home has increased the sales of devices such as mixers, blenders, smart robots.
Transition to "New Normal" Phase: Reopening of Stores and Shopping Centers
As of the end of April, the normalization process started with the necessity of gradually wearing masks and obeying social distance all over Europe. The process, which first started with the opening of relatively small shops of up to 800m2 in Germany, followed by the participation of larger stores and finally the opening of almost all stores after June 1st shows that we have entered a new phase. Although this phase had a limitation on the number of consumers that can be present in stores or markets at the same time, it was noted that consumers missed shopping in physical retailers and, are willing to wait in queues if necessary. Within the same period, the losses of small businesses decreased from 64% to 22% at a time. Growth of up to 80% on online channels has retreated to 50% with the opening of stores and markets. This shows us that shopping in physical stores and retailers still maintains its dominance among consumers.
The most important factor for consumers to shop from markets and stores emerges as having the product instantly. Many consumers who have to meet these needs through online channels during the restriction process state that they have complaints about the delivery time and logistics problems they experience.
We will have to accept this fact; we will never be able to go back to what we used to call “normal”. We will have to get used to living with the threat of Corona Virus until a vaccine or an effective treatment is found. Returning to the “New Normal” before anyone else, China is now the best example we have. If we make an estimate by looking at what happened in China;
- Traditional retailers have had a hard time – and even after strict measures have ended, these retailers have not been able to quickly return to pre-crisis business levels.
- Recovery will be slow and time-consuming – indicating that consumers are still trying to avoid physical spaces and contact as much as possible.
The brands that can provide the most effective return in this process are the brands that can continue to provide Omni-Channel services to their consumers. These brands, which can serve their consumers both online and in the store, will be the brands that will catch the fastest return.
The sales dynamics of the reopened stores in Germany show that everything sold online during restrictions is still in demand at the store.
Technology provided consumers with valuable solutions to deal with the crisis – helping families to improve the quality of life at home during restrictions, continuing education with distance education and maintaining our working life. In addition, it has been our biggest supporter in many areas such as cooking at home, exercising, staying in communication, and having fun. Now technology is also the biggest supporter to ensure a safe comeback for brands and sales channels in the retail sector.
In this new era, brands and sales channels that continue to stay in constant communication with their consumers and benefit them by considering their preferences, reservations and needs, will be the luckiest ones in terms of returning to the “new normal”. Those who present technology to their consumers in the fastest and most convenient way will also lead this recovery.