IMPACT OF COVID19 ON CONSUMER BEHAVIOUR

In a sense, the Covid-19 pandemic has changed the way we work, shop and communicate
with people more than any other disruption (including technological ones) in the recent past.
As more people start working from home, they are sticking to basics, stepping outside only to
buy essentials and are constantly worried about the risks of getting infected in crowded places
like malls and supermarkets.
Being associated with Capillary Technologies, which works with the majority of retail brands
across India, South East Asia, Middle East and China, I was able to witness these shifts in
consumer behavior and retail trends from close quarters.

Covid-19 epidemic, creating a paradigm shift in consumer behaviour

Spurred on by a trifecta of smartphone penetration, cheaper 4G networks and increasing

consumer wealth, the Indian ecommerce market was expected to grow to US$ 200 billion by
2026. That projection was based on customer and market research in a pre-Covid 19 world.
But in the last 2 months, both the market landscape and consumer behaviour has altered
beyond recognition and there is clear indication that the ecommerce industry will hit the US$
200 billion mark much sooner.

Some of the key consumer behaviour changes, according to a survey by

NRF

● 9 in 10 consumers have changed their traditional shopping habits.

● More than 50% of consumers have ordered products online that they would normally
purchase at the store

● Nearly 6 in 10 consumers say they are worried about going to the store due to fear of being
infected

While some of these changes are no doubt temporary, others will be permanent. As the
community moves beyond the survival mode, the digital-adoption momentum is likely to
carry forward and become permanent. This inflection point will be primarily shaped by two
major shifts in customer behaviour - the reluctance to mingle in crowded public places and
higher propensity for digital adoption.

As the recent Mckinsey study in China suggests, consumers are likely to opt for online
shopping even after the outbreak ends, especially for categories such as groceries and
personal care. This trend is likely to continue long after the lockdowns are called off as
people would still be apprehensive to visit crowded areas like malls or supermarkets.

A survey by eMarketer revealed that nearly 60%-85% of internet users across China and
South-east Asia have avoided crowded public places to mitigate the risk of contracting the
virus. While this will certainly come down to in favour of offline, I expect it will not go back
to old normal of majority thronging to brick and mortal shopping aisles.

In short, the Covid-19 outbreak and 2020 will mark a tipping point for the
adoption of ecommerce and mobile commerce platforms.

The emergence of a new world order in Retail

We believe retail is at an inflection point - and this is the start of a “A New World Order” in
terms of how consumers shop and the way the retail industry operates. Retailers will need to
be agile in adapting to this zeitgeist, since the prognosis for brands that miss inflection points
is not great —cases in point, Kodak and Nokia.

Under this New World Order, retailers across diverse categories cannot rely entirely on their
offline presence even after the lockdowns are called off. They will have to inevitably adjust
to the new norms of online buying. This will become even more relevant for categories like
groceries and personal care where previously the propensity to buy online was low.

● The Leaders, Survivors & Laggards in this Retail New World Order

This “New World Order” as we envision it, could force every retailer to embrace
omnichannel ecosystem and converge the operations of their online and offline stores. Not
doing so, will mean suffering huge loss in revenues. So, who will be the leaders, survivors
and laggards in this New World Order?

The leaders would be agile retailers, who upgrade to an omnichannel ecosystem and
constantly introduce innovative shopping experiences by analyzing the new buying
behaviour. They would be closely followed by the survivors - pure-play digital platforms who
have their own e-store and are sell on major online marketplace platforms.

The laggards in this race would be the pure-play offline retailers who are still waiting it out
with the hopes that old buying habits and the demand will be restored post the lockdown
period.

Opportunities for consumer behaviour

Ecommerce challenges
In theory, online stores of all sizes stand to benefit from the switch of consumer behaviour to
online shopping since they are already well-positioned to serve the increasing demand for
goods and services. However, there are challenges. Ecommerce is not a magic bullet in itself,
and Morningstar cites issues with adoption (especially amongst lower-income consumers) as
a dampening effect against any uplift in sales. There are also issues with the supply-chain and
product delivery, with companies already starting to be clever about resolving them through
innovation. Perhaps an even more limiting factor for businesses will be the level of readiness
of their ecommerce offering. If their online platform is not capable of offering a competitive
user experience, the chances are it will fail to entice, impress or retain customers. Ensuring
that your ecommerce site or app is optimized and ready will be critical in the success of your
online offering, and how competitive you can be in an increasingly competitive landscape.
Fortune states that: “companies with robust e-commerce offerings … will fare the best in the
current turmoil” “analysts agree that retailers still playing catch up on e-commerce will be the
biggest losers”“retailers with good sites will lose the least”. Those are pretty stark warnings,
and it’s clear that companies need to ensure that their sites are more than just good. They
need to deliver the best ecommerce experience possible. To start with, they must be
discoverable via search engines at the time their customers wish to make a purchase, and
once customers are on the site the ecommerce platform must be responsive and meet or
exceed customer expectations.

Changes to ecommerce traffic

We have already seen big changes in search behaviour in the Fashion sector. It’s not
uncommon for fashion brands to have a significant proportion of their traffic coming through
branded search. In the example below we can see one UK-based fashion retailer’s branded
search traffic drop by approximately 40% after strict new measures were introduced in mid-
March to combat the COVID-19 virus (we’ve actually seen some other fashion brands drop
by as much as 70% in the same period):

Improving your ecommerce offering to remain competitive

As the Coronavirus crisis continues to bear down on the world’s population, and as their
behaviour adapts, companies with a strong ecommerce offering can ensure that they are there
when consumers need them.
Nike, for example, has managed to increase digital sales by 30% as a result of their fitness
and e-commerce apps being particularly well integrated.
As consumer behaviour changes and results in more and more customers shopping online, so
too will the marketplace change to become ever-more competitive as companies seek to
capitalise on this trend. If your site is not found in search engines for relevant searches, or
your site’s responsiveness lags behind your competitors, your ability to compete will be
severely diminished. In today’s tough economic climate, this is the digital equivalent of
rubbing salt in a wound.
This implies that, rather than stopping marketing activities such as Analytics, Search Engine
Optimisation (SEO), Content Marketing, Conversion Rate Optimisation (CRO), Pay Per
Click (PPC) and Paid Social etc., companies could be best served by investing into (if not
doing so already), or investing more heavily into these types of activities. While each
business is different and will face its own challenges, investing into these areas may actually
help companies thrive in a competitive space, and help offset the financial impact of the loss
of offline sales. Investment here will certainly prevent the loss of online market share, and
will help position brands in preparation for the increase in demand that will surely come once
this crisis abates.
We recently published some tips on How to keep your digital strategy safe from the effects of
COVID-19, which suggests some initial steps companies could take to review their current
offering and help safeguard their business in these troubled times.
While it might be sensible to remain invested in online marketing activities such as SEO and
Paid Media to promote your brand during this crisis, it’s likely that the specific tactics
employed will change.
Both SEO and Paid Media might need to change the focus of campaigns due to changes in
demand, and focus on different sets of keywords based on new consumer search behaviours.
For example, we have noticed that Fashion brands are attempting to pivot to loungewear
items, given that most of the population is stuck at home.
In Paid Media, bid strategies will probably need to be adapted (we have some specific tips
about this on our blog here), and SEO might find new opportunities for new types of content
and changes to on-page optimisation. Editorial content is usually seen as a quick win since it
normally requires little technical input and can therefore be developed and implemented
rapidly. The key is in understanding your customer’s intent and providing content that meets
or exceeds their needs. We have noticed some ecommerce companies are attempting to pivot
their content marketing to capture users who, as of the beginning of lockdown, are at home
with far more time to surf the web.
This shows us that companies should probably perform a deep-dive into their Analytics and
really understand the current needs of customers, since these needs will almost certainly have
changed recently. Have ecommerce sites kept up with these changes?
In this new world, as customers are having to spend much more time shopping online, even
small changes to a site’s user experience and page load times will likely have a much bigger
impact on customer retention and conversion rates.Performing a careful analysis of how fast a
site’s pages load within different devices will usually reveal opportunities to improve site
speed, many of which can be fairly simply to implement and therefore represent quick wins.
Remember, page speed is a ranking factor in Google these days, and there has been much
research published showing a direct inverse relationship between the speed of a page and the
number of conversions. One such study by Amazon showed that an increase in load times of
just one second reduced conversions by 7%. This doesn’t sound like a lot, but for Amazon at
that time, 7% represented $1.6 Billion in sales! Optimisation of page load times is a genuine
opportunity to improve baseline revenue.
In a similar vein, making sites work better for existing customers by analysing their paths to
conversion, and the subsequent optimisation of that journey, will allow customers to have a
smoother and more satisfying checkout experience. This will almost certainly provide uplifts
to the revenue generated by the site, and will probably generate increases in brand affinity
too.