An Evolution in Consumer habits are forming the future for Retail. As social distancing has become the new normal due to the COVID-19 pandemic, consumer habits are adapting in real-time to the new environment and circumstance. But it has merely accelerated the adoption of behaviors already gaining traction, such as the digitalization of shopping, banking and more.
And what we have seen is a shift in where consumers are spending, with a dramatic shift towards e-commerce.
There are noticeable changes in consumers purchasing behavior in addition to the shift online. Surveys have found consumers in several regions worldwide shifting more to value-based purchasing, which prioritizes obtaining maximum value for the consumer for the money spent. And the consumers in India increased spending during the festive and wedding seasons. Another observation is the shock to loyalty. Consumers try out new brands when their normal purchasing pattern is disrupted, and if these yield better value there is a high chance that they will stay with a new brand. Finally, there has been higher love for local observed and a desire to shop local reflected in both products bought and the way in which consumers shop.
How is consumer behavior changing?
We see five key trends in the behavioral changes emerging from the impact of COVID-19:
- Increased digital adoption: people shifting to digital platforms for day-to-day needs.
- Change in mobility patterns: less use of public transport, more remote working etc.
- Change in purchasing behavior: move to value-based purchasing and online shopping.
- Increased awareness of health: wearing masks, increased hygiene, healthy eating etc.
- Changes in interpersonal behavior: increased divorce, increased pet adoption etc.
These trends are interconnected and overlapping. The pandemic has increased people’s use of digital tools in life and business to stay connected in a world that is physically disconnected. Increased use of digital tools is blurring the lines between work, lifestyle and social interaction and between domains like mobility, health and finance. And it is expected to continue in the post-COVID-19 world.
Therefore the experience of living through COVID-19 is changing the world in which we live and our behavior. Changes that provide positive experiences are likely to last longer, particularly those driven by convenience and well-being, such as digital adoption, value-based purchasing and increased health awareness. This provides an opportunity for insurers to offer innovative, modular, granular, value-based and integrated products to meet customer needs. It is vital that insurers understand consumers’ preferences to stay relevant and adapt accordingly.