Predicting a new normal in a presumed post-COVID-19 world
Mega data is revealing consumers’ behavioural shifts during emergence from the darkest days of the COVID-19 crisis.
But predictions on their post-crisis behaviour are proving “illusive” according to IRI Australia, given effects of economic trauma suffered in recent months and angst about a likely post-crisis recession.
IRI researchers, who offer integrated big data, predictive analytics and forward-looking insights to businesses, say that while behavioural shifts are apparent it’s difficult to determine whether they’re likely to be permanent, and if they are, which businesses are most likely to be winners or losers in the immediate future.
IRI Shopper Panel is the largest in Australia and provides the most detailed insight into how households are shopping day to day.
However, IRI says it’s clear there will be intense competition among businesses to “win price perception”, and retail will take centre stage.
Owners of retail businesses should therefore prepare for a new normal where there will be “new and fragmented touch points with shoppers”.
Perspectives of opportunities
IRI says in forthcoming months lower priced/lower penetration brands will have opportunities to entice deal conscious buyers.
It is expected impulse purchases will be down because a multitude of consumers who have compiled lists of things to do once restrictions relative to COVID-19 are lifted, will then be doing less shopping than they have for a long time. Many people are also going to be short on disposable income.
An expected upside of this for retailers is that in devoting less time to retail trips, consumers will tend to go to stores they know well, and loyalty to specific shops is likely to increase – especially where customer service is of a high standard.
These are things retailers should now be resolved to focus on in order to make the most of every touch point they have with shoppers.
Consumers want “local” and “value”
At the height of the corona virus crisis when petrol was cheap and most people could use time as they pleased, research showed 32% of consumers were happy to shop at multiple supermarkets, or visit multiple shopping centres to get what they wanted.
This suggested a possibility that for many people brand loyalty was more important than shopping convenience.
Coles, Woolworths and Metcash proved to be interchangeable shopping destinations for most people, and Aldi was the least interchangeable.
The research indicated that people who traditionally shopped at Aldi tended to continue shopping there throughout the crisis. Those who favour these supermarkets as “time-savers” have continued to trust the company’s policy of making important judgements they believe saves “having to shop around”. (Aldi offers a restricted range of products and brands it perceives as being best value for money.)
It will be interesting six months hence, to see to what extent other businesses in the emerging “new normal” develop similar policies to attract consumers that aren’t necessarily local.
Consumers told IRI researchers that “local” and “value” were prime considerations for them in shopping, but that price alone didn’t determine value for them
IRI’s findings indicate that post COVID-19, probably more so even that after the GFC, consumers short on time, disposable income and faced with a recession, will be seeking goods and services, not only food shopping, from business operators closest to them who they perceive as offering the best value for money. In the immediate future, price is predicted to figure strongly in consumers’ perception of value.
Still a role for treat providers
While business operators are determining what “the new normal” will mean to them, IRI says they should be preparing for consumers’ “probable migration to value brands as a recession mindset takes hold.”
In planning to accommodate this mindset, business managers who had experience coping with the GFC should realise they “will be dealing with something bigger than 2008-09”.
Nevertheless, IRI’s researchers say there’s still room in the doom and gloom for businesses prepared to market what consumers consider is an “affordable treat”, a “deserved luxury”.
Indications are that some of the smarter retailers have already discovered this phenomenon and are busy reassessing their offerings of private label assortments and brands to meet this demand.
The research concludes that in the aftermath of the corona virus chaos, winners and losers among businesses will be determined to a very large extent by their operators’ ability to anticipate which goods and services consumers will see as being new or of continuing value