Changes in Consumer Behaviour - Consumer Goods

Expert Profile

Section 1: Consumer Behaviour Changes in Your Industry

1.1. How has consumer behaviour changed in the industry?

1.1.1. Reduced Discretionary Spending

I think the top three changes in consumer behavior, all of those are coming as an outcome from the economic downturn. Overall, what we are seeing is a higher rate of unemployment. As such there is a decline in ‘on-the-go’ consumption from the B2C perspective, there is a decline in the discretionary spending, which is all, an aftermath of an economic downturn.

1.1.2. Preference Shift

You are seeing that our consumers especially for the technology segment, their preferences have changed. Some of that is driven by the external and policy changes. But all of it around the life at home, cocooning around the kitchens has given rise to the focus on the health and the hygiene of people. There is already an escalation of organic natural or fresh type of food, and people being more conscious about hygiene.

1.1.3. Digital acceleration

There’s a huge shift to shopping online and whether that is because people are at home and then there are few options, where they can go out. The online spend has gone up. If you consider just in the US, it has gone up by almost 35%. We are seeing almost similar figures in terms of the online spend and online penetration. That is not only a part of the retail online spend, but I would also say it is part of an overall shift towards a digital preference. In digital entertainment people are staying home, people are using more of our streaming and cinemas, which is obviously the Netflix and so on. There is also a shift in the media consumption. You are seeing more people actually get that same connect with the social network or they are using more of the social network, as well as the growth of e-pharmacies, the e-doctors and fitness on demand. Which probably we had never anticipated before like let’s say five years before we never anticipated that we could even have e-pharmacy or a doctor and that could be a booming sector.

1.2. Which consumer behavior is going to endure after the pandemic and why?

I think the events of last year, is probably a forced function. People were forced to go into this type of environment. And then, what is going to stay and what is going to endure will be a factor of how satisfied the customers are in terms of the experience that they are getting. So, probably it’s more like a mathematical multiplication equation of forced behavior into satisfaction. If the customers are highly satisfied, they will continue to do this forced behavior. If they are not satisfied, they’ll come out of it.

1.2.1. Preference for Digital Entertainment

I think, obviously, from a technology point of view, there is going to be a preference for digital entertainment because people have seen that change. And there is going to be some amount of stickiness around that.

1.2.2. Remote Working

There is going to be like the remote working. So, that is to continue to some extent in the environment in the next few years. Which would mean that the technology sector would need to actually like improve the experience that it provides to all its employees and to its partners in terms of how they interact remotely.

1.2.3. Increasing Popularity of E-Commerce

The e commerce sector is anticipated to grow. What we might see is that it’s more of a cyclical thing. So, let’s say we might see a downturn, we might see a short dip, as we are seeing now as the brick and mortar stores open. But it is again going to go up. So, we might see that kind of fluctuation. Some of this might be a small dip and then come up strong.

1.2.4. Digitization

I think the other thing is the movement to digitization. Every industry whether they are in the travel industry or health and hygiene, the demand and move towards fitness all is going to move to remote types of interaction. And so probably you will see that this remote interaction and the technology is associated with it in terms of providing a good customer experience is somewhat of which is going to endure.

1.3. How has the pandemic changed consumer interaction within your industry?

I think all of the major business functions had to change with this with this pandemic. So, let’s say the sales part, like the sales team are probably now more focused into providing a hassle-free shopping in hygiene like environment changing the store layouts and reposition configuring checkouts and so on. From the operations parts it’s mostly you know right sizing the network, because most of the industry is moving into omni channel, or maybe the retailers like they are selling into different channels, they are selling online, they are selling through brick and mortar there is our customer-to-customer demand that they are fulfilling through the social media networks and so on. So, it’s all about you know right sizing your network and understanding that where you need to place your network, considering that the customer preferences are changing.

If you look at marketing, we will see that brands need to be very flexible in terms of how they price their products. This is because overall it’s a demand supply equation. And suddenly what we saw particularly from an e-commerce standpoint is that some products, and with the retail stores closed, there has been a shift in people buying DIY goods and home improvement products online. And hence there is a mix that they have to do in terms of pricing like how they can actually have the right prices.

The other thing I would say is targeting the right customers. So, what COVID-19 highlighted, is that some customers are going to drop out, but there are new customers which are coming up. How do you cater to those customer needs and make your business strong?

Let’s say from a marketing standpoint, they have to shift to digital media, moving away from printed media. That is what they have to allocate between how much spend they have on digital engagements on social influences rather than on out of home advertising print advertising create marketing.

1.4. What macro-economic trends/public policy measures impacted consumers in your industry most? How has this impacted their behavior?

Government policies for the UK, working from home if you can, avoidance of public transportation, because of hygiene concerns. I think all of this led to the increased stickiness with e-commerce.

But now, because we are in this constrained environment for almost two years, people are getting used to it. And hence this sort of environment where maybe you should avoid physical retail has led to the grocery segment getting bigger in the online industry. And you are seeing that probably what is happening in the external market.

Right now there is a couple of companies which are fighting for space in the rapid grocery delivery service. So, let’s say the Gorillaz, Flink are competing in that space along with Deliveroo and Uber Eats. So that is the shift. Now you know how government policies are changing like in the UK, the government has said that there will be tax rebate in terms of like making the real estate actually flourish.

If you buy up to a certain amount, then you don’t have to pay the stamp duty, which has suddenly increased the amount of I would say the demand in people to move into new places. And that has a somewhat gave that real estate prices afloat. And it’s a matter of time like whether we will see that if these realistic prices are going to stay high, and if that is going to constrain you know, future generations into moving into the let’s the new home market. So, all of these are really changing because of government policies.

The government policy of having to stay at home is also getting steady state from a technology standpoint, when we were already seeing that the 4G technologies was mature and the 5G was getting along and then it was slightly ramping up. But that has expedited this ramp. So, that has actually fast forwarded like the technology in terms of connections with the multi devices connections and with the steady state growth of let’s say the 5G technology, coupled with let’s say like you know moving into a technology or like a remote type of an experience that most consumers want.

1.5. Have consumer product demands shifted in your industry?

From a technology standpoint, yes, it has changed because the in-home experience, the digital experience is driving some of the key changes, in terms of how people want health and well-being through technology. Rather than it was mainly an onsite paying a face-to-face thing which has now changed, like the e-pharmacy and e-doctors and staff.

Also touching on sustainability. Most companies understand that future disruptions loom large on the horizon and at one point of time when contingency planning was obviously a backroom thing. I think that has actually moved faster. From the technology standpoint what we are seeing particularly in the e-commerce sector is that there are small retailers who want to go online and use that as an avenue because they are seeing that that is the channel that is going to grow.

The technology has to ramp up for that with that, we are seeing associated technologies grow because people are more focused about the speed of delivery, they are focused about real time visibility of the product. If I order something online, I am always checking when is my product arriving and that has actually helped some of the startups and the entrepreneurs to actually come up with really bright ideas in terms of how they can provide this real visibility to customers.

They are working with big retailers in terms of using their software in providing a better customer experience. And then obviously from the technology standpoint like at one point, like the grocery demand, we have never expected that you know you’d be sitting at home and then you will be enjoying with your friends ordering let’s say a packet of popcorn along with some snacks and sort of that and get it delivered in 10 minutes.

Now that is what technology has done like it has brought within fingertips, of the people that you can just order online and then you get it in minutes. So there has been a rapid surge in the usage of technologies people getting accustomed to technology and then you know coming up with more better customer experience in terms of how they can use those technologies. Like it has always been clumsy. Let’s say for the older generation to go and then order it through websites and so on, now you have just apps on your mobile. And it’s so easy, you can see, like how the technology companies are collaborating so that you don’t have to create a different login for each app. It’s all about how you actually like how technology has brought in the forefront like probably the customer experience part, so we are already seeing that.

Section 2: Company Responses to Behavioural Changes

2.1. What are the new measures that you have put in place to respond behavioral changes?

Presently one of the things that B2C players have to change is the topology design because there is an increased tension from consumers on the speed of the network, the availability, and the convenience. Hence, there will be a major change in how demand is fulfilled to the consumers from the retail sectors, particularly from the technology standpoint, like the developing of an omni channel service strategy. Like, which is the channel that consumers want and how is technology geared up to satisfy that. Each of these companies are also rethinking about their physical contact centers and walking environments and whether they have to maintain that. Because, as it moves to more of remote working and remote interaction, probably the physical touch will be lessened.

The other thing, which is going into the price setting frequency, how you can do dynamic pricing and then define your emergency pricing rules, so when do you actually make a price discount based on what consumers are buying and then you actually hinge on to that type of demand. The other thing which we have seen is companies using technology to come out with ideas like reactivating customers and calibrating the new target segment. So, the prices change the market dynamics and the customer purchasing behavior. Companies need to carry out like the new analysis to enable customer reactivation and calibrate against the new targets.

New customers may have appeared, while others might have disappeared. Some customer groups might have adapted to the new sales and service channels. Whereas others are slightly behind, how do you actually reach them using customized marketing, how do you understand the demographics of each customer segment and potentially use targeted marketing tactics to reach out to them. I think those are some of the things that we will see that are going to change and also B2C companies are geared up in terms of responding to that.

2.2. What are the future opportunities/strategy to deal with behavioral changes?

I think one of the major trends that is going to come, is most of the companies are evaluating their globalization strategy. I would say at one point, the world was more into globalization, you had your supply chain across different countries. Now with this pandemic, it has severely impacted global supply chains. And that is where they are thinking about bringing in new suppliers, and have their technology closer to their home.

I would say that to some extent it hampered the outsourcing technology sector as well in terms of how much technology you outsource and then, how do you get the better of it. So basically, how much technology you outsource, how do you maintain that around the globe when your people are working on the right things, and so on.
The second would be the remote interactions. The communications and preference and how do you actually reach out. You will see a growth in social media networks and associated apps and associated technologies. You might also see, some market consolidation because weaker players, in the technology sector or any sector have suffered. There is more consolidation that is going to happen in the market because some companies are going to go bankrupt or disappear, and then there are new companies which come in with a new proposition or customer experience.

Overall, most of the companies need to look at their core competencies and then use technology from that part. So basically, where are my customers, how are they interacting with technology and what is the customer proposition that they are wanting?

2.3. What are the challenges in implementing the current and future measures?

Change management and being open and flexible to changes will be the key. Because, as we have seen like suddenly there is a surge in small stores, or maybe the retail stores, which are more focused on their brick-and-mortar cells has now moved online. The company culture has to quickly adapt to that in terms of how do you provide a better experience and it’s all about how your company culture is either horizontally or vertically integrated within your other stakeholder companies or your peer companies, because ultimately it’s a matter of how open a company is in terms of innovation, open to new technology and how you can manage the experience of your own employees, because I am sure that some companies will have challenges in terms of moving into this technology front, where they might see that they will have to do, massive cuts in jobs and then it’s a matter of how you maintain your brand image among the people saying that you know, this is something to provide a better experience to the wider consumer section.

I think that is going to change from a supply chain point of view, probably bringing supply and from where you procure those are going to somewhat come nearer to home. You are going to see a change in topology because speed has become the forefront, and also, you are going to see how you can provide a better consumer experience. And another sector, probably, which will grow is the reverse logistics, because, as the online sector grows, you will see that people are now getting more accustomed to the online return segment and we anticipate that probably, you might actually trigger some technology innovations that might come in the reverse logistics sector. Obviously, in terms of contract negotiations we have seen that you know, like some of the companies got stuck with age old contracts, which ran over for years. And that can be really challenging thing for a company in terms of having that flexibility. So probably you’d see companies actually having all their things in different baskets so that they can probably mitigate the risk there.