Social distancing and its impact on consumer behavior

Social distancing and its impact on consumer behavior
Rathesh Verma

Ratnesh Verma

April 7, 2020

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At a time when the world has come to a halt, with almost everybody trying to stay at home to prevent the spread of Coronavirus, our consumption behavior is undergoing a shift as well. This change, as is currently necessitated by a global pandemic, will continue shaping the economy even after we understand how to effectively manage it. This era of social distancing will act as the inflection point for certain consumer habits, and subsequently be the driving force for business organizations to innovate their operation models as per the altered preferences of consumers.


Online movement over physical movement


With the actual physical movement being hampered, a major part of business has shifted to e-commerce. A spike in the number of orders placed with such online stores points to the fact that people are increasingly relying on e-commerce to fulfill their essential needs. In order to combat this increased demand, certain e-commerce players have taken swift actions, such as hiking up their delivery drivers’ hourly pay and also offering a raise in their overtime pay. However, any consumer today is judging a brand’s value, and opting for a service only after being satisfied with its hygiene and sanitation practices. Thus, customers are constantly searching for brands that can offer a consistent standard of service, while also taking full accountability of their servicing staff.

The fear of public spaces and human contact is promptly increasing, steering consumers towards offline to online equivalents of existing services. Brands like Grofers and BigBasket for ordering groceries are gaining popularity. Gyms and fitness centres such as Cult.Fit are constantly working on their mobile application to provide hassle free experience to their members by offering online tutorials and live energy tracking meters. Web based platforms such as Practo are beginning to attract people, who are looking for online medical consultations. The extended quarantine will also force the consumers to adopt secondary channels, specifically related to high-involvement items such as cars, electronics and other luxury goods, where physical experience at the time of purchase will be replaced by web searching.

This behavioral change will also be observed in the case of recreational services, where customers will demand dynamic, relevant and new age forms of entertainment at their homes instead of wanting to visit public spaces for the same. This pandemic will push the consumer to shift his behaviour in a way that will leave little room for interpersonal relations, and will replace it with a high level of digital media consumption.


Evaluate and innovate: The new business mantra


A shift in consumer behaviour will make it inevitable for business organizations to modify their operation models and add to their technological advancement, if they wish to survive in the post-pandemic economy. Businesses will have to look for innovative ways to increase their productivity while maintaining cost efficacy at the same time.

If we look at the current scenario, almost all industries are looking for new ways to operate online. A major learning from the Corona virus situation for businesses and corporations would be to adopt more flexible work-from-home policies after having adjudged the productivity and cost-benefits of the same. This can result in downsizing of office spaces, along with making business organizations more open to adopt off-roll specialized services to plug in the gaps, rather than utilizing freelancers or overloading the payroll. Larger and global businesses specifically have a higher onus of choosing services that can provide safety, hygiene and consistency to their employees.

A greater lesson from this lockdown situation for e-commerce businesses (specifically direct-to-consumer) and for new-entrepreneurs, operating through self-owned channels, will be to work towards creating ready stock and supply by expanding their stock-keeping units. Less reliance will be placed on the existing supply chains owing to their precarious nature, which will lead to better functioning in the time of crisis.

Further, at an investment level, sentiment for the last two years has focused on pivoting away from a growth-at-all-costs attitude to a more sustainable growth mindset. The legal and workforce implications of a post Coronavirus world will consequently put the spotlight on many existing firms’ path to profitability, thus potentially changing where investment is made.


Delivery as the only touch-point


The Indian last mile delivery market is growing at a CAGR of around 10%, aided by the growth in e-commerce, hyper-local and offline to online industries. Further considering the effect that this epidemic will have on consumer behaviour, the post-Coronavirus world will start moving towards a digital economy in a highly accelerated manner. Human interactions and interpersonal experiences will then remain limited to the last-mile logistics services. With new work from home policies surfacing, new entrepreneurs moving away from traditional marketplaces and consumers wanting doorstep deliveries, the last mile logistics companies will be bearing the burden of commuting on behalf of the professionals of tomorrow.

Even before this pandemic, we knew that the customer has a tendency to attribute the entire end-to-end experience to a brand, even if the brand partners with vendors (for payment, supply or delivery) to provide the experience. Thus, image conscious brands will now be especially interested in closely monitoring the delivery experience. In order to do so, businesses will be looking for better delivery partners and vendors, who will be able to provide an assured at-the-door experience along with meeting the increased hygiene needs. Even those organizations which currently use their own runners for ad-hoc tasks will start looking for reliable partners to outsource these services.

A long term effect of this quarantine will be seen in the interpersonal transactions of individuals as well. People will start looking for services that can assist them in their day-to-day tasks, such as picking up or dropping off some goods for friends or family. The realization of health risk embedded in human-to-human contact will motivate them to transfer this risk to a reliable third-party carrier, rather than bearing it themselves.

This era of social distancing will bring delivery services to the forefront. It will necessitate businesses to scale up in a highly ethical and sustainable way. Only those organizations which can quickly adapt to changes and provide consistent and comprehensive services in a safe and trusted manner will be able to survive in the post-pandemic economy.

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