Updated: August 10, 2020 8:53:20 am
A “New Normal” is a term we have heard very often. But whether you like the term or not, the fact is COVID-19 is here to stay for some time and it has revolutionised the way we live and think. The consumer during and post-COVID is showing remarkable flexibility, bringing about a paradigm shift in her consumption pattern. I hope manufacturers, brand builders and the government are noting that the new consumer is following the “WW” curve — the “Wait and Watch” curve. Whilst some state governments are busy demanding the opening up of the economy, they seem to have forgotten that the economy does not merely need opening up, but it requires urgent generation of basic demand. Here is where consumer behaviour needs to be closely watched.
Since the lockdown, the priorities of consumers have seen a drastic shift. For manufacturers, the consumer is the king — someone who can afford and buy their products. For politicians, the voter is the king. Generally politicians are not really concerned with what products consumers buy, but what helps them buy their vote.
In many cases, there is an overlap between the two but there are also differences. First, the economy has been affected by a reduction in the purchasing power of many. Hence, the availability of money to buy products needs to be addressed. The government must look at ways like a reduction in taxes which will help the common man. Second, the current scenario has also made all of us go back to the basics, with food, shelter and safety being of prime importance. Luxury products hold little value. Cars, air-conditioners, second houses, and branded apparel will see a fall in demand. But renting will increase. Third, the emphasis will be on saving for a rainy day. Banks will have more money and cash will also be kept at home for emergencies.
Fourth, aviation, tourism and hospitality sectors have been hit. Even if the lockdown restrictions are relaxed, people will be wary of traveling and only doing so when absolutely necessary. Fifth, e-commerce has shown exponential growth and will continue to do so. Consumers would prefer making purchases online and opting for home deliveries rather than venturing out. Sixth, with “Vocal for Local” gaining momentum, there’s a huge increase in local apps, local kirana stores, local artisans and brands. Seventh, people are growing increasingly tired of being at home, and the urge to meet their near and dear ones is at an all-time high. While a few industries like IT can work from home, most others cannot. In such cases, their offices and factories will re-open, but with less staff/working hours/alternate days. Eight, schools and colleges have taken a hit as e-learning and online courses are being preferred. Nine, the entertainment industry has been drastically hit. Theatres too will take time to reopen and consumers will watch shows and movies at home. The media and entertainment industry needs to pay heed to this and curate content accordingly. Ten, with a lot of people laying emphasis on their health and immunity, there’s been a substantial rise in the consumption of organic, ayurvedic, and immunity boosting products. Apart from the obvious products, financial and medical insurance will play an important role. Lastly, real estate will suffer as no long-term, high investment purchases will be favoured, but renting will increase.
The differences are: First, voters need to be provided with their daily needs — basic essentials such as food, water, housing, and electricity. The government is already taking care of that, but money also needs to be given. Second, voters need jobs through development of infrastructure projects. Third, farmers need to have insurance for their crops and the infrastructure to sell at the right price. Lastly, migrant workers who have faced extreme hardships with their livelihoods being disrupted are looking for support. Most are still unemployed, and many are focusing on agriculture as a means of income.
The way forward is to generate demand for products, and create jobs by improving infrastructure. Money will be required by all groups. The government must incentivise spending by offering tax benefits on the amount spent on products like white goods/travel/eating out, and provide jobs by spending on infrastructure projects. They must forget about fiscal prudence this year.
Philip Kotler has predicted that the pandemic will bring about the new consumer who will shake the foundations of capitalism. He believes that the new consumer will be more careful and vigilant against ostentatious consumption, resulting in a more equitable form of capitalism. While I agree with his assumption, I feel that this will not last beyond a few years. History always repeats itself because people have short memories.
Currently, rural areas seem to be the focus of companies, as the consumer there is buying more than before. Those seeking volume will find solace in growth there in the coming year or so. The bulk of our needy and voters lie in rural areas and the focus of government spending must continue to be there. Companies should take advantage and provide products at affordable prices and increase the width of availability to exploit this opportunity. One, however, must not forget that new products must also be launched in metros. It is the urban market that will stimulate growth in the medium to long run.
The government has done well to take care of the poor and rural markets. I am sure they are aware that spending by the urban consumer is also essential for pushing the economy up. The middle income group is crying for attention. The government has planned and has been successful in generating employment by attracting FDI, and developing infrastructure, among others. We will have to wait and see how the “WW” curve changes to the “SS” curve — Spend and Support the growth. I remain optimistic.
The writer is a business and brand consultant
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