Consumer behavior is changing dramatically in the face of COVID-19. If you don’t plan for the future today, you may find tomorrow’s too late.
While the immediate response to COVID-19 seems all-consuming, we still need to think of this pandemic in phases. There’s what we must do “now” to manage business continuity, what we must do “next” to prepare for the new normal and the need to accelerate digital transformation, and what we must do “beyond” COVID-19 to be in a position to create value for the longer term. China’s recovery provides a critical lesson: you need all three tracks of strategy under way to be prepared for each time horizon. Because if you don’t work in parallel, you risk being left behind.
The problem? Reimagining your customer strategy is challenging enough when consumer behavior is stable and predictable; it’s exponentially more difficult when the way we live, eat, and shop is changing rapidly and radically. So, what do we know? The EY Future Consumer Index finds four segments emerging:
- 35 % of people are in what we call “save and stockpile,” worried about their families and pessimistic about COVID-19’s long-term effects
- 27% have “cut deep,” reducing spending across all categories
- 26% are “stay calm, carry on,” with largely unchanged spending habits
- 11% are “hibernate and spend,” best positioned to cope, optimistic about the future, and spending more
So, these are the immediate changes. But we know the pandemic is also forcing a reassessment of values, habits and consumption patterns, and many of these won’t reverse. While the EY Index finds a majority of consumers expect spending to be the same or more after the COVID-19 crisis (31% expect spending to be unchanged, 25% plan to spend more in areas important to them, and 9% intend to spend more across the board), more than a third plan to spend less – and 13% of all consumers plan to make deep cuts.
Add to this mix a host of other changes, from greater working from home accelerating e-commerce and shifting attitudes to digital privacy, and the priority is clear. Leaders need to quickly re-think digital transformation agendas to ensure they position your brands correctly, build foundations for lasting relationships with consumers, and use data and technology to help you understand the new levers for continuous and dynamic optimization. It’s too late to undertake this work when the consumer environment seems more predictable. Even though the duration of the pandemic is uncertain, you must manage the challenges around their customers today, while setting yourself up for rapid stabilization and customer growth in the future.