Behaviour change puts dampener on recovery optimism

The data, to be updated every three weeks, will provide a comparable snapshot about how consumer confidence is changing, and how quickly, as we move down alert levels.

Economic growth is likely to be impacted, given private consumption accounts for around two-thirds of economic activity. EY Oceania Cheif Economist Jo Masters cautions that the lower community confidence, combined with higher savings and more nervousness about people’s financial positions may mean the road out will be slower and more gradual than first thought.

These concerns and uncertainties typically lead households to cut discretionary spending to boost precautionary savings or pay down debt. And while mortgage repayment and rent deferrals are incredibly helpful for households trying to withstand this period, people are conscious that this will ultimately add to the debt pile down the road.

That’s not to say sentiment won't change from this point in time. “Sentiment can change, and in the case of households change quite rapidly,” she says. “So much will depend on the messaging from governments about easing restrictions, the handling of outbreaks and, of course, personal experience.”

Permanent behaviour change

Add to this the equally important consideration about people’s perception of their relative health and safety when moving around and businesses across a number of sectors should be modelling different recovery paths, including a new era when people do things very differently.

“I remember media companies were optimistic about real estate and classified advertising revenue coming back after it dropped off during the GFC,” Nijssen-Smith says. “But it never came back to the same extent. In the interim people had found different ways of getting that information online and they permanently changed their behaviours.”

Keeping customers engaged

One of the best things organisations across the sectors can do at the moment is keep people engaged with their brands, and build brand loyalty. If retailers have better customer engagement through online transactions than their competitors, they may be able to build loyalty through this period. New, innovative and alternative digital offerings to keep customers engaged with the brand is another exercise that can help smooth the recovery, Nijssen-Smith says.

Ultimately, if people are cautious about being out and about, or spending during straitened economic times, then you want your brand to be the one they visit first, or recall having the best experience with during the lockdown period.

“At the moment everyone seems tentative to return to their old habits, but maybe they won't be soon,” she says. “The most interesting thing will be to see how people feel in three weeks time, because then we can tell if they’re becoming more comfortable as they are allowed to do more.”

Nijssen-Smith says she’s a perfect example. “I’m a fairly risk tolerant person but as it stands, I may be one of the last to go back to working in the office, just because at the moment I don’t feel comfortable getting back on public transport for my three hour return commute each day.”