7 Consumer Behavior And Sentiment Shifts In 2020
7 Consumer Behavior And Sentiment Shifts in 2020
A crisis like COVID-19 brought the world to a stand-still a couple of months back when the outbreak first transpired. It is said that it takes a person 21 days to form a new habit or adapt to a new way of living and now after months of living with the “new normal” we are constantly discovering a shift in consumer views and preferences.
The luxury industry is going through a tumultuous uproar as consumers are switching brands at unprecedented rates. Luxury has become a paradox that is being reshaped by changing consumer behavior. Factors like societal norms, cultural practices, disruptive patterns in technology, globalized economy, and sustainable developments all play a vital role in the exponential transformation of luxury. The notions of luxury have become dependent on conveying a message, a story that resonates with a consumer. This needs to be carefully fine-tuned and curated to one’s demographic and psychographic predilection.
The luxury goods industry has seen an unprecedented shift that briskly accelerated by the pandemic. With unpredictable highs and lows in the economy and geopolitics worldwide, brands have had to reconvene and seek alternatives to stay afloat as consumers have an altered image of luxury. Until now, brands used to dictate to consumers from a position of power, but this is no longer the case. Consumers are redefining the meaning of luxury, what used to be seen as extreme luxury by previous generations, now is seen obsolete or passé . Technology, how we spend time, experiences became the new luxury; luxury doesn’t resonate to goods and objects anymore, but to an entire way of living = lifestyle.
According to McKinsey’s consumer research, there are 7 pivotal trends associated to consumer behavior and segments. This presents a unique opportunity to understand how shopper and consumer behavior shifts impact a brand.
Digital and Omnichannel Presence
As the desire for heightened human connect grows, the era of e-commerce is booming and it is clear that digital shopping is here to stay. Even as brick-and-mortar shops begin to reopen, consumers prefer shopping online and contactless services. In the U.S. they noticed that even discretionary categories such as cosmetics and jewelry are expecting a 15% growth. On the contrary, China is expected to see an increase in the share of wallet spent online instead of total consumer participation because online shopping soared before the pandemic.
Preserving Brand Loyalty
Gen Z and high-income earners are most susceptible to switching brands. Consumers are acclimating to a new shopping behavior as result of economic pressures, turbulent retail business and changing priorities. 75% of consumers in the U.S. have changed their shopping behavior, out of which 36% are trying a new product and 25% are discovering a new private-label brand. Factors such as value, availability and quality are seen to be three main drivers for consumers to experiment with a new brand.
Promising Availability and Convenience
The importance of convenience and availability are driving forces of consumers switching to an opposition brand. Availability refers to in-store and online. Retailers need to manage their logistics and ensure service availability in order to avoid consumers migrating between brands.
Valuing Essentials
As the economic turmoil continues, consumers are becoming more mindful of their spending as their finances become tighter. The intent to spend in essential categories is increasing while overall consumer spending is declining. Consumers are also seeking value for their money, especially in essential categories. While non-essential categories such as apparel and footwear are making a comeback, this only discerns the high-income earners and Gen Z.
Brand Social Responsibility Awareness
The pandemic has urged brands to act responsibly and use their voice to make a difference. Consumers are more inclined towards brands that are associated with meaningful collaborations and share similar values. Consumers are showing more compassion towards ways of implementing sustainable practices. This whole process has accelerated the understanding of the aftermath of unbridled consumerism.
Homebody Economy
As people are urged to stay home and practice social distancing, the homebody economy has given consumers a renewed sense of confidence as they resume their “normal” life. People are still reluctant of fully returning to their daily activities even as the government eases restrictions. Consumers are ready to engage in small outings, but large events and air travel remains off the grid.
Cultural Sensitivity
As consumer behavior and sentiments change, brands need to be mindful of their messaging technique. A more open-minded and holistic approach is needed to ensure a consumer’s ideologues match that of a brand. With what’s going on today, cultural sensitivity has evolved into contextual sensitivity. Fashion designers, innovation teams, brands, and companies need to move fast, stay relevant, and audit their current capabilities and ask themselves if they are prepared for a contextual sensitivity-driven society.
A big takeaway from this chaos has been change. The last couple of months has enforced a new sense of living and just as no one expected a pandemic in 2020, we have observed different human behavioral attributes as we learn to adapt these changes. Strategies have quickly shifted and priorities are quickly being reassessed. Consumer behavior and sentiment will continue evolve, now more than ever because the unprecedented pandemic has drastically shifted our likings, preference, value and mindset.
Cover Photo Courtesy: Canberra Business Chamber
