The economic crisis generated by the COVID-19 pandemic has undoubtedly left countless unemployed people around the world, leading to a decline in the purchasing power of the population and directly impacting the pocket and consumption habits of various families, mainly in the months of confinement. According to the International Labor Organization (ILO), Latin America and the Caribbean, they set an all-time record of 41 million unemployed people as a result of the pandemic. In other words, the Latin American region reports an unemployment rate of 13% compared to 8.1% in 2019, which is quite alarming and worrying. While this would seem to indicate a drop in purchasing power, statistics show that consumers are still spending and Randall Castillo Ortega, an entrepreneur and the founder of RACO Investment in Costa Rica and Panama, discusses consumer trends in a post-COVID-19 environment.
Despite a drop in household incomes, this did not limit purchases by boosting various items, due to the perceived sense of shortages. Therefore, during the highest peaks of the pandemic, people’s consumption habits had already changed dramatically from the commodity procurement phase to the panic and supply procurement phase; giving higher priority to cleaning products and food to prepare at home. It was at this time that various families went to supermarkets and pharmacies to wean the shelves and gondolas of products to disinfect, wash, personal hygiene, and any other pharmaceutical products that they said they needed to fight this virus.
However, household purchasing power has definitely dropped as many people lost their jobs or lowered their incomes, which led to only being able to make essential purchases. Explains Castillo, “This had a direct impact on supply chains and consequently on the acquisition of products such as softeners, liquids to clean glass and furniture of wood and microfibers. While demand for soap powder or bar, mops, garbage bags, chlorine, as well as toilet paper and feminine hygiene products increased. Chlorine is one of the products that increased its price the most, between 3-7% from the third week of March.”
These factors have made brands, during one of humanity’s largest pandemics, restructure, coupling and improve their business strategies and techniques to continue to persuade and constantly influence the buying habits of various consumers due to two circumstances: the first related to the new purchasing and consumption patterns that have changed forever and the second because new brands are continually emerging with products and services that look more between yes and at more affordable prices.
Therefore, no matter when and how COVID-19, the biggest challenge of post-coronavirus businesses, especially for small businesses and start-ups, will be to structure and implement a strategy that adapts to new customer demands with products and services that connect with this new reality, as the social norms governing our consumer behaviors have completely changed, and this uncertainty opens up new rules of the game for brands.
Given this, in recent months, it has been observed that, since the pandemic spread rapidly, new trends have emerged in people’s way of consuming, which have been driven more quickly as cases of contagion have increased. Some of these new trends are not as new as home service, e-commerce and the use of digital social channels such as social networks to know and maintain communication with current and potential customers.
In addition, there has been a significant increase in the use of e-banking, e-learning, internet services and the implementation of artificial intelligence in different business sectors such as logistics, supermarkets, industrial security, hotel, hospital and financial services to optimize their internal processes and improve the shopping experience.
There’s still the possibility that the commercial movement is going to be slow, since consumers will continue to prioritize staying or consuming at home, and it is certain that more activity will be seen, but it is still a long way from returning to the level of movement before the pandemic. In addition, trademarks should consider and be aware that consumer behavior will depend on many factors, such as age, unemployment, remittance income, availability of public transport, etc. So, if unemployment has risen, families won’t be so willing to go out again, which will make them stay home longer, continuing their routines adopted during the health crisis.
It is a fact that eCommerce is gaining more ground in the food industry as the new normal becomes a more tangible reality. Says Castillo, “Manufacturers and distributors are currently delivering home orders directly to households, as it is an easier way to bring their products closer to consumers although it does not mean that the distribution of their products at points of sale is being set aside, they are simply shortening their supply chain, this being a more direct channel to reach the end consumer.”
The biggest challenge of retail businesses will be implementing a strategy in the current business scenario, starting with adapting the design of their premises focusing on social distancing. This will affect your profitability and mean that locals will have fewer buyers within your facility, further splitting your income.
Although definitely, despite this “new normal” and the rethinking of various trading strategies, economic impact remains a decisive factor in people’s consumption behavior. 81% of Americans are spending less after the COVID-19 crisis. Even in China, which is coming out of the pandemic, a third mention that they plan to spend less on restaurants and home services. “Faced with this landscape that has been an experience of inconvenience and success for industries, it is possible to project short- and long-term demand trends, for different products, services, sectors and markets as everything will continue to change progressively and our tastes and preferences will continue to adapt,” concludes Castillo.