The Impact of COVID-19 on Consumer Behavior

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Table of Contents

Introduction
Consumer Behaviour
Implications for Organisations
Conclusion
References

Introduction

The coronavirus (COVID-2019) epidemic has placed a heavy burden on world economics and reflected on people’s daily lives. Due to the abrupt change of conditions and rules in all fields of human activity, the global business has appeared to be unready for the current requirements and challenges of the complicated time. In particular, the most radical changes have occurred in the behavior of consumers who begin to adapt and adjust their habits, values, and outlooks to new circumstances determined by legal restrictions. Thus, this paper aims at examining the impact of COVID-2019 on consumer behavior in various spheres of human activity, including work, communications, education, travel, shopping and consumption, entertainment, and healthcare. In addition, the paper will incorporate the necessary theories into the analysis and discuss the implications for organizations.

The coronavirus pandemic is sweeping with astonishing speed, infecting millions of people and inflicting substantial damage to almost all economic sectors primarily because of severe restrictions on movement and commercial operations, imposed by governments. The main industries the most affected by the pandemic include tourism, sports, aviation, automotive industry, mechanical engineering, the energy sector, and agriculture, among others. For example, according to the Mobility Market Outlook, in 2020, the revenue for the travel industry worldwide is estimated to be $447.4 billion, demonstrating a 34.7 percent fall compared to the previous year (Lock, 2020). The economic damage produced by the COVID-19 pandemic mainly stems from a drop in demand, implying that the available products and services are not purchased by consumers. The reduced demand is conditioned not only by strict social limitations but also due to massive unemployment as many companies, irrespective of their size, had to cut staff to compensate for lost revenue.

In this context, it is relevant for companies, especially managers, to examine the changes that begin taking place in consumer behavior. This subject generally refers to the study of individuals or groups and their actions, habits, and preferences related to the purchase, choice, use or disposal of goods and services to fulfill individual desires and needs. According to Sheth (2020), consumption alters depending on four critical contexts, namely, social life events (marriage or having children), technology, regulations, and natural disasters, including the pandemic people experience today. Indeed, the time of infection threat, economic uncertainty, and self-isolation has changed consumers’ habits, views, and preferences concerning work, shopping, entertainment, communications, home life, health, and wellbeing overall. Online delivery, digital entertainment, remote working and learning, telemedicine, and a surge in e-commerce are trends that have gained accelerating impetus during the pandemic.

Consumer Behaviour

Work

The rapid changes that happened in the employment sector during the pandemic are twofold. Firstly, because of enormous financial pressure and the real possibility of bankruptcy, many companies are forced to cut their staff. For example, in September 2020, the US unemployment rate sticks to the mark of 8.4 per cent, while in April, the rate reached its hit, 14.7 per cent (“News release,” 2020). These massive layoffs significantly alarm ordinary people; according to Accenture Covid-19 Consumer Research, 64% of respondents reported that they are worried about their job (“How COVID-19,” 2020). According to the standard economic theory, generally, people are rational, and their decisions stem from a careful assessment of the advantages and disadvantages of products and the current situation (Bascavusoglu-Moreau, 2020). Thus, both unemployment and concerns about resignation make population be inclined to excessive hoarding of essential products and improvisation related to savings and postponing the desired purchase.

Secondly, COVID-19 is shifting workspace from offices to home since many companies close their premises and encourage remote work because of the risk of contagion and restrictions. In this regard, employees’ perceptions are also changing; for example, 46 per cent of employees who did not have previous experience of remote working want to do this more often in the future (“How COVID-19,” 2020). This tendency overall has resulted in a sharp leap in demand for digital collaboration instruments usually applied in online workplaces. For instance, in three months, a daily user base of Zoom increased from 10 million people to 200 million, while Slack’s paying customers grew twice (“How COVID-19,” 2020). In general, employees believe that their employers have assumed the correct steps to take care of their health and keep them updated.

Communications and Information

The shifts in communication and information spheres are determined by several factors, primarily by in-person interaction decline, long self-isolation, and media consumption increase. On the one hand, in the conditions of the pandemic, average face-to-face communication has shrunk, which leads to considerable growth in social media usage. For instance, as of the second quarter of 2020, Facebook’s monthly active users reached above 2.7 billion, which is almost 100 million more than in the previous quarter (Clement, 2020). These tendency has magnified brand communication to the customers since companies obtain broader opportunity to convey their messages and ideas to customers.

On the other hand, mass media and the Internet have become the most widespread resources of information, which update individuals about the actual news. Research by Basch et al. (2020) calculated that as of March 5, 2020, YouTube’s 100 most viewed videos was with the word “coronavirus,” gathering over 165 million views. Besides, according to the Marketing Class-Consumer behaviour, community and family has a direct effect on consumers’ preferences and choices (Bascavusoglu-Moreau, 2020). In this light, the amplified interactions through social platforms and exchange of information about the pandemic have enlarged the demand on medicines and healthcare accessories and equipment.

Travel and Mobility

As has been indicated above, the tourism and travel sector is among the most affected industries gaining tremendous loss during the containment measures of COVID-19. According to calculations of the World Tourism Organization (UNWTO), only in 2020, the financial damage inflicted on tourism will apparently exceed $1 trillion, posing 120 million jobs at risk (Richter, 2020). In addition, regarding the aviation industry, only airlines will face an $84.3 billion loss in 2020 since passenger demand dropped by 90 per cent (“Industry Losses,” 2020). In such circumstances, the intentional system of the brain becomes the most active in the decision-making process because consumers take conscious efforts to learn useful information and select reasonable alternatives. For example, they may choose potential variants of leisure and travel within a particular state instead of an international trip, thereby stimulating domestic travel. Besides, the risk of contagion urges people to avoid high-density transit hubs and public transport and explore transport options, focusing more on price and time of destination.

Education

The entire educational establishment closures in response to COVID-19 have immensely strike traditional educational systems worldwide, causing the largest disruption of education. According to the United Nations (UN), the pandemic has concerned around 1.6 billion learners in over 190 countries, which approximately accounts for 94 per cent of the global student population (“Policy Brief,” 2020). This problem is aggravating pre-existing disparities in education sector diminishing the opportunities for the most vulnerable, including refugees, disabled, and children, youth, and adults residing in poor or rural regions. Nevertheless, it is worth noting that the crisis has opened new prospects for online learning. For instance, LinkedIn reported that, in April’s first week, users watched 1.7 million hours of education-related content, which is three times more than at the same week of January (Srinivasan, 2020). Due to the pandemic, individuals change their preferences in favour of distance learning service, using a wide range of educational tools and platforms.

Healthcare

Undoubtedly, the pandemic has notably reflected on the consumers’ habits and views related to health. The notions of health and wellbeing have received their new meaning since many people clearly realise the hazard of the infection, and, thus, worry about personal, familial and friends’ health. In particular, 64 per cent of respondents admitted that they are concerned about their health, while 82 per cent worry about the health of others (“How COVID-19,” 2020). These justified fears lead to that many consumers become more health-conscious regarding food quality, hygiene, and fitness. For example, before COVID-19, individuals washed their hands six times a day on average, while during the virus, this number has increased to 12 times, a 90% jump (“How COVID-19,” 2020). This also resulted in increased demand for personal protection equipment and sanitisers. Finally, it is worth noting the relatively new field of healthcare, namely, telemedicine, has gained a powerful impetus for large-scale development. E-pharmacy and e-doctor are now trendy instruments among consumers because of the amplified danger to contract the virus in healthcare facilities.

Entertainment

The last sphere on which the COVID-19 has left its imprint is definitely entertainment. Being stuck at home, consumers begin spending more time but less money on their entertainment, reinforcing the drift toward digital options. For example, in five months, the number of Netflix’s subscribers has increased by 16 million (Fabius et al., 2020). Besides, the number of gaming app downloads jumped more than 30 per cent over the year (Fabius et al., 2020). It is worth noting that consumer behaviour has been affected not only by political and technological stimuli but also intense buying decision process. Customers recognised the problem of ubiquitous restriction and started seeking information and alternatives to make appropriate choices, preferring streaming services as entertainment sources to traditional cinema or clubs.

Shopping

Because of the severe impact of the widespread restrictive measures, the decline in consumption will continue even after the pandemic. However, despite this, several phenomena have occurred in shopping, including accelerated e-commerce, the location of stores closer to home, and increased consumers’ trust for brands. From January 2020 to June 2020, online retail stores have experienced an unexampled world traffic growth. In particular, in June 2020, retail websites received around 22 billion visits, compared to 16 billion in January 2020 (Clement, 2020). Applying the role theory, it is worth indicating that in the pandemic reality, the consumers begin to transform from typical choosers and pleasure seekers to activists establishing standards to product quality and its cleanliness. In this regard, only brands usually manage to meet sanitary requirements by providing products in hygienic packaging and displaying care for their employees, which conditions the consumer trust for them.

Implications for Organisations

Although the pandemic has touched all human activities, it is evident that in the near future, most of the population will return to normal life in many aspects. In this regard, organisations and government should explore the changes occurred in consumers’ thinking, reactions to stimuli, habits and attitudes and make appropriate consequences to be ready for similar challenges. The following discussion will outline four primary implications that organisations should consider while planning their market strategies.

The first implication is associated with the deficit of confidence that begins taking place in every people life, irrespective of social and educational status. In the time of uncertainty, consumers are deferring their purchases in many categories, activating their intentional system of the brain to make mindful decisions based on the learned information. The central factor which promotes such behaviour and situation overall is unceasing noise revolved around COVID-19 and fuelled by misinformation about the virus. Thus, to address this issue, companies should focus on building reasonable confidence and reassurance by providing cleanliness, ethical sourcing, and timeliness. In particular, an organisation should elaborate plan based on customer experience audit findings, adjust marketing strategy and sales channels based on new assumptions. In addition, any brand should identify new opportunities by exploring ways of expanding goods and services.

The second implication is related to the virtual experiences that concerned both employers and employees. The increased use and investment in virtual reality will proceed after the pandemic since digital tools impacted ways of communicating, learning, consuming, and working. Therefore, it is crucial for companies to remove obstacles to enhance buying decision making because consumers begin to focus more on searching for information and evaluating alternatives. Besides, organisations should promote online connections by creating virtual communities and spaces or platforms to deliver real experiences of coexistence and collaboration.

The third implication that brands should consider is certainly the health of their employees. Most people concluded that the healthcare system has changed, requiring more personal and government spending on health. Since, according to standard economic theory, people are rational, cleanliness is becoming a prerogative for the majority of the population and the attribute of not only hotel and hospitals but all places and facilities. In this context, every business should take actions to be more involved in healthcare. For example, hotels can offer healthier food, sleep and health-related tips based on WHO’s advice, or cleanliness reports.

The last implication is linked to home that due to the virus, has turned into the safest space. Comfort and safety-related product, especially technology, will become the mainstream of business progress. In addition, the demand for autonomous technology such as drones and robots will probably rise as well. In this vein, the business can design reliable delivery and marketing channels connected to homes through e-commerce and calling. Moreover, companies can incentivise delivery drivers and call centre staff to interact with consumers more profoundly.

Conclusion

In summary, the paper has examined the impact of COVID-2019 on consumer behaviour in various spheres of human activity, including work, communications, education, travel, shopping and consumption, life at home, entertainment, and healthcare. For instance, both unemployment and resignation-associated concerns make consumers more inclined to excessive hoarding of essential products and improvisation related to savings and postponing the desired purchase. The changes have resulted in a sharp leap in demand for digital collaboration instruments usually applied in online workplaces, including Zoom and Slack. In addition, the paper has discussed four implications for organisations connected to the deficit of confidence, the virtual experiences, employees’ health, and home. Finally, the paper has applied standard economic theory, the role theory, Elephant and the Rider theory (intentional system of the brain), buying decision making, the Marketing Class to explain the pandemic impact on consumer behaviour.

References

Bascavusoglu-Moreau, E. (2020). Introduction to Behavioural Economics [PDF document]. Abu Dhabi Sorbonne University.

Basch, C. H., Hillyer, G. C., Meleo-Erwin, Z. C., Jaime, C., Mohlman, J., & Basch, C. E. (2020). Preventive behaviours conveyed on YouTube to mitigate transmission of COVID-19: Cross-sectional study. JMIR Public Health and Surveillance, 6(2), e18807.

Clement, J. (2020). COVID-19 impact on global retail e-commerce site traffic 2019-2020. Statista. Web.

Clement, J. (2020). Facebook: Number of monthly active users worldwide 2008-2020. Statista. Web.

Fabius, V., Kohli, S., Veranen, S.M., & Timelin, B. (2020). Meet the next-normal consumer. McKinsey&Company. Web.

How COVID-19 will permanently change consumer behaviour (2020). Accenture. Web.

Industry Losses to Top $84 Billion in 2020 (2020). The International Air Transport Association (IATA). Web.

Lock, J. (2020). Global change in travel and tourism revenue due to COVID-19 2019-2020. Statista. Web.

News release (2020). US Bureau of Labor Statistics. Web.

Richter, F. (2020). COVID-19 could set the global tourism industry back 20 years. The World Economic Forum. Web.

Sheth, J. (2020). Impact of Covid-19 on consumer behaviour: Will the old habits return or die? Journal of Business Research, 117, 280-283. Web.

Srinivasan, H. (2020). Turning to learning to adapt to our new realities. LinkedIn. Web.

The United Nations (2020). Policy Brief: Education during COVID-19 and beyond. Web.

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