Doing Business In A Post-COVID World
Typically consumer behavior and shopping habits are reasonably stable and slow to change. When major changes do happen they are usually driven by a major life event such as moving, having a child, or changing jobs. And since only a very small percentage of consumers have those events at once, marketers and business owners can usually discount them as trending factors that influence the behavior of their customers.
The Covid-19 pandemic changes that. It has not just affected everyone's life in the entire country, it has affected the globe. As of this writing, the end effects of COVID-19 are still in the future. But we can already see measurable and dramatic changes in consumer behavior. In March, Grocery store sales were up by 77% over the previous year, while restaurant sales were down 66%. This created unexpected shortages in the consumer supply chain with grocery stores running low on numerous items that are typically in ample supply. At the same time, the restaurant supply chain had surpluses to the point suppliers that resulted in the waste of perishable food items.
Now as businesses start to reopen I have had many conversations with clients about what a “new normal” might look like when it comes to running a small consumer-oriented business.
The Old Concerns Don’t Go Away
The core reason of why a customer chooses to do business with you won’t change. They have not changed in thousands of years and that in its simplest form is, “will this product/service provide the benefit I’m looking for?” So all the standard thoughts of product differentiation, messaging, and marketing still apply. We still need to clearly communicate the benefits of our offer.
New Concerns Are Added
In the short term, consumers will add a few new considerations into their behavior reasoning. The first is safety. Consumers want, no, need to feel safe to return to anything resembling normal behavior. The moment they feel that they may be at greater risk by doing business with you than someone else or than the benefit of the product/service provides, they will choose something else. In light of this, business owners will need to take every effort to not only follow health guidelines but to publicize this to their customers.
Another factor consumers will take account of is the safety concerns a company takes for its staff. It’s become clear that as a society we depend on others in ways we didn’t consider before. Consumers are now thinking about what stores and companies are doing to keep employees safe because this reflects on their own values. Stories of COVID spread within companies, as has happened in certain meat processing facilities, does not endear customers to that business. Showing you have policies and procedures to protect workers should be publicized.
In this time of change, many companies are being very creative in how they address both lost revenue and new consumer concerns. While there are health guidelines, the implementation is ultimately up to you the business owner. And in that, you will probably have a number of choices. It’s my take that being transparent with your customers regarding your decision-making process will prove to be a valuable tool in addressing their own concerns. This doesn’t mean that customers need to know every detail you consider but when they know that the dining room is set up in configuration A rather than configuration B for reason X they will understand that you are actually thinking about them and are not just reacting arbitrarily. It also serves to remove the cause to second guess your decisions.
The Long-Term Change In Habits
Working from home is probably one of the biggest changes that the Covid-19 pandemic brought about. Prior to the pandemic the U.S. Census data indicated that about 5% of American workers worked primarily from home. This number has steadily been going up since 2000.
It’s estimated that 44% of American workers have an option to work from home during the pandemic. For many companies, this was a forced shift they had been wanting to implement for some time. It’s worked very well for some... to the point that companies are expected to increase the amount of staff that works from home permanently. This saves companies a decent amount of fixed costs like real estate and allows them to have more for variable costs like employee compensation. Since COVID, major tech companies like Google have said their workers can work from home till 2021. Even consumer-facing companies like Discover Financial have had the majority of their staff working from home including over 8000 call center employees. They also plan on allowing this through 2021 even after they reopen their centers to employees.
The future holds that more people will spend more time at home. This will influence businesses that serve people at home. In the first months of the pandemic home improvement stores had dramatic increases in sales as people at home took on more projects. At the same time commercial building crews virtually ground to a halt as they were both forced to shut down and commercial contracts were cancelled or put on hold.
Staying home also means more eating at home. But the trends of home cooking while increasing slightly during the stay at home order are likely to continue to decline. Single-person households in the US have increased from 17% in 1969 to 28% in 2019. The benefits of cooking are dramatically different if you are cooking for one versus cooking for many. Cooking for one is inconvenient and not as cost-effective as cooking in bulk. This means that restaurants and food services that focus on the convenience of doing business with them are likely to see continuing growth in their business. This demographic shift should mean that convenience services like take-out orders are not likely to decline.
The biggest long-term adjustment businesses will need to make will be to adapt to the 90% economy. While many sectors will rebound quickly others will continue to struggle. Entertainment, Travel, and Hospitality are predicted to struggle for some time as health guidelines make it difficult to run at full capacity and consumer behavior stems the flow of sales. It will be some time before consumers feel safe flying, going into crowded spaces like sports arenas or movie theaters. This will have an effect not only on the business of those companies but those that are peripheral to them. This will resonate through the entire economy. The majority of economists predict an initial rebound followed by a slow and steady recovery. Businesses will need to be started, jobs created. In the meantime, businesses should prepare for a 90% recovery. A 10% loss in GDP doesn’t sound like much but it does predict significant consumer changes.
If you want to talk to a business and marketing expert about what business in a post-COVID-19 world would look like for you, contact me for a consultation.
