COVID-19 is changing consumer behavior worldwide; business needs to adapt rapidly
COVID-19 is changing consumer behavior worldwide
COVID-19 is having a lasting, worldwide impact on consumer needs, preferences and behaviors, according to a new report from KPMG International, “Responding to consumer trends in the new reality.” The report tracks the opinions of 75,000 consumers in 12 markets to examine the changes and how businesses need to think and act differently in response to these trends.
“COVID-19 has affected every consumer somewhat differently, but there are some important themes,” said Gary Reader, Global Head of Clients and Markets, KPMG International Limited. “Consumers are staying and working from home more, prioritizing savings over spending and doing business digitally even more than before. For business, it is more important than ever to understand what is driving their customer and then look at their strategy and business model to determine how they need to adapt to keep pace with shifting customer demands.”
The survey tracks consumer trends between May and September 2020 across five industry sectors: consumer & retail (grocery and non-grocery), banking, insurance, entertainment & leisure and travel & tourism. Overall, the survey finds that consumers tend to trust brands less than they did pre-COVID 19. Insurance was the only sector to see a consistent net gain in trust in the May to September period; while travel & tourism and entertainment & leisure suffered the greatest erosion of brand trust. All sectors generally saw a modest increase in brand trust in September, with the exception of banking, which held even.
As Aura Giurcăneanu, Audit Partner and Head of Consumer Markets and Retail at KPMG in Romania comments: “Since May 2020, our research has seen four key trends that have impacted consumers and have ultimately changed their purchasing patterns and consumption. Consumers expect these changes to last longer than 12 months. The trends across the globe are economic impact, erosion of trust, rise of digital and home is the new hub. These themes highlight the pressures consumers are under, their feelings towards brands, and their changing behaviors in the new reality.
Retailers will need to better understand the needs of the customer groups — via segmentation driven by AI and psychometrics. Personalization not only of communications, but also of developed products, will be key to meeting the needs of the new consumer. Besides, consumers are gravitating toward brands that are empathetic and supportive of their values. Consumer Commerce is the future. Bricks and mortar will remain an important channel although we know channel agnostic and customer centric is key and the competition will be much broader than today’s retail.”
Nearly half, 45 percent, of respondents do not feel a strong financial impact, which could mean opportunities for businesses that are able to meet the new consumer’s expectations. All consumers predict they will spend less in the next 6-12 months and all are prioritizing savings. Perhaps not surprisingly, ‘value for money’ is ranked as the key purchase driver.
“Trust in brands is eroding and business leaders must meet the safety needs of customers and employees first, while also sharing their commitment to environmental and social policies as part of their redesigned purpose. The path to success goes through the rapid adoption of digital, a must to reduce costs to serve and meet customer demand for e-commerce, whilst managing cyber risk, and simplifying their product offering ensure brand differentiation,” explains Robert Maxim, Advisory Partner, KPMG in Romania.
Key trends include:
- Two in five (43 percent) of consumers are worried about their financial security in 2021
- More than one-third (36 percent), are prioritizing savings over spending
- 37 percent are working from home more, and 60 percent plan to do so more in the future
- One in five (20 percent) want to stay at home as much as possible
- Confidence in public transportation has declined 37 percent compared to before COVID-19
- Net spend is expected to be 21 percent less over the next 6-12 months, versus pre-COVID-19
- Close to half (45 percent) predict digital channels will be their main connection to brands
- “Value for money” is ranked by 63 percent as the top purchase criteria
Alexandru Comănescu, Tax Director, KPMG in Romania, explains: „We already experienced an accelerated growth in the number of transactions from our clients with significant operations online (with more than 100,000 transactions per month, compared to only 40,000 before the pandemic). Even for acquisitions that would traditionally require an actual presence (fashion), those companies that provided an experience similar to the real deal reaped the benefits. Moreover, management of logistics in the current context was one of the most important factors for success. From the tax standpoint, the legal framework offers a series of incentives to taxpayers (i.e., for research & development, reinvested profits) to stimulate the development of new distribution channels.”
“Consumer brand relationships are likely to permanently change as a result of COVID-19 and businesses need to reexamine how they build trust with their customers in this new reality. The brands that can demonstrate and articulate their value and adapt to rapidly changing customer demands as they spend more time at home and rely more on digital, are the ones that will be most successful,” said René Vader, Global Sector Head, Consumer & Retail, KPMG International Limited.
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