COVID-19 Consumerism and Your World

COVID-19 has made the most significant change to the way the world lives, works and plays.

Nothing since the second world war has led to as many global business shutdowns, rationing schemes, self-isolations and pan-national lockdowns.

Online working from home has put cloud-based systems and streaming services under unprecedented strain.

CEOs are having to consider major restructuring.  (Expect a boom in recruitment agencies offering replacing freelance and retail staff once the outbreak is over).

Personal relationships will doubtless be put to the test as isolation from the outbreak takes its toll on couples, friends and families confined to sharing home-spaces 24/7 for weeks, and perhaps even months.

A whole new world

Coronavirus is a Black Swan event.  It unexpectedly and dramatically changes consumer relationships with brands, as well as themselves.

Whilst the changes have been sudden, businesses have inadvertently been preparing themselves for some time.  Over the last few years, increasingly online purchases have over-taken offline buying.  Traditional high-street stores are becoming more like experiential venues and showrooms to examine goods before buying online.

In the B2B, video conference is commonplace. Remote working is the norm. As far back as 2017, the number of UK workers who moved into remote working increased by nearly a quarter of a million over a decade according to the Office of National Statistics.

In terms of COVID-19, most countries have implemented either enforced or recommended avoidance of large gatherings.  That includes everything from sporting events, attending gyms, religious services, and even the cinema.   Even more stringent restrictions may arrive.

But communities are resilient.  By the first full weekend of the lockdown in London, faiths like Judaism, Hinduism, Islam and Christianity were reaching out to congregants via streaming live videos.

The totally global reach of the COVID-19 is so widespread that it’s possible that once people eventually do return to ‘normal’ everyday living, when compared to former definitions of what is ‘normal’ the new norm may seem completely abnormal.

 1. Official communications: at best confused, at worst contradictory

Consumers have always been cynical.  Anxious to lose a sense of personal control, some are now are suspicious of authorities and what they are told via press conferences.

The key is transparency.  Without it, people start to doubt what they are being told, or think that facts are being withheld, then governments and authorities find themselves in deep trouble very quickly.

A UK survey published by Opinium for the Observer Newspaper on March 14 revealed fewer than two in five (36%) trusted what the prime minister, Boris Johnson, said about COVID-19.

Just 37% trusted the information given by the health secretary, Matt Hancock.  And despite repeated advice, only 53% washed their hands more.

59% placed their faith in the chief medical adviser to the UK government, Chris Whitty.

55% said they would trust the director general of the World Health Organization, Dr Tedros Adhanom Ghebreyesus.

2. Every consumer sector effected

Coronavirus could impact just about every consumer market.

Take the luxury sector:  According to a survey conducted among 28 C-suite luxury executives by Italian luxury brand consortium Altagamma, in association with Boston Consulting Group (BCG), the effects of the virus are will extend beyond the first half of 2020 into 2021.

Executives surveyed expect global luxury market sales to decrease between €30 to €40 billion ($33 to $44 billion). That would push the sales of global personal luxury back to levels not seen since 2015.

3. COVID-19 may economically decouple two of the world’s biggest superpowers

The US/China relationship, already under enormous pressure in recent years, is on the verge of imploding as both sides seek to apportion blame for the virus’ origin.  They exchange tit-for-tat recriminations on other fronts, including expelling journalists.

Many of the UK’s goods are already produced in China. According to the House of Commons Library, in 2018: UK exports to China were worth £22.6 billion; imports from China were £44.7 billion.

Historically, China’s trade with the UK trade increased rapidly since the turn of the century.  In 1999 China was the UK’s 26th largest export market and 15th largest source of imports.

Despite reports claiming China initially covered up the virus, four months into the global outbreak, the Chinese government sought to establish itself as a global hero saving many both in and outside China.

Lee Seong-hyon, the director of the Center for Chinese Studies at the Sejong Institute in Seoul said: “China’s coming out strong with its PR, sensing that this global epidemic is also a great opportunity to burnish China’s soft power credentials with Europe.”

“China is grasping any opportunity to move forward and show they’re doing the right thing when other countries are distracted,” said Jean-Pierre Cabestan, a professor of government and international studies at Hong Kong Baptist University.

Keynesianism

In the 1930s and 1940s the US government was strongly influenced by Keynesian economics (also called Keynesianism).

Keynes said capitalism is a worthy economic system in which people earn money from work.  Demand for goods controls employment and production – and so consumerism. Businesses employ and pay people to work. Then people spend on things they want.

However, sometimes people lose jobs. Businesses close. The people stop consuming, at which point, the government steps in.

Keynes explained that when an economy is poor, people save. They invest and spend less.

The government has the option to borrow money and provide jobs Then people can start spending again. This helps other people find work.

However, many don’t agree with Keynes’ ideas. They say that when the government borrows money, it takes money away from businesses.

In the recession of 2007/08, leaders around the world (including Barack Obama) created stimulus packages which allowed the US government to spend money to create jobs.

Conservatives and Libertarians argued that the stimulus package rewarded the bad behaviour that lead to the recession. Banks could misbehave knowing government would bail them out of trouble.

In the decade leading up to world war two, swayed by Keynesian economics, in America, consumerism was rebranded as a patriotic duty to fuel recovery from the Great Depression.

The New Deal economist, Robert Nather wrote: “Only if we have large demands can we expect large production.  Ever increasing consumption on the part of our people is one of the prime requisites for prosperity.”

By the second month of the coronavirus striking the UK, the government announced it would cover 80% of workforce wages, up to £2,500 a month.

4. From boundless consumerism to nesting and social distancing

Under President Trump, many Americans believe consumerism is a civic responsibility.  Since the coronavirus started to spread, increasingly there has been a global consumer onslaught at supermarkets and grocery stores for pasta, toilet paper and basic produce like bread and milk.

Shelves have been laid bare.

Governments have either imposed restrictions on the amount of produce bought, or allocated times for the vulnerable and front-line workers to shop exclusively.

Sophocles: “Many things are wonderful and terrible, but none more so than humans.”

On the flip side, there has been a rise in donations and other acts of kindness.  However, some viewing the world through the narrow window of a smart phone or home laptop interpret acts of kindness – such as collecting shopping on behalf of elderly neighbours – as ploys to commit fraud or other online or offline line crimes.

In turn such suspicion drives more conspiracies.

Over the ensuing months, consumers around the world will experience increasingly tougher social-distancing regimes disrupting daily lives.  Consumers accustomed and conditioned to go out and buy, buy, buy will have to isolate themselves in a cocoon spun with the threads of  knowledge that additional discretional funds are shrinking.

 5. Loss of trust

Since the outbreak took hold, social media half-truths have exploded.  So too have experts giving opinions on everything from medical advice and working from home, to conspiracy theories.

Unfounded rumours include:

CORONAVIRUS IS A BIOLOGICAL WEAPON RELEASED BY THE US.

THE VIRUS WAS DELIBERATELY RELEASED TO KILL PENSIONSERS.

THE ZODIAC SIGNS ARE NOT IN HARMONY.

THE VIRUS IS A SIGN OF THE SECOND COMING.

TRADITIONAL CHINESE MEDICINE CAN STOP THE SPREAD.

PETS ARE RESPONSIBLE FOR SPREADING THE DISEASE.

ALCOHOL WARDS OFF CORONAVIRUS.

COVID-19 CAN BE CURED BY DRINKING BLEACH OR SNORTING COCAINE.

Virulent spreading of tittle-tattle is leading some to extend distrust to those around them. This in turn, could pull back willingness to spend with formerly trusted brands.

As social distancing deepens, dependence on the web for communal connection increases.  More rumours are posted.  Many become blasé to the wallpaper of noise.

Equally purely by the sheer volume of posts, more anecdotes are likely to get through people’s in-built fake-news filter and evolve from being conjecture, to enjoying credibility.

 6. Three steps to coronavirus brand emails

The shift to near-exclusive online shopping comes with caveats.  Firstly, there is brand email fatigue as the consumers are inundated by any brand they ever bought, cramming email.  (The same applies in the realms of B2B).

Brands are adopting a three-step approach towards coronavirus campaign emails:

First, the service message.

This is an information piece.  It details changes in policies, services, restrictions, precautions, directions to apps, details of store closures…

Next is ‘your brand-friend’.

This is where brands use emails to say, “thanks for being there in the past, right now, take care of yourself; we are all in this thing together: Tomorrow, we will look back at this, smile and remain your trusted friend.”

The final step is ‘hey you!”

This is a cold emailing to anyone on a list.  The message is: “you bought something or rather from us at some point or other, so why not buy something from us again?”

(The ‘step-too-far’).

In the shadow of consumer giants

When big brand retailers like Apple and Nike closed shops, malls lost footfall – affecting neighbouring retailers.  Necessary restrictions to help save lives mean those same malls are now self-contained ghost-towns.

Many supermarkets and groceries have stopped accepting home delivery orders.  Supply chains are so squeezed that estimated delivery dates – even via Amazon or Apple – have gone from 24 hours, to several weeks.  In response, Amazon has launched an intensive recruitment drive.

Fearing ‘fear’ itself

In brand psychology, there is a school of thought that posits one of the many reasons consumers buy is to distract themselves from a fear of emptiness, replacing loss, as well as unfulfillment – which some even interpret as a fear of death (Freud referred to the Greek God – Thanatos).

In the first century B.C. the Roman poet and philosopher, Lucretius worried that our fear of death leads to irrational beliefs and actions that severely damage society.

Beyond consumerism, the coronavirus has had worrying societal repercussions.

For example, it was widely reported that rural migrant workers in China were blocked from quarantined cities.

Many poorer workers around the world simply do not have the luxury to work from home –certainly not the means to spend, spend, spend online.

Some have started looking at foreign neighbours, including schoolchildren with suspicion; debating whether, even after the outbreak has finally faded, they will ever visit a Chinese restaurant again.

Coronavirus has altered consumer perceptions and behaviours forever.

It will be up to everyone to ensure that those changes are for the best – not just in terms of business, but in terms of culture, society – your world.