How Consumer Behavior Will Change After the Pandemic
Three predictions about what will change and, more importantly, what won't.
Posted May 18, 2020 | Reviewed by Lybi Ma
"It seems we are massively entering a quarantine of consumption where we will learn how to be happy just with a simple dress, rediscovering old favourites we own, reading a forgotten book and cooking up a storm to make life beautiful." – Trend Forecaster Li Edelkoort.
During every disruptive event, experts start prognosticating about how everything we know will change forever. Feel-good predictions about immense, irrevocable change are fun to make and even more entertaining to read. After the Great Recession, many experts predicted that luxury brands would die, and conspicuous consumption would become taboo.
Here we are in the middle of the COVID-19 pandemic with infection and death numbers that continue to increase every day. It feels like there's no end in sight. This is a risky but opportune time to make post-pandemic predictions. We desperately want to know what will happen to us. This post is about predictions about consumer behavior after the pandemic.
Predictions for the rest of 2020
We are already getting indications about what buying behavior will look like for the rest of this year as COVID-19 outbreaks keep recurring in between periods of lockdowns. Far fewer people will travel for leisure or work. Consumers will buy a lot less in the aggregate, and shift their buying to online channels. Many older Americans will adopt online shopping for the first time. Other buying changes for 2020 compared to 2019: fewer restaurant meals, more grocery shopping, fewer spa treatments and massages, more video games, fewer movies in theaters, more streaming video, and no live in-person concerts. Americans will cut corners and become frugal, many from necessity, and some from personal choice. Paradoxically, the savings rate will increase, as the recession takes hold and unemployment increases.
Predictions for 2021 and beyond
In the long run, one of two things will happen. A vaccine will be available and be widely administered to Americans (much like a flu vaccine) or before that, collectively, we will achieve herd immunity to then-current strains of COVID-19. Here are three predictions for consumer behavior in the post-COVID-19 era:
1) Virtually all buying behaviors will revert to their pre-pandemic patterns for most people.
No other event in my living memory has changed so many consumer behaviors so abruptly and drastically as the COVID-19 pandemic has. Sales of items like hand sanitizers, hair dye, and Netflix have gone through the roof, while others like cars, business travel, movie tickets, and athletic shoes have plunged. These changes are partly the result of social psychological phenomena like social distancing, self-quarantining, and panic buying, coupled with new norms of cleaning and hygiene. They are also fueled by safety concerns, disappearing paychecks, accumulating bills, and uncertainty about what's in store.
We obviously won't buy hand sanitizers and bleach at the same blistering rate in the post-COVID-19 era. Nor will we remember every moment of boredom, frustration, and fear during the weeks of self-isolation. But will we embrace frugality and shop less as Li Edelkoort predicts in the epigraph when jobs and the certainty of our future paychecks returns? Prognostications about perpetual frugality are common after every economically disruptive event. After the Great Recession, for example, many experts predicted that American consumers would widely buy store brands, save more money, and embrace frugal, minimalist lifestyles.
Such predictions are usually wrong. After the pandemic, I predict that most of us will revert to the status quo as quickly as we can manage. American shoppers will buy far more things than they need, spend a greater percentage of their paychecks on things they consider to be necessities than they should, and fail to save enough money for their futures. Entrenched habits are hard to break; once the economic and social conditions in which they thrive return, the habits will as well.
2) For a small number, the pandemic will be life-changing. Their buyer behaviors will change permanently as they adopt new worldviews and lifestyles.
After 9-11, many teenagers who would not ordinarily have enlisted, joined the Army, changing the course of their lives. For everyone else, as the terrorism fears and the economic tension subsided, life returned to normal. After the great recession of 2008, spurred by hefty student loans and shaky job prospects, the FIRE (Financial Independence Retire Early) movement took off among thousands of American millennials. Many FIRE adherents lived on shoestring budgets, saved 50 percent or more of their incomes for years, and made plans to retire in their early middle age. Most millennials, however, followed the well-worn marriage-homeownership-parenthood path of their Gen-X and Baby Boomer forebears. For them, the 2008 recession did not leave a lasting mark.
The same sort of thing will happen in 2021 and beyond. Variants of existing subcultures like FIRE, voluntary simplicity, and minimalism, which are grounded in frugality and saving money, will become popular, with new twists. This time around, reducing consumption to save the environment will be a more prominent motivation because we've seen how nature recovers when humans recede. Many consumers will flock to these lifestyles and try them out, especially if there is a prolonged recession. Far fewer people will adhere and be converted long-term. Those who are the most affected, tangibly or psychologically, by the pandemic will be more likely to adopt new lifestyles and worldviews. The COVID-19 pandemic will change their buyer behavior forever.
3) The pandemic will be a catalyst for entirely new ways of buying and consuming.
Discontinuous change happens in unexpected ways and is a function of many converging social, technological, and political factors. Disruptive events catalyze change, accelerating it and pushing it in a certain direction. 9-11 stirred a common need to connect directly with others, even strangers, and spurred on the popularity of social networking sites like Friendster, Myspace, and ultimately Facebook. It changed our norms about friendship, disclosure, privacy, and commerce. The Great Recession led many to question ownership and possession. It led to the mass acceptance of shared, or so-called collaborative consumption. The result was the dominance of ride-share companies like Uber and Lyft, and lodging-share companies like Airbnb, among others. These changes made the world a smaller place.
This time around, the change will be in the reverse direction, from the global to the local. The COVID-19 pandemic has increased the salience of self-sufficiency, vigilance, and individual social responsibility. These psychological processes will be the catalyst for the next round of discontinuous change. Other trends, such as increasingly visible climate change, the broad adoption of artificial intelligence, and population growth, all have the potential to contribute to emergent change. Consumer behaviors that support local enterprises, whether it is local farms, mom-and-pop restaurants, or neighborhood manufacturers, will become popular and even mainstream. Large corporations that make high-tech products, cutting-edge drugs, or provide standardized services will be tolerated, but they won't gain consumers' trust or loyalty easily. Foreign goods and brands will be treated with suspicion and be seen as second choices in many categories. Until the next disruption materializes, the Post-COVID-19 world will be a larger and more insular place.