Throwback 2020: How COVID-19 shaped consumer behaviour, redefined businesses

The past few months have been a reality check, forcing us as individuals to introspect and acknowledge every little thing that we might have taken for granted. Calling it a year of change barely does justice to a year that has transformed the world in more ways than we could have ever imagined.

The traffic-laden roads suddenly fell completely silent. The bustling malls patiently waited to hear the footsteps of a single shopper. Schools were no longer filled with the excitement of students running down the hallways and offices stood empty and lifeless.

Overnight our world transformed and while we're slowly but surely on the path to recovery, we might never go back to the way things were. There is a silver lining shining through these dark clouds. We are looking at a 'new normal', one that will carry forward some of the positive behavioural changes from these unprecedented times to hopefully create a progressive, kinder and healthier world order.

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For instance, digital has become the new mantra for connectivity. The past few years have witnessed a strong digital revolution with the rising penetration of smartphones and internet connectivity across the country. However, there was still some reservation with regards to e-commerce and digital payments among the more wary older generation as well as those residing in tier 2 and 3 cities.

The pandemic, though, changed the entire landscape. With everyone, especially senior citizens, forced to stay at home for safety reasons, digital solutions served as the only platform to stay connected with the world outside and ensure a continuous supply of essentials such as groceries and medical supplies. The number of first-time e-commerce users, as well as those registering for e-payment solutions, increased manifold in a span of a few weeks. Digital payments across wallets and internet banking increased by 20%, while online sales doubled from around 2% to 4-5% of total grocery sales.

A lot of previously cautious users found comfort, safety and convenience in ordering essentials online and are likely to continue with the practice even after the pandemic ends. Online grocer, BigBasket has seen 84% increase in its customer base, with retention rates growing to 50%.

The online grocer's subscription-based service Bbdaily that delivers milk and fresh items, has seen a growth of 139%. Similarly, brands such as Milkbasket are expected to continue to grow with a more permanent shift in consumer behaviour. Online meat delivery market has managed to post 2.5-3X gross merchandise value (GMV) with brands such as Licious, Zappfresh, FreshToHome, leading this trend.

Licious has seen significant traction, and is now hoping to reach Rs 1000cr+ by the end of the first quarter of next year. FreshToHome has hit 1.5 million B2C orders per month. Large offline stores such as Spencers, Modern Bazaar have all strengthened their online delivery services and 2021 will witness further strengthening of logistics and supply chain services to strengthen their online operations. The government has been trying to push its digital agenda for years, and the pandemic has definitely quickened the pace of building acceptance and trust.

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The online wave opened up doors for smaller and local players with innovative products and solutions. Consumers were spending more time online, allowing them to discover new and upcoming brands with unique offerings. 72% urban Indians have been economically impacted by COVID-19 and 52% consumers stated that they were financially worse off than they have been in the last year, as per Kantar's latest report.

Thus, even with lower discretionary spends on travel and entertainment, consumers are still struggling with overall expenses and budgets. They continue to seek value when choosing between brands. While the monetary value does play an important role, consumers now, more than ever, seek brands that are authentic, responsible and embody values such as transparency and honesty.

They are making more considered decisions that lead to meaningful purchases. Local brands that empower communities, protect the environment or fulfil a meaningful purpose, have witnessed steady growth even during these uncertain times and are expected to experience accelerated growth, as consumers seek both rational and emotional value from the brands that they endorse.

Smaller local brands with the agility to quickly revamp their operations and business models to align with the changing times were able to offer customised offerings and build significant online presence within a short span of time. These digital-first brands focussed on creating a seamless online brand experience.

A recent report by Unicommerce indicated that over the past year there has been a 65% increase in brands developing their own websites in India, which led to an increase in self-shipped orders. At the same time, brand websites have witnessed 88% order volume growth compared to 32% for e-commerce marketplaces. With retail stores slowly opening up across the country, one can expect an interesting mix of online and offline brand experiences.

And while online is here to stay, consumers will revert to offline experiences for certain high-value purchases, especially in high involvement fashion categories. In order to stay relevant, brands will be expected to create a seamless and integrated omnichannel experience while harnessing the power of latest technology such as virtual reality, Artificial Intelligence (AI) and Internet of Things (IoT).

Certain key product categories witnessed strong demand over the last few months. While health and fitness have emerged as popular trends in the past few years, the pandemic has led to an almost overnight surge in demand for immunity boosters. From grandmom's homemade secret 'kadha' recipes to childhood favourites such as Chyawanprash, a number of traditional immunity boosters made a strong comeback on kitchen counters. Dabur has seen a sevenfold growth in demand for Chyawanprash.

The company launched Tulsi tonic in April, ahead of its planned June launch, apart from herbal churans such as Amla Churna and Ashwagandha Churna. Not just millennials and Gen Z, who are typically associated with the health and fitness trends, but even the older generation will continue to be extremely conscientious about their health and wellness.

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It is no longer a problem-solving approach towards health, but one that's focussed on building sufficient preventive measures, by following a more balanced and healthier lifestyle. Besides, vitamins and immunity-boosters, fresh organic produce are finding themselves on the grocery lists of many households. 

Online yoga and fitness classes have become extremely popular, offering the convenience of staying fit from the comfort of one's own home. The pandemic witnessed the mushrooming of many online sports classes for children. While children will return back to the football field once things start settling down, some of the virtual meditation and fitness classes that allow one to join in from any part of the world might continue to enjoy patronage in the post-Covid era.

Cult Fit has launched an online subscription service under a new brand name called cult.live and this trend, along with trends such as recreational cycling, is only expected to grow further in 2021. Online health and e-pharma applications have also become extremely popular as they offer a safer and convenient option to keep track of one's health. Again, these apps will continue to play an integral role even after the pandemic as consumers get used to receiving accurate and timely health updates in a safe and convenient manner.

Work from home and home-schooling have also created an almost instant demand for more screens - tablets, PCs and laptops, as well as accessories such as wireless headsets and keypads. Besides, laptop tables, comfortable office chairs as well as other work from home-related furniture also saw a rise in demand as consumers started getting used to a new lifestyle centred around their homes.

Ed-tech platforms such as Byjus and are experiencing high engagement as well, with educational and activity-based programmes being consumed at a higher frequency by children confined within the four walls. OTT platforms are witnessing highest-ever viewership and engagement. In-home dining has also led to a sharp increase in demand for the services of delivery aggregators such as Swiggy and Zomato, as well as some niche brands such as Homeslice that offer ingredients to create a DIY cooking experience at home.

While home-schooling might not be a lasting trend and people have started going back to restaurants and cafes while maintaining social distancing, working from home a few days a week even post the pandemic might be a desired trend improving efficiency at work and doing away with unnecessary commute stress. Thus, lifestyle tech-accessory brands such as BoAt, casual athleisure brands and virtual communication platforms such as zoom will continue to aid the trend towards working from home a few days a week.

Being locked in at home for months at end has helped us re-discover the warmth and security of our homes. While people are yearning to step out, away from the confines of their homes, they have also come to value and appreciate the time spent at home with family. Thus, home decor as a category will continue to garner interest and engagement in the next few years.  

They say the darkest days come with the biggest lessons not only for businesses but also for humanity at large. The pandemic has forced us to reflect on our choices and the lifestyle we lead. And now, as we move towards a new dawn, we have an opportunity to upgrade to a new normal, a 2.0 version that is better, healthier and more humane.

Being confined to our homes ironically opened up our lives to the possibility of a virtual world, not limited by geographical boundaries. We attended meetings and workshops across continents while children learnt new language skills or science experiments with children from all across the world.

It has given local brands the opportunity to realign their values to resonate with the new evolved consumer; grow internationally with the help of global marketplaces as well as learn from the global best practices now available via workshops and masterclasses on OTT platforms. 2020 has been a year of change but also one of choices, growth and life lessons that will find their way well into the soon approaching new year.  

(The author is Founder & Managing Partner, Fireside Ventures.)