By Wassim Jammal, business director of Publicis Commerce MENA
COVID-19 is everywhere. The pandemic has affected the lives of hundreds of thousands of people around the globe, but it has also caused major disruption across all business sectors.
The countries that are affected the most by COVID-19 represent over 40 per cent of the global economy. According to McKinsey & Co, the potential impact of the COVID-19 pandemic on GDP is an estimated fall from 2.5 per cent to 2 per cent globally, and from 2.09 per cent to 1.15 per cent in MENA, based on a quick recovery scenario.
Regardless of scenario, together as a global community we will face a significant economic disruption. While the virus itself can feel unpredictable, we as a marketing community can project consumer behavior, and with the right steps, mitigate some of the negative effects of the virus on our business.
Within this article, we share some of our predictions for the commerce marketplace based on shifting consumer demand and the transformation of shopper habits.
Growth in digital commerce and online grocery demand
Today, e-commerce platforms are witnessing increased traffic on their websites and apps. Some are observing more than 100 per cent growth in comparison with previous months. People are avoiding many trips to the shops and are therefore stocking up on their groceries online. The average basket size grew across all e-retailers between 20 per cent and 80 per cent.
More time at home
Social distancing and lockdowns have resulted in a spike in on-screen consumption. According to first-party and third-party sources, time spent on TV, OTT and social media is at its peak. Short-video platforms are seeing a global uptick in overall interest, with up to 2,800 per cent increase in YouTube search queries related to the platform’s functionalities (YouTube Trends, Live, etc.). Other platforms like mobile gaming apps, productivity apps and healthcare apps are witnessing excessive consumer demand.
The online infrastructure in MENA is facing a major test: Will e-retailers be able to adjust to the increased demand as consumers become more dependent on online shopping?
Consumers have already started to express their frustrations on social media. They have started complaining about deliveries not arriving on time, out-of-stock items and high price tags on hygienic products through third-party sellers.
As the pandemic situation progresses, we predict that other consumer behaviour shifts will become more pronounced. These behavioural shifts will have strong implications on commerce and consumption across various industries.
As governments and corporations continue to take the right measures to face the humanitarian challenge caused by the pandemic, the number of people spending time indoors and in isolation will rise.
Time spent on online media and TV will increase. As the usage of smart TV increases, service/device providers will consider an increase in membership while OTT device providers will launch special promotions to boost membership. According to Nasdaq, analysts project Netflix subscribers to grow by 30.9 per cent compared with the prior-year quarter. Time spent on tablets will likely increase as kids spend more time at home.
With more time spent indoors and more remote work, we anticipate people will make their in-home experience more convenient and luxurious. This will increase online purchases of grocery, gaming, office tools, sports equipment, etc. There will be further decrease in the usage of public transportation and ride-hailing. We will continue seeing a further decrease in visits to the mall and restaurants.
Across the region, business at dine-in restaurants has dropped by 40 per cent. Emailing consumers will provide a terrific opportunity to fill the gap for human interaction in-store. This is the time to boost personalized CRM and deliver information to audiences, as their time spent on mobiles is increasing. Food Delivery services are witnessing a decent drop in the number of orders. Consumer worries have led to a change in behaviour; canned food and cooking at home is the new norm.
The fear of potential contamination is making consumers more cognizant of what and how they consume and interact with products. We will see increased purchases of items convenient-to-open-and-use and food items that are snack-pack sized, single serve (i.e. non-sharable). People will most likely use online payments more than cash on delivery, and we might see a rise in the use of voice assistance technology (Siri, Alexa & Google Assistant).
Some categories will continue to witness positive growth such as hygienic items, packaged foods and drinks, healthcare items, insurance products and online entertainment. Other categories will witness a drop such as quick-service restaurants, retail, travel & tourism, luxury and automotive.
The entire world is facing this pandemic. All businesses are facing the challenges. How businesses react to this disruption will define how they come out of it. Below are seven recommendations for your business.
- Examine digital commerce vs. brick-and-mortar as part of your omni-channel strategy:People have shifted towards online shopping for all types of goods. Your customers’ changing preferences are unlikely to return to pre-outbreak norms. Ensure winning on online assortment and content: ensure product listing, quality of goods and the accuracy of product description. Getting the fundamentals right is crucial on top of positioning and visibility.
- Prepare your supply chain for coronavirus(source: Harvard Business Review): The outbreak will definitely add to our knowledge about dealing with supply chain distractions. At this early stage we recommend:
Know all your suppliers. Map your upstream suppliers several tiers back.
• Understand your critical vulnerabilities and take action to mitigate the risk
• Create business continuity plans.
• Don’t forget your people: A backup plan is needed for people too.
• Revisit your supply chain’s design.
- Beware of price gouging: As demand on some items goes up and supply drops, many third-party sellers are taking advantage of the crisis by gouging prices. Keep a very close eye on near-term pricing changes to avoid brand deprecation.
- Maintain Top of Mind: Retain your brand’s health by optimising push and pull media across e-retailers and marketplaces. This is where your consumers are.
- Reassess your products’ primary benefits and consider playing in new consumption occasions: Keep track of consumer search behaviour and social sentiment around your product and category. Consider highlighting key benefits that help address a new consumer need, or play in a new usage occasion that drives your products’ alignment between commerce leads, media and marketing whilst being agile. For example, a packaged food product could highlight a certain ingredient that boosts immunity vs. original communication around taste.
- Ensure consumer stabilisation: Invest in your core customer segments that demonstrate long-term growth potential or high customer lifetime value. Be sure to anticipate their evolved behaviour and needs, and address those using hyper-personalised messages. This will be most relevant in the UAE especially, with Subscribe-and-Save launching soon on Amazon.
- Support pandemic response efforts: Businesses are only as strong as the communities of which they are part of. Companies need to figure out how to support response efforts by providing money, equipment, or for example, a few companies have shifted production to create medical masks and clothing.
Following these recommendations will help your business in these disruptive times. The outbreak is evolving quickly, and some of the observed shifts may become rapidly outdated. Our perspectives will be constantly updated as the outbreak continues to evolve. In the meantime, we recommend you follow the above steps and continue keeping safe.