By Kavita Ramrakhiani and Anish Dasgupta, Rain
There’s no denying that the pandemic brought life as we knew it to a halt. Today, with the economy opening up, we’re beginning to step out again. But the landscape has changed. And the closer we look at it, the more we see that we’re not going to be picking up where we left off. COVID-19 essentially hit the reset button on everything we knew. The new normal is anything but.
The earlier part of this decade pegged Millennials as the key consumer. As we edged closer to the 2020, Gen Z was added to the list. And ever since, marketers have been pouring through reams of research to understand these cohorts better (every marketing head we know has a ‘story’ about the day they learned new words like “lit” and “turnt”). If we’re being honest, we were just beginning to get a handle on Millennial consumer behaviour and had just started scratching the surface with Gen Z. And now, with COVID-19, we have a new spanner in the works.
But what makes these two generations stand apart from their previous generations, Boomers and Gen X, is the fact that they are generations that grew up in a turbulent world. From the 9/11 attacks to climate change to the global refugee crisis to political turmoil, both generations have been shaped by crises. And however similar circumstances may be today, they have had different experiences of the world.
Millennials can remember a time when the world wasn’t jumping from one crisis to another. They remember the calmer 90’s and it wasn’t until the 2008 global financial crisis that that they got their first shock of a world in recession. So, they’ve seen better times and would tend to be a shade more optimistic than their younger cohort, Gen Z, who having experienced the 2008 crisis as part of their childhood are more pragmatic.
Millennials today are facing their second recession. They have been working for about 10 years and have an established career. They are married and are possibly young parents. Some of them are probably looking to buy a home. Gen Z today are where Millennials were a decade ago. They are either graduating college or have started working recently.
So how are these similar, yet different, consumer groups going to react to yet another global crisis? We reviewed a number of research findings from around the world and curated a list of the key accelerators and trends that we thought were interesting and relevant to the region.
1. Unemployment will affect more than just finances
The most immediate impact on both cohorts is the prospect of unemployment. A Euromonitor report on the estimated impact of COVID-19 on unemployment for 2012-2022 shows that young people are hit harder by economic recession, with youth unemployment rates rising faster than the overall rates. To add to this, youth unemployment rates in the MENA region have been the highest in the world for over 25 years (Source: World Bank, World Development Indicators, 2018).
The result is a lag in getting to key milestones in life. A Euromonitor report on marriage rates in Europe and North America (2007-2022) indicates that Millennials got married later, started accumulating wealth later and got into the property market later. This pandemic will create another difficult challenge for Millennials and the resulting recession will affect their wealth prospects further. It’s therefore fair to say that Gen Z will face similar financial setbacks and similar lags in reaching the same key milestones.
2. Mental health is going to be a serious issue
Job and financial insecurity have also amplified stress levels for Millennials and Gen Z. While Millennials face the increased burden of taking on childcare and home-schooling while working from home, the younger Gen Z are worried about how school closures will affect their job prospects. The constant stress and anxiety have led to depression and mental health issues that have made Gen Z the most anxious generation today, followed by Millennials (Source: Mental Health Concerns by Generation, Euromonitor International Health & Nutrition Survey 2020).
The overall negative state of mental health has put both sets of audiences in a more somber and contemplative mood. Data from Euromonitor’s Lifestyle Survey (Feb 2020) shows that this emotional isolation has resulted in an increase in self-reflection – with “Time for Myself”, “Time with partner” and “Time with parents” being the top three priorities for both generations. And “Travel” – which both these generations were heavily associated with – is near the bottom of the list.
3. Quarantining is forcing re-evaluation of priorities
This heightened appreciation for family is the result of quarantining with their loved ones – which has brought about a fresh appreciation for those who live with them and reframed social connections. However, while family connections improved, new relationships have been strained. Those among the younger cohort who just started dating before quarantine are left wondering how to take things forward.
The other result of quarantining has been that our audiences have been forced to slow down the pace of their lives. Perhaps for the first time, Millennials have the time to sit back and re-evaluate their lives and what it means to spend time well. Having more time on their hands has been good for them. They’ve been getting more sleep, working at a slower pace, getting more time for hobbies and self-development. This is reflected in the recent rise in sales of baking ingredients, arts and crafts equipment and gardening equipment, among others. This is also because studies have shown that manual labour is a means of feeling more in control of circumstances. All this has them increasingly prioritising time affluence and they may not be so ready to go back to their old pace of work.
4. From being connected to virtual living
The online world is central to both Millennial and Gen Z lifestyles. But so far, it’s largely revolved around social media, which was looked at as “just another channel” to consume content and connect. It’s now expanding to a medium where the audience “lives”.
Quarantine and social distancing have contributed a push to the evolution of social media, and new digital spaces are cropping up to facilitate genuine human connection in the absence of in-person meetings. With physical venues less of an option for socialising, people are turning to digital spaces for life experiences that would otherwise be sought in the physical world. For example, HouseParty is replacing group movie viewing and virtual concerts are replacing going for a concert.
5. Purchases will have more meaning than brand equity
Faced with financial uncertainty, it’s no surprise that both Millennials and Gen Z will be restricting their spends to necessities like housing, food, healthcare and education. But this doesn’t mean they won’t be spending at all. As mentioned earlier, social isolation and introspection have them increasingly questioning what brings fulfillment to their lives. The combination of introspection and stress is leading to a shift in their purchase priorities from “excess” to “physical and mental well-being” as a means to regain control. This is why there’s an increase in subscriptions to apps that offer emotional support and well-being.
6. From Activists to local-vists
Both Millennials and Gen Z have always been very vocal about social issues and don’t shy away from making themselves heard. They are aware of and sensitive to the fact that some sections of society are suffering worse than others. Research shows that they will continue to make themselves heard (Source: Euromonitor International Lifestyle Survey 2020, Social and Political Issues Activities by Millennials and Gen Z).
The pandemic has made them even more “woke”. So, they are going to care more about family, health and society. But the pandemic hasn’t just pushed social issues to the forefront, it has also affected global politics. Increased tension between nations and regions, and has driven up populism and racism with initiatives like travel bans (from specific countries) and managing the flow of medical supplies (to protect states’ own citizens) has forced people to choose sides. In addition to that, quarantining has made proximity and convenience important purchase drivers. As a result, in an effort to help local communities (and economies), the audience will buy local brands when possible.
7. Quest for trust and expertise
One of the key social impacts that COVID has had is in the way we interact with others, especially when it comes to physically meeting someone. The traditional mode of “smile and shake hands” is no longer possible because you can’t smile from behind a mask and everyone wants to limit contact. The problem isn’t one of “how to greet”, but that greetings are a way to establish trust. And we need to re-learn how to do that. When we meet someone who is also wearing a mask, it’s a signal that they share common thoughts about hygiene and give us a feeling of safety. So, today, trust is at a more basic biological and physiological level, where it’s based on common thoughts about hygiene. The mask itself is a marker of trust.
At a larger level, the audience has lost faith in the systems which kept us safe. The pandemic has brought to the forefront the lack of expertise. With fake news of treatments and vaccines all over the internet, consumers don’t know what to believe. This has led them to seek out expertise, which is not necessarily something that a social media influencer can provide.
The post-COVID-19 market is going to be a first for all of us and promises to be our most challenging yet. As we marketers start to rewrite the book on audience understanding, it’s important to understand the context of the behavior changes that we’re going to see. The above are in no way a comprehensive list of these changes but are the foundation that will define and shape consumer behavior for the foreseeable future.