Photo: Jonas Leupe via Unsplash.
The pandemic has had a profound impact on consumer habits. From reigniting e-commerce to accelerating the shift to remote working, new consumer preferences will radically shake up pre-COVID-19 market forecasts and open up major opportunities for innovation. Here we look at four trends shaping the future of the consumer market.
According to Deloitte, innovation is becoming a key competitive battleground in nearly every sector. Despite the damage to the economy caused by COVID-19, one of the positive outcomes of the pandemic is that it has paved the way for a radical rethinking of how we conduct our daily lives. Humanity has undergone one of the biggest experiments in its contemporary history that has dramatically shifted patterns of consumer and workplace behavior – and innovators of all stripes are here to help.
The scale of the disruption has motivated many consumers to reconsider their spending habits. Demand for more ethical lifestyles was already hitting new highs even before the outbreak. For example, the National Restaurant Association’s 2019 What’s Hot report indicated that many meat-eaters began opting for alternative sources of protein that they see as better for their health and for the planet. The pandemic is likely to accelerate such trends and push more buyers to embrace conscious consumerism, which creates opportunities for fast-moving companies (both established and start-ups) to capitalize.
Such behavior is likely to drive demand for sustainable goods and more ethical corporate behavior, as well as expand the market’s capacity for more innovations. According to a report by Deloitte, consumers are increasingly looking to enterprises to lead the conversation on global issues, embrace corporate citizenship and sustainability.
Companies like Impossible Foods and Beyond Meat that leverage cellular technology to create alternatives to existing animal protein have already raised money during the pandemic – and their value will likely continue to grow. Other ethical consumption trends that are booming right now include plastic-free produce, plastic-free packaging, compostable carrier bags, plant-based foods, natural fabric clothes, clothing re-sale and recycling schemes. Although zero-waste consumption will remain more of an ideal than a reality for the foreseeable future, these and other similar changes have already begun to accelerate the transition to a circular economy.
The benefits of the mass shift to home-working that started in March, combined with warnings about never-ending waves of infections, has a disorienting effect on companies. Few understand how the front office will look at the end of the pandemic. A recent report by Citibank showed that about a quarter of the occupations surveyed across the US – 113 of 483 – could be done remotely. More importantly, those 113 occupations employ 52 percent of the American workforce. If more than half of the workforce is able to carry out their responsibilities from home, we will likely witness a dramatic increase in the number of people switching to remote work.
During the past few months, we’ve seen an increase in market attention to different productivity tools. Spike, a conversational work ecosystem, attracted an $8 million cash infusion from Insight Partners, while startups Superhuman and Notion also expanded their popularity across the market. With more households ultimately transitioning to remote work, productivity tools will be in higher demand, which in turn will fuel more innovation in this sector.
New Financial Habits
The traditional finance industry is under pressure, and there is more to come. The annual P-FIN Index of financial literacy revealed that American adults on average could correctly answer 52 percent of questions on financial topics, while Gen Z got just 41 percent of the answers right. These figures are likely to change in the wake of the pandemic, which has pushed many people to reconsider their investment strategies and spending habits. Massive layoffs and potential salary cuts will likewise impact financial decision-making and cause individuals to reassess their desired role in the new and disrupted economy. As a result, there is a need for new financial literacy tools that address major shifts in consumer habits and help individuals avoid the risk of making a costly mistake.
Some traditional banks as well as new financial services providers and fintech companies are already building financial literacy components into their customer offerings as a way of mitigating their own risks while simultaneously helping their clients. This increases the potential for greater disruption in the banking sector. Despite the generally abysmal economic outlook, fintech firms are seizing the moment, especially in more traditional markets. One good example is the current success of Vivid Money – a German mobile banking startup that promises to change the fintech industry.
Lots of financial literacy resources are out there – with many, unsurprisingly, available online. Purdue University offers a five-week free personal finance course on the edX platform. My Financial Mountain also offers 12 video modules that encompass topics ranging from savings, to debt and credit, to basic personal finance. Given the rise in demand for financial education in the wake of the pandemic, we should expect to see a wave of new materials and platforms that offer accessible resources on this topic.
The Mobile Transition
During the past five years, around 1.4 billion smartphones were sold worldwide annually. This seems like an impressive number, but it nevertheless reflects the stagnation in the smartphone market. Still, ownership of smartphones remains high: the United States has more than 260 million registered smartphone users, or almost 80 percent of the entire population, while in China that number surpasses 850 million, or around 61 percent of the total population.
But while the pandemic and its economic effects may not boost the number of smartphone users, it has surely impacted the amount of time that people spend on their smartphones. The research states that 80 percent of shoppers use mobile in-store to check product reviews, compare prices or find other store locations. The increased use of smartphones to surf the web or use social and entertainment apps – as well as the widespread use of smartphones for COVID-19 contact tracing – has created more demand for expanding the functions of the smartphone. This, in turn, will broaden the scope of customer services provided through mobile apps and drive a new wave of change in how we use our smartphones in our everyday lives.