Not only has COVID-19 threatened consumers’ health and countries’ healthcare systems, significant economic impacts have been made on countries as the virus seems to have turned economic trends. Australia is facing its first recession in 29 years. Japan’s decline in household spending in April is at its worst records since 2001. Singapore’s PMI in April has not been this low since the global financial crisis in November 2008. Let’s approach these unravelling times as hidden opportunities for change instead. In order to survive and thrive, it is crucial for businesses to move quickly and take appropriate action by anticipating changing consumer behaviors and market trends.
In the following article, we will discuss the insights on dynamic market challenges and upcoming business opportunities derived from our latest research.
Consumers adopt tight financial management strategies due to uncertain times ahead.
Consumer concerns about the local and global economy, their household financial positions and job security has 65% (-2% vs April) of consumers looking for ways to reduce their general expenses, mainly by reducing discretionary expenditure and putting money into savings, at 57% and 55% respectively APAC-wide. Australia seems to be making a turn as it is showing a shift in consumers’ approach to managing their finances, with 35% not taking any precautions to manage their finances (vs. a mere 14% in April) which resonates with their confidence in their financial position and job security.
With 60% already being a cashless society and an additional 21% considering going cashless, 27% of consumers are changing their investment strategies along with a drop in the percentage of consumers reducing their expenses in some markets; Malaysia (-8%), Hong Kong (-7%), Korea (-7%), Taiwan (-5%), Australia (-5%). This is the time for financial institutions to seize the opportunity, act quickly, adapt to cashless payment options, and tailor investment portfolios to changing customer needs.
Another prominent, but obvious change sparked by COVID-19 that companies should act on is consumers’ increased awareness regarding personal heath. Consumers have become more and more conscious of their personal, environmental health, and cleanliness in general, changing the way their every day habits. 80% of consumers will continue to spend more time on self-care (e.g. more regular cleansing or treatment, using more skincare/body care products etc.), and over half (57%) either took up new health insurance policies or are considering doing so.
Shifting consumer perspectives and attitudes turn into new consumer habits, leading the way to business opportunities.
Travel bans, working from home and other social distance control measures continue to challenge traditional retail businesses’ survival as 70% of consumers spend more time on the internet. COVID-19 accelerated the inevitable transformation and dependency on e-commerce, potentially changing consumer behaviour indefinitely. Traditional retail expenditure is not on the consumers’ top-of-mind while 79% have already increased or will consider online shopping.
Taking a closer look at consumers’ responses to “Have you done or considered doing any of the following in response to COVID-19”, the results reveal that:
- 59% have already increased and will continue their e-commerce journey.
If we were to exclude Australia (28%), online shopping behavior has increased 63% within Asia, where Thailand takes the lead (74%), followed by Taiwan (69%). Categories where share of wallet has increased by >20% are mainly day-to-day items; food (raw food 52% and cooked 50%), household products (49%) and healthcare products (45%).
- Consumers are becoming more familiar and comfortable with finding and selecting what they’re looking for from online businesses. How brick-and-mortar business are adapting to this change will be crucial to their survival.
- 64% watched more digital content and 46% increased the time spent on playing online/mobile/video game and plan on maintaining this habit. Staying at home gives us time and more opportunity to go online and play more online/mobile/video games. Although the percentage of increase in games varies in markets, from the lowest Australia (28%) to the highest in Thailand (60%), it is still remarkably high.
- Note that the gaming industry has moved away from being a sole entertainment platform, where consumers participate in an activity to kill time, but has evolved into another social platform for interaction and communication. Take “Animal Crossing” as an example, a social simulation video game released by Nintendo sold more than 13 million copies in the first six weeks since late March. Such a video game has already re-defined social gatherings as some people had their first date on the platform. It’s time to think about how marketing and communication campaigns in the digital world will work during COVID-19 and beyond.
- 60% adopted and will continue to use more contactless payment options. Looking back at the days prior to the COVID-19 outbreak, contactless payment modes were already popular. Therefore, it is not surprising to see the majority (60%) of consumers taking on cashless-payments and another 21% consider joining the cashless society. In terms of payment modes, contactless payment applications are the most preferred, followed by contactless payment cards. A selection of consumers is still using non-contactless cards, but it is only a matter of time before they move to contactless payments modes as well.
Businesses shouldn’t wait around for changes to happen and take a reactive approach. Take a proactive stance, anticipate changing consumer behavior and be part of the change. Better yet, be the change. Now, more than ever, is the time to buckle up, identify the key market challenges, act, consistently drive the ‘new’ direction throughout your business and take the lead in this new era.