Crisis Marketing Strategy II : Changes in Customer Trends

Crisis Marketing Strategy II : Changes in Customer Trends

by GoWork Team

You are reading the second article from a series of three articles written to provide a recap to GoWork’s exclusive webinar: Crisis Management: How Brands in South East Asia Are Adapting Their Marketing Strategy in the Time of COVID-19. Here’s the link to the first article if you’re looking to start fresh. Stick around to read about some of the most inspiring brand stories from China in the wake of the crisis. 

The COVID-19 Crisis has spelled trouble for many businesses, especially those in the offline retail industries. The combination of government measures against crowding in public spaces and the public affinity towards social distancing had a grim impact on offline retailers. Their consumer base, now advocating stay-at-home movements and online activity initiatives, are simply out of their reach.

Now that we’ve learned about how the retailers are reacting and adapting to the crisis, it’s time to see the factors behind the changes: shifting customer trends and behaviors during the crisis, be it intentional or as a side effect of other paradigm shifts.

The example provided by Agustinus Michel of Creative Capital came from China – the country with one of the world’s largest retail markets. In 2018 alone, China’s urban retail market amounted to about 1.3 trillion yuan or about 138 billion USD. 

How did the pandemic crisis affect such a huge market? Here’s a short recap from the webinar.

Customer Spending and Consumption Trends

During the early days of the coronavirus outbreak in China, the consumer spending trends did not slowly decline, but instead sharply decreased to an unprecedented level, compared to last year’s “Spring Festival” season spending.

The decrease was especially apparent in the F&B, entertainment, and offline retail spending categories for consumer spending in all city tiers in the country. A decrease of about 75% on F&B and entertainment spending was noted during this period. 

The consumers were simply spending more online if we’re talking about retail. New online consumers didn’t only come from obvious demographic groups, but instead a new customer base coming from older age groups trying to compensate for their limited mobility during the crisis.

For the first time in China, the influx of new male user groups surpassed the number of new female users. As much as 50% increase in male users were recorded at the beginning of the pandemic – of which, 32% stated that their online shopping spending increased by at least 10-20%. Some also said that they’ve only started to shop online during the outbreak. In comparison, the increase in new female users was recorded to be about 43%.

Moreover, there is an 82% increase in online shopping and entertainment users that are over 55 years old. Most of these new customers are spending more on online entertainment. This was especially surprising, considering this generation is what is known as the “TV Generation”. Among them, there is also about 41% net increase in online shopping spending. 

Baca Juga:

Consumer Decision-Making: After the Outbreak

What were the people of China really looking forward to spending more towards after the outbreak? The answers are fashion/clothing, food & beverages, daily necessities, along with beauty products and sports and fitness. This survey represents the plausible consumer trends for the “new normal” of the post-crisis market interest. However, to understand if consumers are going to truly spend more after the pandemic, Creative Capital elaborated on further research on how the pandemic affected their outlook on consumption and spending.

Due to the crisis, people in China will tend to be conservative in terms of their consumption and spending habits. On average, as much as 54% of the correspondents agreed to “plan ahead”, “reduce unnecessary spending”, and reduce “timely consumption”. This survey suggests that after the pandemic, consumers are going to be more careful in making purchasing decisions, and making those decisions based on long-term and short-term considerations.

Additionally, consumers are more likely to make ecologically sound decisions when determining purchase. This was based on an increase in eco-consciousness and an overwhelming increase in animal rights support.

When talking about consumers’ decision-making process, then it is important to explore the cultural factors that directly affect those decisions. 

Since the COVID-19 pandemic was considered a national crisis, Chinese consumers took it to themselves to “help” the country by purchasing national products, giving rise to a neo-nationalist mentality.  This “buy Chinese” movement is being seen as an act of solidarity to Chinese brands and labels that are affected by the virus.

Up next, learn how the brands and companies are engaging their consumers. Hint: CSR and CRM.

Make sure to keep our blog bookmarked for the third part of this series.