Home, sweet home

This is the first time most consumers across the world have the experience of being confined to their own home. What will this new experience mean for business? Let us look at the experiences of consumers during lockdowns and how this could impact consumption after Corona.

Phase 1: Panic
In the first phase of a quarantine, people struggle to understand the new situation. With the outlook to be confined to their homes and confronted with alarmist media messages, fear and anxiety drive people to expect the worst, and panic shopping for food sets in.

Phase 2: Getting to grips
In the second phase, people start to accomodate themselves with the new situation. With restaurants closed, many find that they are unskilled in the art of cooking and look for ways to use their stockpiles of food. Youtube creators quickly picked up on this new demand and are delivering videos with easy cooking instructions for panic-bought ingredients, for instance Corona Kochen by ZDF (Germany), Easy recipes (UK) or Easy treats (Australia). Next to cooking at home, wellness is booming.

Phase 3: Introspection
In the third phase, people get used to spend most of their time at home and start contemplating what to do with their time and circumstances. They consume more online media or try out new hobbies. Many find that while they have been busy living their lives, they neglected the homes they now find themselves in, and plan to enhance or refurbish their homes, if only to find themselves in better living conditions in case another lockdown might set in.

Phase 4: A new life
In the fourth phase, lockdowns are gradually being removed, and people get out of their homes again. Currently, European governments are planning to gradually reopen business. Austria, Denmark and the Czech Republic are reopening shops from mid-April, Norway and Lithuania from end of April, Sweden and Korea had no lockdowns. In China, where the lockdown has already ended, consumers had a phase of revenge shopping, flocking back to department stores to reward themselves after confinement and buying personal goods – luxury cosmetics, fashion accessories – to celebrate their newfound freedom and make themselves feel better.

Digital service providers are on the upswing: Adobe shares gained, penccil.com subscriptions are rising. On the other hand, airline and cruise line shares have dipped. But the quick reactions of investors and the longer term expectations of consumers are not always aligned: Saga cruise bookings for 2021, for instance, are up. A survey among consumers in Austria – the first country in Europe to gradually ease the lockdown – resulted in the intent of consumers to catch up on shopping, restaurant visits and travel. The survey shows that people also consider to change their lifestyle. These 4 trends will influence consumption in the future:

Off grid, on line
During the time of confinement, more consumers discovered the value of online services. This will accelerate the general shift from brick-and-mortar to online. More will work from home, and the online experience is evolving with virtual experiences, video storytelling and virtual assistants such as Samsung’s NEON project.

Home, sweet home
For many, home was mainly a place to sleep after a day spent outside – in transit, at the workplace, in restaurants. Being confined to their own homes was an experience most had for the first time in their lifetime. It was the only way to be safe and protected – an existential rather than just a circumstantial reason. Consumers found that their home is more important than they realized, and will look for ways to improve them.

Out but healthy
Consumers will stay vigilant about hygiene. Physical environments (hotels, retail spaces) emphasizing physical and mental health will benefit. Generous space is an advantage, while businesses connected to crowded spaces and crowded activities (budget hotels, football games…) have more to lose. Low-end hotel chain OYO, for example, has seen a 60% drop in revenue. High-end hotels should be better positioned from the outset and will think of new ways to advertise their top standards and promote offerings for private wellness, relaxation and meditation.

Bluer skies
As transport halts around the world, air pollution decreases and contrails diappear from the skies. People see skies which have not have been that blue since dozens of years, and in some places wild animals come back to explore quarantined towns. Videos of animals exploring quarantined towns get millions of views. This experience makes people reappreciate nature and in the long run more conscious about the environmental impact of their consumption. Public awareness about ecology is rising, questioning established industry structures and shopping patterns. The French president’s representative group of citizens recently proposed the closure of out-of-town hypermarkets to encourage shopping locally and shelving the 5G network because it uses 30 per cent more electricity than previous iterations. On the long run, consumers will increasingly look for products which are more responsive towards environment and society, with more authenticity baked in. Conscious consumption will be on the upswing, and products fit for this new view will have rich stories to tell about their integrity and value.

Focus on the internal image
To understand consumer trends, we have to understand the logic of consumer sentiment. As soon as shops reopened in Austria, long lines formed in front of home improvement stores, while there was initially less traffic in other shops. This indicates that consumption centering on the internal image – private space, homes – is benefiting, while consumption driven by the external image – fashion – will recover once social distancing rules have ended. Home improvement and interiors profit, while the established fashion industry is about to hibernate for a while. A Prada dress or a Louis Vuitton bag is bought to improve your external image: you want to look good and impress others. The importance of this external image diminishes when social exposure is reduced and social activites are curtailed. With rules on social distancing, the promise of fashion to signal and attract makes less sense. A new piece of furniture, on the other hand, is bought to improve your internal image.

Mayday (Post Scriptum, May 2nd, 2020)

Customers in front of Ikea on May 2nd, SCS Shopping City in the outskirts of Vienna