Living in quarantine. What consumers buy and what business opportunities it brings

Two weeks. That was enough for our everyday life to turn 180 degrees, and the economy to become unsteady. The reality has changed and with it people's behavior, their shopping preferences and the way they spend their free time.

The first case of coronavirus was recorded in Poland on 4 March. Even then the loudest message was "there is no reason to panic". Today (1 April) there are 2420 of them, Poland (like many other countries in Europe and in the world) is in a state of the epidemic, and we have, well, at least several reasons to panic. 

But stay calm - there is light at the end of the tunnel.

Coronavirus pandemic

Under the government regulation there is a strict order to stay at home, shops, gyms, cinemas are closed, all mass events are cancelled. Life goes on, and although everyone tries to find themselves in this new situation, the effects of this (time will show how long) lockdown will be painful for months to come. The future of the tourism, catering or transport industry hangs in the balance. These are obviously not the only sectors that will suffer from the pandemic. In the text about WeChat we have already written about the impact of coronavirus on the economy and e-commerce.  

What has changed in consumers' lives? What kind of purchases do they make today? And what are the chances for business?

This is not the end of the world

The world economy is a system of interconnected vessels - more or less dependent on each other. A shutdown of a factory in China may result in the bankruptcy of several companies in Europe. The closure of borders and airspace means billions in losses to airlines. Such examples can be multiplied. The virus has also messed up trade a lot.

Practically overnight, demand has decreased. Consumers buy less because they are locked in their homes, stressed out, uncertain of tomorrow. And this uncertainty is what keeps them from buying the most.

One could say that our lives have been rather predictable until now. We could more or less determine what we would do tomorrow, next week, next month. The situation in which we find ourselves (at the state and global level) is unprecedented in that today we cannot say what the coming days will be like and when the epidemic will end. And if it ends, are we sure that the virus will not return in the autumn? Maybe there will be another, even more aggressive mutation? In such a situation it's hard to shop, but it won't last forever - after all, people in quarantine also need clothes, cosmetics or electronics. 

Allegro, in the second week of quarantine (20-27 March), recorded an increase of 12.8% over the previous week. The chart below shows which industries increased sales and which decreased (automotive).

*The blue bars are the percentage change in each category in the second week of quarantine compared to the first week, the plus signs are indicative sales.

Allegro - purchases during coronavirus

Source: Robert Feldman, Drugi tydzień kwarantanny w e-commerce - sprzedaż rośnie, a sąsiada usłyszysz zza ściany niebawem, Linkedin

In addition to the clear increase in instrument sales - which can be explained by the fact that people have found time to pursue their passions - there is also an increase in the computer industry, probably due to the need to work remotely and learn online for children who need the right equipment. 

Of course, it will still be necessary to wait for the full rebound and to recover from the losses - after the epidemic is asleep, consumers will have less money (because they have either lost their jobs or closed their businesses), and they will plan their expenses even more carefully. The expected increase may take place in a few, several months.

In a study conducted by McKinsey on Italian society (i.e. the country most affected by the virus), the scepticism of respondents about the rapid improvement of the economic situation is clearly visible. As many as 87% of them say that the aftermath of the crisis will be felt at least one year after COVID-19. 

Brands that existed in the online and offline space, i.e. they had their own brick and mortar stores and e-commerce mostly experienced significant declines. Internet sales are not able to match the sales generated in shopping malls. Especially if it does not offer necessities. Therefore, e-shop owners, adapting to the situation, have to look again at their business and adjust it to the requirements of the digital transformation. No shop can now afford to let the customer - disappointed by poorly intuitive architecture or inconvenient forms of shipping - move to the competition. And the crisis ruthlessly highlights such weaknesses of the store.

What can you do to better prepare your e-commerce for a pandemic?

Simplify and shorten your shopping path as much as possible. No more registration for purchases, avoid distractions and pop-ups on the product card and in the shopping cart.

Make sure you have good readable product information, large pictures, describe the size exactly (if you are in the fashion industry).

Remember that you are now gaining a new group of customers, i.e. consumers who have so far only bought stationary. Show them the convenience of online shopping. Offer a starter bonus, loyalty program or discount.

Take care of good relations with the client. The epidemic will end someday, and a well-informed customer will be shopping with you long after the coronavirus.

Use positive messages. Remember that behind every order there is a living person - perhaps full of anxiety about his/her health or work - try to keep a friendly language, do not scare, do not underline the danger.

Use Chatbot to answer the most frequently asked questions by new users - including those not familiar with digital shopping.

Convenient and safe delivery is essential. Take care of the health of your customers and the couriers you work with - provide contactless shipping, payment by BLIK or phone.

Analyze and change - befriend the analytical tools, check what activities generate the highest sales in your store and react in real time.

Not all industries will be equally affected by the recession. Who's growing? Parcel delivery companies, grocery stores - also those online (the demand is so great that e.g. Tesco in Krakow has blocked deliveries for three weeks ahead), hygiene industry, manufacturers of gloves, masks, safety aprons.

Coronavirus statista

Source: Statista, Change in online sales of products and services due to coronavirus (COVID-19) outbreak in Poland in March 2020, by type of product and service

coronavirus - what we buy
Source: Statista, Most popular food and hygiene products purchased during the coronavirus (COVID-19) epidemic in Poland in March 2020

The rest of the businesses are doing the best they can. Restaurants and cafés offer take-away meals, cinemas and theatres sell vouchers for use in "better times", and gyms provide online training for club card holders. The event industry focuses on moving planned events to the Internet, and hotels are switching to long-term rental mode. And although this is not a remedy for the crisis, it will allow companies to go through the hardest period.

Example: CrossFit Krakow provides holders of the Multisport card with home trainings (similarly to the network of Fitness Platinium gyms), sells workout sets to be performed at home prepared by professional trainers, and has also introduced one-time tickets (for PLN 9) for online trainings available on the Gymster platform.
CF krakow - trainings
CF Krakow - multisport
Fitness Platinium - multisport
Fitness Platinium - trainings

A time we didn't have

Since remote working in companies (where it is possible) is mandatory, people commuting earlier to the office gain an extra hour (or more) a day. People working on the so-called junk contracts have been dismissed, others have been sent on compulsory leave. We all sit at home. How do we consume this time when you can't go to the cinema, café or have a beer with your friends? 

A typical day starts with checking the news - we look at tables, charts and curves. With numbers and mathematical language we try to describe this new reality. Then we turn on the mode: work - whoever has the comfort of isolating himself from the other household members, the home office comes easier. The rest of the time for work must be shared with the time devoted to childcare or other home activities. And finally, free time comes - previously so longed-for, today treated as a necessary evil (especially by people who have been deprived of employment by the virus).

In times of epidemic, you can see the best - next to empty rice and toilet paper shelves - a bunch of webinars, podcasts and free online entertainment. And even virtual walks through museums or forests. 

Example: Empik offers 11,000 e-books for free, thanks to Versailles VR | the Palace is yours users can see the interior of the Palace of Versailles and a collection of artworks. A similar experience is offered by Zachęta in Warsaw.

The whole life has moved to the Internet. Instead of visiting a beautician - an online tutorial - psychotherapists meet with patients via computer, and the legendary Russian Bolshoi Theatre publishes "Swan Lake" on You Tube. The most popular streaming platforms have problems with performance, and in online chains people compete in the number of books they read. One could say that we'll come out of this quarantine more culturally-minded, with a lot of catching up on literature and film, with courses in yoga, meditation and cross-stitch. Is that really the case? Yes and no. On the one hand, we have gained more time, which has to be used somehow, but on the other hand, the closure period is still too short to talk about changing habits and lifestyles now.

The epidemic also highlights social inequalities and shows how theatre, reading books, and cooking Thai food are entertainment for the privileged. Not everyone can, even if they want to, because someone has to fill up the shelves in the shops, take away the trash or clean up the hospital during the night shift. A pandemic is more than staying at home, working remotely and singing from balconies sometimes.

Where to look for opportunities?

Although we are now accompanied by fear, helplessness and uncertainty of tomorrow, we must not forget that the state of pandemic is a temporary and will sooner or later pass. It is crucial to react to all the changes we are experiencing now. A chance should be found in your own creativity and adaptation of your business to the new reality. 

Example: During the epidemic in China, the cosmetics brand Lin Qingxuan had to close 40% of its stationary stores. Employees were sent to remote work to actively promote the brand's products in social media. The result? The company's sales reached a 200% increase compared to the previous year.

According to eMarketer research, in 2020 the share of e-commerce in total retail trade is expected to increase to 12% (data for the United States), in Poland it is 7% respectively. Experts expect that consumers previously unconvinced to shop online (who are now "forced" to do so) will see how this will make it easier and save time. So it may turn out that growth rates will be higher than forecasted. 

Cooperation in business will also be an opportunity. The Chinese network of stationary and online supermarkets Hema has signed a contract with 40 chains of restaurants, hotels and cinemas closed during the epidemic, recruiting their employees to handle orders and deliveries. The crisis is a matter for all of us, this is not the time for unfair competition. 

One may wonder how the shopping behavior developed during the forced quarantine will change when the epidemic is silenced. Will people be willing to buy online and work remotely? Or will everything go back to the way it was? We still have to wait for the answer to these questions. We already know for sure that on a psychological level, the current situation will have a serious impact. Long-term isolation, home locking, loss of job and health - all of this will increase social unrest, depression and loneliness. 

So let's use digital tools for the right purpose - to make everyday life easier, to help you work or learn remotely, to buy more conveniently and to spend your free time better.
Let us not forget that there should always be a human being at the centre of all this - with his or her needs, emotions and expectations. Let us create solutions to reduce barriers and technological exclusion. The digital revolution is a fact, but it is up to us to decide how many victims it will consume.

Don't you know how to adapt your shop to the current situation? Looking for a reliable partner?

Let's work together!

Paul Cunnington

Business Unit Manager UK & Ireland
+44 780 323 86 01
paul.cunnington@strix.net