Changing Paradigm of Consumer Behaviour amid Covid-19
Dr. CS Joshi,
Professor and Head of Commerce Department,
M.B GOVT P.G College,
Haldwani, Uttarakhand
Tanuja Chaudhary,
Research Scholar,
M.B GOVT P.G College,
Haldwani, Uttarakhand
Abstract:
The pandemic has fundamentally changed the world, where people are living differently, buying differently, and in many ways are thinking differently; thus, it has successfully created a new culture where social distancing is a new norm and way of living. These new norms have immensely affected the way consumer tends to behave and purchase and have enabled the consumer to develop new habits. Therefore, the study is conducted to analyze changing consumers' buying behavior during the crisis. Secondary and primary data is utilized for the study. A well-structured questionnaire was distributed via mail to elicit the relevant information.Data was analyzed with the help of Independent T Test and One Way ANNOVA and percentage. Analysis of data leads to the conclusion that55.6% of consumer tends to adopt online platforms after lockdown and pandemic. The shopping patterns of consumers, the way consumer spend has fundamentally changed (38.6%). But there is no significant contribution of demographics in this changing buying behavior of consumers. Further, four new segments of consumers, which is stockpilers and savers (58.2%),cutdeep (47%), spenders (39%), and calm and normal consumers (46%),have evolved due to pandemic that affects the way they purchase.
Keywords: Consumers, Covid-19,Pandemic, lockdown, Consumer Behaviour, spending, changing preference
Introduction:
Consumer behavior enables the consumer to decide what, when, and how to purchase a product. A well-informed consumer tends to show the change in behavior with the interplay of micro and macro forces. Covid-19 is no exception for consumers. The draconian Corona Virus has indeed proven to be a global pandemic that has affected every individual and strata of the world. The pandemic has fundamentally changed the world, where people are living differently, buying differently, and in many ways, are thinking differently (Accenture, 2020). Thus, it has successfully created a new culture where social distancing is a new norm and way of living.
Since the government has switched from regulation to complete and partial lockdownretailers are compelled to close their doors that have adversely affected the supply chains. As a result, consumers across the globe are changing their behaviour towards shopping. They are now seeing the brands through a new lens. According to Accenture (2020), the pandemic has reshaped the industries and market; therefore, new habits among consumers are evolving, which will be endured beyond crisis or may remain permanently. Consumer behavior continues to evolve during Covid-19(Carufel, 2020) therefore, it becomes significant to study the changing trends of consumer buying behavior due to Covid-19. Thus, the purpose of the study is to analyze how consumers' buying behavior is evolving during the crisis.
Literature review:
Pathak (2020), in her article, highlighted that change in consumer buying behavior is an evident result of the pandemic. Consumers are shifting from retail purchases to online purchases. They are spending less as recession is stepping in.Agarwal (2020), in her blog, delve into the awareness level of consumers about the pandemic. It was concluded that most of the Indian citizens are not aware of the symptoms and causes of Covid-19 and preventive measuresagainst it. 60% of the respondents are unsure about the origin of the virus; 46% of the people are not practicing social distancing. Therefore, it is suggested by the author that the awareness level about Covid-19 has to be increased. Carufel (2020), in his article, highlighted that the buying behavior of consumers have been fundamentally changed as most of the consumers will now prefer to buy local products and ethical products.Singh (2020), in her article in Times of India, has highlighted the fact that changing preference of the consumers from non-essential to essential has compelled brands, even non-essential brands, to change their strategies and communicate with consumers in social media. Although post-Covid-19 situations will change and online purchasing will be gaining its pace, but fear will rule the mind of consumers. Therefore, new communicationsstrategies need to be developed that reduce the psychological impact in the mind of consumers.EY, a tax consultant company(2020), highlighted that consumers behavior will shift in three horizons. Now phase where consumers will stockpile the essentials, followed by next phase where daily life will resume but with less confidence, and beyond the phase where online adoption will continue to increase.An article by economic times (2020), highlighted the fact due to Covid-19, the preference of consumers to purchase an automobile will witness a shift. Consumers will shift back to personal mobility rather than shared mobility or public transport due to rising concern about personal hygiene and fear of the virus, after citing a study conducted in China where the automobile industry witnessed a reversed trend of declining sales of the car. Therefore, the Indian automobile industry can learn lessons from leading global companies. However, Indian customers will be reluctant to online purchasing of the car due to lack of test drives and many other reasons;therefore, the automobile industry needs to re-plan their retail strategies.
Objectives:
Hypothesis:
H (0): There is no significant difference between the demographics and changing behavior and attitude of buyers.
H(a): There is no significant difference between the demographics and changing behavior and attitude of buyers
Research Methodology:
The study is descriptive in nature therefore; descriptive research design has been adopted for the study. The study is based on both secondary and primary data.Secondary data is collected from authorized websites, newspapers, and journals. Primary data for the study is collected with the help of a well-structured questionnaire distributed via mail.
Development of instrument: The questionnaire is divided into three sections, the first section includes basic demographic questions about respondents, followed by the second section that includes questions related to the buying behavior of consumers before and during Covid-19, and the third section includes questions about spending habits of consumers during and after Covid-19. Further, changing behaviour and attitude of consumer are measured from scale of 1 to 5, where 1 is highly dissatisfied and 5 is highly dissatisfied.
Sampling: The questionnaire was distributed among 300 respondents based on convenience; therefore, convenience sampling was adopted. However only 189 was received and brought to use. Therefore, the response rate is 63% ((189/300) *100).
Tools: The collected data was further analyzed with the help of percentages and graphs Chi-square, Independent T test and One-way Annona.
Discussion and Analysis of data:
Socio-Economic Profile of Sample Respondents:
Table 1provides an overview of the socio-economic profile of sample respondents covered under the study. The sample consists of 189 respondents.
Table 1: Socio-Economic profile:
|
Demographics |
Frequency |
Percentage |
|
|
Gender |
Male |
83 |
43.9 |
|
|
Female |
106 |
56.1 |
|
|
Total |
189 |
100 |
|
Age |
Under25 years |
64 |
33.9 |
|
|
26-35 |
99 |
52.4 |
|
|
36-45 |
17 |
9.0 |
|
|
Above46 |
9 |
4.8 |
|
|
Total |
189 |
100.0 |
|
Occupational Background |
Students |
55 |
29.1 |
|
|
Government or Private employee |
81 |
42.9 |
|
|
Business person or self employed |
43 |
22.8 |
|
|
Other |
10 |
5.3 |
|
|
Total |
189 |
100 |
|
Income |
0-250000 |
109 |
57.7 |
|
|
260000-500000 |
30 |
15.9 |
|
|
500001-750000 |
13 |
6.9 |
|
|
Above750000 |
37 |
19.6 |
|
|
Total |
189 |
100.0 |
Source: Computed source
Socio-economic profile of respondents includes gender, age, income, and occupational background. From the table, it is analyzed that, out of 189 respondents, 106 are male (56.1%) and rest 83 are female (43.9%). Therefore, it is evident that the majority of respondents are male. From the same table, it is analyzed that 64 (33.9%) respondents fall within the age group of up to 25 years,known as Generation Z. 98 (52.4%) respondents fall within the age group of 26 to 35 years, known as Millennial or generation Y. 17 (8.99%) of the respondents fall within the age group of 36 to 45 years, known as Generation X, and 10(5.29%) respondents fall within the age group of 46 years above, known as Baby Boomers. In the present study, the maximum respondents fall within the age group of 26 to 35 years that is generation Y or Millennial.Occupational background of respondents is analyzed from the data collected, and it is witnessed that 43% (81) of the respondents work as government or private employee, followed by 29% (55) are students.57.7%(109)of the respondents earns up to 2,50,000.
Analyzing changing Consumers Behavior during Covid-19 crisis:
(a)Analyzing changing shopping habits and lifestyles:
It can be seen from table 2before the Covid-19 crisis, 63% (119) of the respondents liked to visit the store, mall, and market to shop rather than 37% (70) online mode of shopping. Thus, reflecting the preference for physical mode of shopping before the pandemic.
Table 2: The preferred way of shopping before Covid-19
Table 3: A preferred way of shopping during Covid-19
Although table 3reflects, after the covid-19 crisis, the situations have changed, and the preference for online shopping has witnessed a decent jump to 55.6%, with 105 respondents preferred online mode. Thus, the Covid-19 crisis has paved the way for e-commerce business and online platforms.
Table4: Buying pattern of consumers:
The reason for the increased preference of the online mode can be summed from table 4where 48.1% (91) of the respondents have accepted online mode as a usual way of their shopping, and 27% (51) of the respondents have accepted online mode for specific occasions. However, there are still 13% of the respondents who do not have trust in the online mode of shopping; therefore, prefer shopping from stores, and 6.9% of the respondents may start preferring online mode once they have developed the trust. Therefore, it can be understood that trust serves as one of the significant componentsfor adopting online mode for shopping.
(b) Analyzing changing attitude and buying behavior of consumers:
Table 5 reflects the changing attitude and buying behavior of consumers amid Covid-19. 24% and 37% of the respondents are highly agreed and agreed that they experienced a shortage of products at stores. During a pandemic, it is only 32% who agree to stock products that they would not otherwise stock up though 35% are neutral about it, and 18% disagree on stocking up products. 29% agree about online shopping, whereas 23% disagree with online shopping. 30% of the respondents are shopping at the stores where they would not otherwise shop.
Table 5: Changing attitude and buying behaviour of Consumers:
|
Statement |
5 |
4 |
3 |
2 |
1 |
|
Experience shortage of products at stores |
24% |
37% |
26% |
10% |
4% |
|
Stocking up products from stores, I wouldn’t otherwise stock up |
11% |
32% |
35% |
18% |
5% |
|
Making online purchase when I would usually shop at store |
13% |
29% |
29% |
23% |
6% |
|
Shopping in a store I wouldn’t otherwise shop |
10% |
30% |
34% |
22% |
5% |
|
Delaying purchases of non-essential items |
36% |
36% |
19% |
7% |
2% |
|
Shop more health consciously |
35% |
48% |
10% |
6% |
1% |
|
Shop more cost consciously |
14% |
47% |
28% |
9% |
3% |
|
Shopping for others who can’t afford |
13% |
43% |
35% |
6% |
3% |
|
Now, prefer to purchase locally grown fresh articles |
30% |
42% |
22% |
5% |
1% |
|
Now, prefer ready to eat food articles or frozen food |
8% |
23% |
32% |
26% |
10% |
|
Now, prefer purchasing from trusted and known branded products |
29% |
35% |
28% |
6% |
2% |
|
Eating and drinking out less than before |
39% |
32% |
19% |
5% |
5% |
Source: Computed Data
Kinds of products: 36% of the respondents highly agree at delaying the purchase of non-essential items, that gives companies an opportunities to focus on the production and marketing of essential goods.48% of the respondents will tend to shop more health cautiously, and 47% tends to shop more cost cautiously. 43% agree to shop for others who cannot afford it.
Brands: 42% agree to purchase locally grown products. Thus, reflecting growing opportunities for local business and local farmers. Though, the study reflects neutral (32%) results for consuming packed products. 35% tend to purchase branded products, and 39% prefer avoiding eating and drinking out.
Table 6: One Way ANNOVA:
|
Statements |
Gender |
Age |
Income |
Occupation |
||||
|
|
Levene’s test
|
P value |
Levene’s test
|
P value |
Levene’s test
|
P value |
Levene’s test
|
P value |
|
Experience shortage of products at stores |
0.214 |
0.507 |
0.109 |
0.282 |
0.361 |
0.905 |
0.215 |
0.303 |
|
Stocking up products from stores, I wouldn’t otherwise stock up |
0.141 |
0.25 |
0.032 |
0.688 |
0.534 |
0.123 |
0.421 |
0.751 |
|
Making online purchase when I would usually shop at store |
0.828 |
0.337 |
0.805 |
0.537 |
0.511 |
0.675 |
0.786 |
0.513 |
|
Shopping in a store I wouldn’t otherwise shop |
0.918 |
0.055 |
0.258 |
0.026 |
0.02 |
0.383 |
0.739 |
0.112 |
|
Delaying purchases of non-essential items |
0.557 |
0.703 |
0.69 |
0.248 |
0.273 |
0.951 |
0.968 |
0.658 |
|
Shop more health consciously |
0.757 |
0.117 |
0.868 |
0.002 |
0.644 |
0.277 |
0.482 |
0.007 |
|
Shop more cost consciously |
0.124 |
0.111 |
0.485 |
0.303 |
0.908 |
0.701 |
0.202 |
0.538 |
|
Shopping for others who can’t afford |
0.448 |
0.177 |
0.738 |
0.929 |
0.072 |
0.647 |
0.21 |
0.282 |
|
Now, prefer to purchase locally grown fresh articles |
0.473 |
0.112 |
0.611 |
0.317 |
0.205 |
0.271 |
0.228 |
0.82 |
|
Now, prefer ready to eat food articles or frozen food |
0.111 |
0.098 |
0.712 |
0.313 |
0.07 |
0.382 |
0.7 |
0.929 |
|
Now, prefer purchasing from trusted and known branded products |
0.492 |
0.37 |
0.016 |
0.255 |
0.897 |
0.47 |
0.063 |
0.578 |
Source: Computed Data, at 5% Level of Significance
The above table 6 represent the results of the Independent Test for gender and One-way ANNOVA for rest of the demographics. Since both the tests are is robust of violation of normality (Lumley, Diehr, Emerson, and Chen,2020) therefore, the test is further proceeded with testing second assumption of homogeneity in variance. The thumb rule state that if p value of Leven’s test is more than 0.05 (5% level of significance), then there exists homogeneity of variance. From above table it can be observed that significance value of Levene’s test is more than 0.05 for all statements, therefore there exist homogeneity of variance. Therefore, we now proceed with Independent T test and One-Way ANNOVA. The significance value of both the test for all statement is more than 0.05, therefore we accept the null hypothesis that there is no significance difference between changing behavior of the consumers and demographics. Thus, it can be inferred that the changes are solely due to Covid.
Spending analysis of consumers:
Table 7reflects the change in the way consumer tends to spends and buys during pandemic and lockdowns. Inspiring from the study conducted by company EY in 2020, new segments of the consumers have been identified, in the study, who tends to spend and behave differently due to pandemic. The first category of the consumers is stockpilers and savers, followed by, cut deep, calm and normal consumers, and spenders.
Table 7: Spending analysis of consumers in a different phase of lockdown:
Overall, 38.6% of the consumers believe that their buying habits have been fundamentally changed that gives new opportunities to the consumer goods company to bring products as per the changed requirements and preferences of the consumers. The knowledge of these newly evolved segments of the consumer will enable the companies to focus on a specific segment of the consumers thus,formulating new and successful strategies to meet the changing needs and preferences of the consumers.
Analysis of the spending on items after Covid-19 crisis:
Figure 1, reflects the items on which consumers want to spend after a pandemic. The list of items that will be purchased by consumers after Covid-19 was topped by the hygiene items(45.5%), followed by vacations (33.33%), personal care items (28%), clothing and footwear (21.2%), and visit a restaurant (15.9%). Thus, companies must focus on the production and supply of a new product line that solely concerned with health and hygiene. Further, consumers are interested in vacation and restaurants; thus, travel and tourism and hotel industry must focus on the formulation of new and safe strategies and ways to welcome their consumers.
Figure 1: Items to be purchased after pandemic.
Source: Computed data
Concerns of the consumer affecting buying decisions of consumers:
Figure 2, reflects the primary concern of consumers during the crisis. Impact of the economy (64%) followed by the impact on health (57%) and impact on job security and income (56.1%) are the top three concerns or issues consumers are worried about amid Covid-19 that may affect their buying decision during and after a pandemic.
Figure 2: Concern of consumers affecting their buying decision:
Source: Computed data
Expectation of consumers after Pandemic/Lockdown:
Figure 3 reflects the expectation of consumers after the pandemic. 46% of the respondents' consumers expect to spend less and avoid wasting money and be more responsbile consumers. It is followed by work from home(39.7%), avoiding international travel (37%), avoid going to movies, concert, and events (36.5%). It can be understood from the analysis that a new workforce is evolving that prefer to work virtually rather than at a physical workplace.Consumers are evolving as more responsible ones and tend to avoid waste money.
Figure 3: Expectation of consumers:
Source: Computed data
36% of the respondents will avoid going to malls (36%), and avoid eating in restaurants (35%), and others. This reluctance of consumers to visit mallsmay compel owners of malls to change the way they sell and operate. (Mukherjee, and Mukherjee 2020) Also, issues like whether salesman washes their hands are trials of products are any safer, preference for online platforms, staying away from crowds may affect the visit of consumers to malls.
Conclusion and suggestions:
From the above analysis, it can be concluded that pandemic and lockdown have affected the way consumers tend to purchase. Demographics at this phase of pandemic does not contribute to the changing buying behavior of consumers. This pandemic has paved the way for online platforms and a new form of communication to connect to the consumers.Though there are consumers who are reluctant to shop online due to lack of trust, especially about lack of safety in the way they pack and deliver. Therefore, companies must come up with strategies that may build trust among consumers.
Impacts on the economy, job security, income have been the primary concern for the consumers that may affect their buying decisions.Therefore, the company should formulate strategies that are price sensitive.Industries like tourism and hotel are worst hit due to pandemic, but consumers still tend to spend on vacation and restaurants after pandemic;thus, leaving both the industries with new opportunities to serve their customers.
Pandemic has also evolved the new segments of the consumers that tend to have different spending patterns. Savers, spenders, calm and normal consumers, and cut deep are the new four segments of the consumers. These new segments of consumers and their buying style will change the market use to operate; thus, giving new opportunities to the consumer company and retail sector to reshape the consumer market.
New social distancing norms, sanitization, temperature checking have created new settings within the malls and restaurants. Moreover, with thesenew norms, consumer behavior can be changed profoundly, and selling products may become difficult, leaving malls and brands within the malls in a dilemma whether to adopt lenient or strict policies like product trials, product return, and pricing.
Adherence to social distancing more hygienic lifestyle, preference of local shops that may provide online delivery, adoption of contact less delivery are few suggestions to deal with the situation. Furthermore, increased efforts on sanitizing the products during delivery products, cheaper pricing of the goods, purchase of local goods, formulation, and implementation of stricter traveling policies, are few other suggestions that can be utilized by companies and other stakeholders.
References:
Lumley, Diehr, Emerson, and Chen, (2002). The Importance of The Normality Assumption in Large Public Health Data Sets. Annual Review of Public Health 23. 151–169 https://www.annualreviews.org/doi/pdf/10.1146/annurev.publhealth.23.100901.140546
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