Will COVID-19 change consumer behaviour for the long-term?

“The COVID-19 pandemic offers countries an opportunity to build recovery plans that will reverse current trends and change our consumption and production patterns towards a more sustainable future.”                                                   United Nations 

Since the start of the COVID-19 crisis, our levels of consumption have dropped significantly. This has impacted many industries, mostly negatively, though some have flourished. In this blog I explore how these changes in our consumption patterns impact the sustainability agenda, whether sustainable consumerism is likely to last in a post-COVID world and what this means for business.

Changing consumer behaviours

The changes in consumption patterns are of course driven by the forced closures of retail outlets in most geographies which has a significant impact, but will only last until such restrictions are lifted as is gradually happening. The more long-term impact in consumer spending is driven by financial concerns as many consumers don’t expect to have the same spending power as before the crisis as a result of job losses and a drop of income.

According to McKinsey market research from early May, consumer behaviour has changed significantly as a result of the crisis and a number of these behaviousr are likely to become the new normal:

• Consumers in most countries expect their personal finances to be affected by COVID for at least 4 months
• This is affecting all categories of consumer spend with the exception of groceries, household products and home entertainment. The only country that is relatively bullish about the recovery is China where life is gradually returning to some form of restricted normality.
• A new category of consumer spend has emerged from the crisis: ‘low-touch activities’, which together with digital activities have unsurprisingly seen significant growth since the crisis began. These include take-away and delivery services, online gatherings, telemedicine and remote learning and exercise. Outdoor and fitness activities, remote learning for oneself, and digital entertainment are likely to remain strong in a postcorona world.
• In contrast, non-grocery shopping in stores and visits to the mall are likely to see a significant drop, as is domestic travel. Only going to the store to buy groceries is likely to remain popular after restrictions are lifted.

Further analysis by the World Economic Forum has identified two industries that are likely to be particularly hard hit: Travel and Apparel.

The travel industry has seen a dramatic fall in passenger numbers as travel has been more or less frozen across the globe. As a result of this, citizens and global workforces have embraced remote technology and been surprised by its effectiveness. As I wrote in a previous blog, this is likely to result in changing behavioural patterns that will remain in place postcorona. Homeworking will become far more acceptable – indeed expected – and business travel will be reduced as all companies embrace remote working technologies.

It is less clear whether leisure travel will suffer the same fate in the long run. While you can come close to replicating a business meeting and reducing travel has many cost benefits – critical in the current economic climate - and health benefits, you can’t have a virtual holiday or visit special locations virtually, even with the best virtual reality glasses!

Whether green recovery packages, such as the one developed by the European Commission which prioritises low carbon solutions, will influence both of these remains to be seen.

Apparel is another sector that is struggling. For an industry that was focused on speed of production to meet the ever-changing needs of consumers, the drop in consumption has hit hard and signals are that the recovery may be slow, with China seeing a 40-50% drop in consumption compared to pre-COVID levels, in spite of stores re-opening. A re-adjustment may be taking place which is unsurprising for an industry that produced more than 150 billion garments per year, enough to provide more than twenty new articles of clothing to every person on the planet. Until recently, we bought 60% more clothing now than we did 15 years ago, and only keep these garments for half as long.

What is sustainable consumption?

The United Nations’ Sustainable Development Goals has a goal dedicated to ‘Sustainable Consumption and Production’ defined as “the use of services and related products, which respond to basic needs and bring a better quality of life while minimizing the use of natural resources and toxic materials as well as the emissions of waste and pollutants over the life cycle of the service or product so as not to jeopardize the needs of future generations”.

Sustainable consumption is a critical part of the transition to a more sustainable future. Simply put, our material footprint is rapidly growing, outpacing population and economic growth, and if the global population reaches 9.6 billion by 2050 as expected, the equivalent of almost three planets could be required to provide the natural resources needed to sustain current lifestyles. The recent growth in the apparel industry described above being a case in point. This is unsustainable at every level.

But over-consumption is not only an environmental challenge, it is also a societal challenge that impacts our financial stability and sense of wellbeing. This is best captured by Professor Tim Jackson, author of the excellent Prosperity without Growth:

“People are persuaded to spend money we don’t have, on things we don’t need, to create impressions that won’t last, on people we don’t care about.”

This might seem controversial in our modern-day consumerist world, but the more you read, the more sense it makes. Consumerism appeals to our extrinsic motivations, which are driven by a wish to receive a reward or avoid a punishment as opposed to intrinsic motivation where the behaviour itself is the reward. See the work of Shalom Schwartz for a detailed analysis of this. In the next section I will argue that COVID has reinforced intrinsic motivations.

Is our current crisis likely to result in more sustainable consumption?

It is clear that consuming less – as is currently the case – is very sustainable from an environmental perspective, but COVID-19 is also changing our relationship to things. This is partly prompted by financial insecurities and partly by a reassessment of what matters. As we spend more time in nature and with loved ones and value lost social interactions we feed our intrinsic motivations at the expense of the need to purchase things that feed our extrinsic motivations. An interesting symptom of this trend is the challenge social media influencers, who tend to feed unsustainable consumption through their depictions of the ‘perfect’ life and look, have lost their appeal since the pandemic started.

An Accenture survey carried out in early April in 15 countries showed that consumers were being drawn towards more sustainable consumption and that these changes were likely to stick:

• 60% of respondents are spending more time on self-care and mental well-being, with about six in 10 consumers (57%) saying they have started exercising more at home;
• 64% of consumers said they’re focusing more on limiting food waste and will likely continue to do so going forward;
• 50% of consumers said they’re shopping more health-consciously and will likely to continue to do so; and
• 45% of consumers said they’re making more sustainable choices when shopping and will likely continue to do so.

The good news for business

Sustainable consumption does not necessarily mean a drop in consumption revenue. It means a shift to consumption patterns that are less destructive to the planet, meet basic human needs and enhance wellbeing. Those companies that are able to deliver these will find traction with consumers that have different needs than they did prior to the pandemic. But to succeed they may need to reconsider their production processes and business models:

• Reduce the energy intensity of your products across the entire value-chain
• Reduce the materials intensity of your products
• Increase the useful life of products
• Identify opportunities to shift from product sales to service delivery business models

I will return to these themes in next week’s blog which looks at the potential of the circular economy to support create a sustainable, healthy and resilient post-COVID economy.

I will leave you with the words of Mahatma Gandhi who, prescient as ever, summed up sustainable consumption best:

“The world has enough for everyone's needs, but not everyone's greed”