Quarantines across the world have exposed all economic agents to a life of isolation. As factories shut down or work at reduced capacities, consumers become homebound and governments struggle to keep the economy afloat, economists seek to analyse the effects of this isolation. This 3-part series will look at the effects of quarantines and isolations through different perspectives — micro and macro, consumer and producer, and more — to understand how the economics of quarantines and isolations work.
This article will focus primarily on the adapted consumer behaviour to look at the psychological effects of lockdowns and their manifestations as economic actions.
“Our research indicates that new habits formed now will endure beyond this crisis,permanently changing what we value, how and where we shop, and how we live and work.” (Accenture.com)
The effects of lockdowns were perhaps most evident in the actions and decision-making of consumers across the globe. Due to a prolonged period of being at home, consumers had to severely alter their shopping habits and methods. “80.7% of respondents said they have started washing their hands more, 19.2% have started stockpiling food or other resources in case of shortages, and 12.6% are now actively choosing to shop online rather than go to a store. Only 4% of respondents said they’d made no change to their behaviour in the wake of the virus” (Attest).
Many analysts predict that this adapted consumer behaviour, which is still evolving as the pandemic continues, will tend to stick around for quite some time, making it a paradigm shift in consumer behaviour.
A new habit emerged in the pandemic — quick response to information. With every major development in the news regarding the pandemic, grocery store shelves observed a rapid consumer response. According to a Nielsen study, consumer response to news and announcements was noticeable within a span of a mere two weeks. If this habit continues to persist, it will imply a significant change in demand elasticities for countless products (given the fact that the time period is an important consideration), as consumers react much quicker.
The pandemic also marks an interesting change in consumer priorities. As consumers become more aware of the health-risks of shopping blindly, there is an increase in concern for hygiene and sanitation. Research indicates that this has also externalised in the ‘buy local’ trend. Consumers believe that locally-produced products are more likely to be hygienic (read: COVID-free). This rise in conscious consumption has transformed the way producers are marketing their products.
The evolution of these changing consumer trends has also been quite interesting. Nielsen identifies 6 stages of consumer behaviour amidst COVID-19 concerns. The first stage is Proactive Health-minded buying. This stage can be correlated with the birth of hygiene as a priority. In this stage, there is a general increase in interest in products that promote health and wellness such as sanitisers. This stage is followed by Reactive Health Management (stage 2) during which consumers actively prioritise products essential to prevent the spread of the virus, such as masks. The third stage — Pantry preparation — can be marked using the announcements of local and national quarantines in various locations. This is the stage best associated with panic purchases as grocery store visits spike along with demand for foodstuffs with long shelf lives.
With the 4th stage, Quarantined Living Preparations, the shock of lockdown news settles down and people begin accepting the restricted living lifestyle. In this stage, many key consumer trends emerge as people cope with the state of isolation. In stage 4, there is a rise in online shopping which puts a strain on the supply chain. The later stages of Restricted Living (stage 5) and Living a New Normal (stage 6) mark how the pandemic has changed consumer behaviour for good as lifestyles are altered with the use of e-commerce, permanent shifts in supply chain and hygiene practices.
The 6 stages of consumer behaviour mark and analyse the evolution of consumer habits in the journey of the pandemic. However, there is more to the evolution than just a transition from panic purchasing to building stock in routine grocery shopping. It entails a gradual shift into finding balance and happiness in the restricted living lifestyle. The pandemic affects lives so deeply and adversely that consumer needs change on a psychological level too, rather than just a logistical one. Coping with restricted and isolated living has been difficult. So many of the traditional entertainment and recreational activities are no longer available — travelling, cinema hall trips, mall visits, park outings and many more. As people try to manoeuvre through this maze of endless lockdowns, they cling to certain activities to help weather these storms. Thanks to lockdowns across the world, activities like baking, gardening or reading have become an integral part of consumer behaviour.
According to Google Search trends, the frequency of searches for ‘Baking’ increased by 61% since the 8th of March. The frequency of searches for ‘DIY’ (do it yourself) increased by 46% and ‘Recipe’ increased by 55%. The frequency of all of these searches peaked during the second week of April. This strongly suggests that consumers have been looking for activities to do at home during the quarantine period more than usual.
When asked ‘What is helping you cope whilst staying at home?’, around 45% Britons replied Cooking, and 42% of them replied gardening. Sales records corroborated this popular opinion as British grocery shops identified a 92% increase in the sales for flour in March and a 115% increase in demand for suet. Lily Barclay (editor of bbcgoodfood.com) says
“The motion of stirring, beating and kneading can be meditative and the results are very rewarding, which is why we are seeing a surge in people wanting to learn new baking skills”.
The results of the survey indicate a change in consumer behaviour that goes beyond just basic necessities and hygiene products. The complete change in lifestyle brought by the pandemic has a crucial psychological aspect that has increased the need for cathartic activities like baking and gardening. In a way, consumers are looking for coping mechanisms which are evident from their shopping carts.
The most talked-about change in consumer behaviour has been about the change in hygiene practices; the increase in demand for masks, or sanitisers. This is because the pandemic made these products a necessity of sorts. Perhaps that is why the increase in demand for these goods overshadowed the increase in demand for baking or gardening products. The goods that have been helping consumers cope with the pandemic have come in the spotlight much later, probably because baking and other coping mechanisms emerged somewhere around Nielsen’s 4th or 5th stage. In contrast, the rise in demand for sanitizers was evident from the first stage. This difference can be explained using Maslow’s hierarchy of needs.
Maslow’s Hierarchy of Needs is a motivational theory popular in psychology and management studies. It is a pyramid that represents the importance of various human needs in relation to each other. According to the hierarchy, basic needs (safety needs and physiological needs) need to be satisfied before psychological needs. This explains why sanitisers and masks were bought in stage 1 and 2 while baking ingredients were bought in stages 4 or 5; hygiene products have become a part of our physiological and safety needs while our coping mechanisms are a part of our psychological needs. This comparison is important because it signifies the change in the status and nature of these products; they have become less of luxuries and more of needs and basic wants.
This outbreak has forced consumers to adapt to different lifestyles. It has transformed the way we think about our consumption patterns and habits. Yes, our grocery lists look quite different today than they did 7 months ago, not just in terms of the items listed but also their quantities. The climate of instability and uncertainty in the air has brewed for so long that it has become an instinct to prepare for the worst. ‘Why buy only 2 packs of chips? In case there is a lockdown again or the stores shut down, it makes sense to buy 5.’
The very way consumers approach shopping has changed. The act of shopping has become a dense mix of making sure all their needs are catered for whilst ensuring that they have everything to make this quarantine as smooth as possible — which can be something as complex as ingredients for a chocolate souffle or as simple as renewing Netflix subscriptions. This is different than before because the certainty of an uneventful tomorrow made them spread our shopping over the entire month, perhaps even on a day-to-day basis. It also explains why consumers are so prompt in our response to new information; new announcements and curveballs are expected in this unexpected situation.
With the storm the pandemic has brought in everybody’s lives, this article has only been able to cover a small portion of the multiple ways consumer behaviour has changed. This transformation is more of an on-going evolution, which will adapt to more situations in the days to come. Eventually, as things normalise, many of these new habits will stay with us while some will fade. Either way, out of this chaos, we will strike an equilibrium…
Advaita Singh is a Second-year Economics and Finance major at Ashoka University.
One response to “The Economics of Isolation (Part 1): Thinking like a consumeR”
The way we looked at things and how we treated them is changing and evolving to a “new normal.” Including the way digital billboard advertisements are run. This is set to bring about the best in all of us as we learn how to overcome a crisis in our lives and to live by adapting ourselves to it.