Skews, corrections and transformations
The Coronavirus crisis has led to many obviously temporary changes in consumer behaviour – think toilet paper.
But where those changes happened in categories poorly-aligned with consumer needs, or in which disruptive innovation was waiting in the wings, things get interesting.
We can think about three different types of change:
1 / Skews: Temporary changes without an underlying driver in consumer needs.
An example flagged by the BBC recently is the uptick in cosmetic surgery globally as people seize the opportunity to recover at home, out of sight of nosey colleagues. Here the crisis unlocked pre-existing demand but will prove to be temporary – as lockdowns lift the opportunity passes.
Skews are short-term but can be valuable while they last for businesses agile enough to respond. Kin+ Carta’s recent webinar offered some useful thoughts on how to spot skews and how to leverage existing assets to address them.
2 / Corrections: Longer-lasting changes triggered by the crisis that also align with consumer needs. In the absence of relevant innovation, these may rearrange spending and consumption but won’t fundamentally alter a sector.
Simplification within grocery retail is a good example of this.
A previous crisis – the arrival of the German discount stores – had forced through several rounds of range-rationalisation and a shift away from traditional promotions towards everyday-low-price models. But despite that, many FMCG categories went into the crisis with heavy volumes sold on deal and long lists of SKUs.
Greater manufacturing efficiencies, simpler logistics and a desire to limit panic-buying have seen SKU counts and promotions drastically reduced since March.
We expect this kind of correction to be one that stays with us in the medium term at least because complex promotions and deep SKU portfolios rarely served consumer needs well. They were typically ways to secure shelf-space or a zero-sum game of escalation between competing brands, encouraged by retailers. The reset forced by the crisis can benefit consumers and brands alike.
3 / Transformations: Large-scale, fundamental shifts in markets where changing needs meet with new solutions, and sectors are jolted into new shapes by the crisis.
The theme linking many of these transformations is changes to how we sell.
Some of these have already become commonplace just a few months into this new world: a resurgence of direct-to-consumer (D2C) selling, restaurants spinning up delivery services, and an acceleration of the shift towards e-commerce. With Financial Advisers less easily accessible we expect to see the slow shift towards D2C models in financial services pick up pace too.
Some are more subtle – such as the changing role of reps in pharmaceuticals. Sophie Bradley from our Health team wrote about this recently and her thoughts on the changing skills needed by salespeople applies to many sectors where in-person show-and-tell is no longer an option.
These changes are likely to be the longest-lasting as well as the deepest. Enabled by technology that was largely already in place, these changes offer genuine efficiency benefits (Rory Sutherland spotted that long before the rest of us). All Coronavirus has done is provide the spark to get things started.