Times are changing, and many of these changes will either stay for a long while or continue to persist after the pandemic. The pandemic has accelerated buying trends, thus creating new priorities and psychological profiles of shoppers. This has made understanding consumer behavior more important than ever, yet has never been more intricately challenging. Brands are finding that balance between becoming agile and accelerating digitalization while maintaining brand authenticity and relevance to the market.

The Philippines has one of the longest lockdown and community quarantine relative to the pandemic. Even as contagion is still present, the government is slowly relaxing restrictions to revive the economy. But with thousands either losing their jobs, taking on pay cuts or being placed on furloughs, consumer spending has decreased.

The good news is – PEOPLE WILL CONTINUE TO SPEND. 

In fact, the pandemic brought in new retail channels, accelerated digitized transactions, introduced supplemental contactless services such as call/text to order for a store or curbside pick-ups — all anchored on serving customers and keeping them safe. While the on-line and off-line spending combined may still fall short versus the pre-pandemic state, spending continues but will be intentional and controlled in the new reality. With limited budgets, the share of wallets will primarily be for food, personal care, and household cleaning. Travel, leisure, and entertainment will slowly return but will take a back seat behind domestic priorities. The challenge now for retailers is to secure that share of wallet from the adjusted and limited budget for spending.

With the majority of Filipinos still fearing contagion, how will the market respond and behave in the new reality?  How should businesses adapt and evolve to better serve consumers?  We share our thoughts and observations from our diverse retail and vast market to help chart strategic business directions in order to stay relevant in the highly complex retail industry during unprecedented unpredictable times.

SHOPPERS WILL STILL WANT TO EXPERIENCE SHOPPING

While e-commerce is on the rise and more Filipino consumers have learned to embrace on-line shopping and cashless transactions, consumers will continue to long for the usual ‘experience’.  Even as digital shopping provides convenience in a click and offers a much better promise of safety, it fails to satisfy the need for personal connection that physical stores provide. Chatbots fall short in extending immediate response-action that consumers are pampered with by store personnel. For many, shopping is a therapeutic activity where the journey in itself is a form of relaxation and entertainment, while the freedom and ability to see-touch-feel the products are gratifying. In this social human nature for engagement and connectivity lies the security of physical retailing enhanced with technology.

VALUE FOR MONEY TAKES ON A HIGHER MEANING

Pre-pandemic, value-for-money was one of the most abused marketing propositions that it has somehow lost its spark. Because it is human nature to value what is lost or lacking, this jargon has finally regained its popularity and relevance. With credits to the uncertainties and unpredictability of the times, VFM is now a critical theme for the new reality. For the consumer, it is getting more for what they paid for.  For the retailer, it is acknowledging that one’s role is no longer simply providing the goods at the right time, place, and price; it is addressing the customer’s expectations of paying for goods that have excellent quality, freshness, and affordability. VFM is communicating well to the consumers that money spent in the store, is money that is worked hard for, is patronage that is valued by the retailer.

ASSURANCE FOR HEALTH AND SAFETY IS A BASIC NEED

As soon as news of the virus hit the streets, establishments felt the painful impact of a rapidly declining foot traffic. Shoppers made fewer trips, quicker visits, and fortunately, higher spend.  However, the magic touch of impulse buying lost its power, cross-selling and up-selling became more challenging with limited people shopping in-store. In a snap, retailing changed and the agile organizations embraced digital technology and other contactless shopping options, linking brick and mortar to online platforms. If there is anything good that the crisis brought, it is the long-overdue advancement of shopping technology and the overall improvement of convenience and service to customers. In reality, though, this shift in shopping behavior that drove all these retail innovations is due to fear of contagion. To slowly ease customers back into physical stores, retailers must continue to prioritize the health and safety of consumers. Physical stores must not be complacent in communicating and religiously practicing safety and precautionary measures. Consumers will only return to the store or slowly revert to their usual shopping behavior if and only if they are confident and trusting enough of the brand they patronize.

REVISUALIZING VISUAL MERCHANDISING

In welcoming the return of warm bodies, store layouts must be adjusted and conformed to evolving habits and preferences. There must be a balance between smart layouts and planograms with considerations for efficient implementation of social distancing, lower capacities, and directed customer flow. It is likely that safety signs and hand sanitation sections will become a staple in every store’s blueprint.  The usual visual merchandising tactics – cross-merchandising, free-standing units, animations, on-shelf and off-shelf displays, impulse stacks, sidekicks and end caps – all must be taken more seriously to optimize space planning and drive larger baskets. While every brand is into innovation, this may be the right time to put in place smart shelf technology for aesthetics and customer analytics.

TIGHTER ALIGNMENT WITH CUSTOMER PREFERENCE

As much as traffic count will be key to survival as pandemic eases, every opportunity must be taken to grow the customer’s basket. Assortment and categories must be reviewed against the evolving market trends and changing customer’s preferences but not to mistake them for the stock-pile pandemic reaction. For instance, the emergence of the home or domestic economy opened the gateways for the baking category to rise from simply being a niche; health essentials became a destination. With issues and concerns on product availability in the past months, brand loyalty waned, allowing secondary or even nameless brands into the retail mainstream. As travel takes the back seat, consumers take comfort in food to take them to places with nothing preventing them from tapping into available channels that could satisfy their global cravings. To secure customer patronage and market interest, variations on relevant assortment must be considered. Simplifying the buying process would be helpful as well in tapping into local markets and growers and start-up entrepreneurs to beef up product offerings. To have a seamless interface across front and back end operations, there may arise the need to reinvest in demand forecasting, assortment and customer analytics to respond to the disruptions in supply networks and in customer behavior as exemplified in the unprecedented COVID-19 pandemic.

IN CONCLUSION :

For businesses to survive and stay relevant, they need to develop a strong understanding of the aspects of the new realities in retail. Consumers will ease their way into brick and mortars as the pandemic restrictions relax because it is natural for human beings to want to connect and engage – an experience they find more satisfying than e-commerce transactions even as they have learned to adopt it. With paranoia prevailing, there will be fewer trips but with potentially higher spending.  Nonetheless, to bring them back into your stores and regain confidence, there is a non-negotiable requirement of being promised health and safety. Faced with decreased customer traffic, lower sales productivity, and inventory issues, brick and mortar stores need to adjust by adding new and relevant product lines to drive sales, rationalize depth and breadth of variations and sizes to accommodate emerging categories. Such adjustments will require interface with store planning and visual merchandising to optimize space. As innovation helps brands to stay relevant, and product offerings and service keep customers’ business, how the brands behaved towards helping others in the midst of the pandemic define the patronage of consumers-turned-advocates. What will continue to resonate in the hearts of the consumers is how brands placed precedence on genuine concern and service for the community it serves beyond business.

COVID-19 has unmistakenly affected global markets, forcing businesses to explore innovative solutions to overcome the  growing negative implications of this unprecedented crisis in what is now known as the new normal.

New Normal. New Psyche.

With products and industries identified as essential and non-essential at a time when the market is stricken with fear and anxiety, convenience and preference as purchase influencers have been overtaken  by immediate product availability and trustworthiness  in the realm of safety in the new normal.

• Consumers have shifted from their brand of choice to what is available and on hand.
• Customers are more cognizant of brand’s ability to be tenacious in upholding promise amidst the crisis.
• Customers gravitate more towards brands that have walked the talk with visible safety and precautionary measures for their stakeholders. Over time, audience fatigue is observed on Covid advertising  without seeing any practical help or action.
• Consumers are moving away from “consumerism,” focusing on service over product.

HEALTH IS PARAMOUNT

As with business and among individuals, health is both a concern and a priority.

While consumers stay within the safety perimeters of home and avoid crowds to protect themselves from contagion, businesses strive to be relevant at this time  to sustain operations.

As business models are reviewed and reinvented to be financially healthy in the new domesticated economy, there remains the greater concern for the well being of communities that needs to be addressed, an expected non-negotiable consumer requirement from all sectors even when the crisis has settled and restrictions are eased.

BEING ESSENTIAL

Unknown to many,  businesses such as supermarkets operating in the midst of a health scare  deal everyday with the inestimable difficulties of managing inventory, logistics and other operational concerns including  pandemic-related anxieties among frontline employees.

On top of all these and the daily risk of exposure, there are higher expectations from businesses  to have a greater sense of responsibility in matters of compliance to  governing ordinances and adherence to protocols in the upkeep of public welfare and safety.

The crisis has upended daily operations as we know in a high risk situation that make operations even more complex while enduring the pains to keep the business afloat and serve consumers best.

BECOMING ESSENTIAL

On the flip side, non essentials work doubly hard on innovating and reinventing themselves to prevent brands from fading into oblivion.  Becoming relevant has become mandatory at a time when the propensity to purchase among consumers  has not only become limited but very meticulous as well.

Branded apparel lines crossed-over from stylish fashion to much-needed PPEs  aligned with their image; others came up with signature face masks and shields that remained true to their brands’ lifestyle edge.  Liquor manufacturers produced sanitizers and disinfectants instead. Fast food chains made available bestselling products on the menu in supermarkets  to save precious inventory from being written off, and to be perceived as a brand that ’empathizes’ with its consumers at a time like this.

Essential or not, all businesses  struggle with challenges and continue to innovate in order to become relevant.  The impact on the economy is global, so tremendous that many folded up causing thousands their jobs, crushing hopes and dreams the world over.

If there is anything good this crisis has done, however, is that is has brought people together, unified opposing views, humbled humanity enough to recognize that no one can live alone, bridging differences to rise again.

WHEN GIVING UP IS NOT AN OPTION

The situation spared no one  – shattering businesses large and small, confining millions to their homes, it has leveled the ground for both economy and society, leaving even the strongest vulnerable to its most destructive effect.

History shows that it is in crisis that the Filipino spirit triumphs.

It gives us pride to witness businesses collaborate and support the with government to help provide the needs of thousands displaced by the crisis.  Faceless corporations suddenly showed humanity, prioritizing  and providing people in their organization help in every way possible. Consumers patronized MSMEs and start-up entrepreneurs and local products. Even payment deadlines have been extended.

As some formats are forced to cease operations, business leaders back up the ones that remain in service.  Others reinvent and rebrand to continue employing thousands.  Rising above profits to people, essential businesses are reinforced with providing additional resources and support to cushion the impact on weaker businesses and keep the economy robust.

The unified efforts of the team are what bring success on the water. No matter how strong individual paddlers are, if a team doesn’t work together, the culture of trust and respect won’t be there and the team can’t go far.

COURSES MAY CHANGE, VISIONS REMAIN

We draw inspiration from some examples  of business leaders who were undaunted by the seeming hopelessness and helplessness of the economy during lockdown.  These are visionaries who instead of withdrawing, marched on ahead in full gear to conquer and succeed.

A retail tycoon courageously enlists his essential business for IPO when stocks are shaky. Instead of taking the hit from other crisis-affected businesses in his conglomerate, the leader tenaciously  reinforce his strongest weapon to counter adversity.

Another retail operator practiced transparency with his people, explaining the potential risk of closure brought by the effects of COVID-19.  Endeared, he got the full support  of his team on improving productivity.  Today, the stores  are   still fully-operational with not one less employee.

A leading local operator stands by the commitment to serve the community best.  Despite being embattled by difficulties surrounding the pandemic, genuine concern for the people and community thru efficient service take precedence over profitability.  Today, the brand remains endeared as one that would stand by its promise, making it stronger even in the face of giants.

The geese migration routes never vary, year after year, even when the flock members change.

In spring, they will always return to where they were born.

The lesson to learn here is to stay true to our core values and purpose.

Strategies, tactics, and products may change in order for an organization to remain agile, but great companies always stick to their core purpose and values, and preserve them with vigor.

WHEN THE WORST BRINGS OUT THE GOOD

A pandemic is a moment of tough choices. Decisions made now  will shape the fate  and define the future of millions.

How do we save people’s lives without destroying their livelihoods? Where do we allocate scarce resources? How do we  protect those who do not have the means to protect themselves? Should we let go of people to cut down on expense? World leaders, business owners, heads families all over the world are trying to find the balance between being sustainable and being helpful.

The choice is not about which business must remain; rather it is about how to become agile to sustain the weak and emerge together more resilient and united, leaving no one behind.

The  pandemic has proven that one law defies gravity.“We actually rise by lifting others. Others do not have to lose in order for you to win. Help others succeed, and we will be successful.”  – Francis Kong 

We want for every Business to be relevant, to thrive and rise above any challenge, and pivot to sustainable success. We are driven more than ever to work with you to make this happen.