Expert Insights: How COVID Will Change Consumer Behavior Forever

As part of our ongoing Roundtable Discussions, we chatted with extremely informative and insightful Steph Smith, Founder of Integral Labs. We spoke about some of the emerging industry trends due to coronavirus, surprising consumer behavior, and what life will look like in a post-COVID world.

1. What are some examples of a well-executed pivot by an industry or company that you’ve seen?

Yes, there are so many impressive businesses that have pivoted, both large and small.

Some of the more well known examples tend to be larger companies pivoting their supply chains to make PPE or sanitizer. Some examples of this are Ford repurposing its infrastructure to produce ventilators and face masks, Lyft using its fleet of rideshare vehicles to deliver medical supplies, or LVMH redirecting entire factories to support sanitizer production.

But of course, it’s not just the huge companies that are pivoting. Many small businesses are having to sell their products online or completely change the goods or services they’re offering. One great example is Mr. Holmes Bakehouse, which went from losing $3m in wholesale bakery orders to quickly developing DTC baking kits, despite no experience in eCommerce. He’s now aiming to scale the kits to $100k in daily sales, after an impressive start to the new business model.

For more innovative pivots, you can find a few great examples in this article, written by a friend of mine.

1. What are some consumer trends or behaviors that you think are short term vs. long term and lasting?

The important thing to understand about COVID-19 is that it’s reformatted our priorities and done the following:

• Created some new problems
• Made some old problems obsolete

When evaluating whether our collective behaviors will continue past the short-term, we should be asking ourselves the question: “Do we think this particular problem will still exist in 3 months? How about 12?”.

There will be some subset of companies that are seeing surges in demand now (like bread baking kits) that I don’t think will hold on for long past the pandemic. The short-term interest in bidets, while toilet paper was out of stock, is another good example of something that died off quickly.

On the other hand, there are new problems that won’t disappear immediately and have to some extent, completely reshaped our society as we know it. Masks in the Western world, are a discrete example of a change that likely won’t be reversed for some time. It will become embedded in our culture.

We also are seeing that certain trends that were already gaining traction, like remote work or the gig economy, are getting accelerated significantly. I recently heard someone refer to this phenomena in the following way: some of these companies are getting to lease out new users for free. They’re getting to a test-run with these individuals and some of those people will eventually switch back to their old behaviors, but some people will stick around.

I think anything that was previously being held back by tradition is going to hold its ground even after the virus subsides.

1. Have you noticed any positive trends in emerging industries or consumer behavior? (e.g. more charity-focused etc.)

This seems obvious, but everything digital is taking off. This was a trend prior to the virus, but the entire world is now being forced online. Remote work. Digital contracts. Telehealth. Virtual concerts, museums, happy hours, school classes, etc…

Prior to the virus, a combination of tradition, infrastructure, and a “techlash” (re: privacy, monopolies, etc) held back tech from being even more integrated into our lives. Now, all of that has become moot. The world is working on getting more people online – with some companies like Charter Communications seeing a 42% growth in internet sign ups in Q1. That should only accelerate in Q2. Meanwhile, the FCC made a ruling to free the entire 6GHz band for wifi, quadrupling available bandwidth. You’re seeing companies implement automation while people are at home, and for better or worse, much of this technology will stick around after.

I do think you’re seeing an increased sense of charity across companies – even companies like Amazon and Instacart are wary of profiting during these unfortunate times. It’s hard to say how long this will last.

1. How can struggling industries/companies tap into the other growing industries and trends?

This is a good, but really difficult question. I think it’s important for any company to really start at zero. Imagine you were starting a company from scratch. Ask yourself: what problems do you see in the world? What needs fixing? The special thing about a pandemic is that it brings things to light in really obvious ways. Marc Andreessen points out in his article, It’s Time to Build, how many stark gaps there are in our societies.

I would really encourage existing companies to ask themselves the difficult question: “Does the problem that I was solving before still exist? Will it exist after COVID-19 and if so, in what form?” From there, you can start to really think outside of that box that you’ve probably put your company in and think from first principles. In other words, don’t just think about how you can take your existing product online, but consider whether you should be selling something new altogether.

You may also consider taking this time to repurpose your knowledge. For example, if you know how to build an ecommerce business, but currently there is no demand for your particular product, you could either sell a new product or support other companies by creating a course about how to effectively set up an ecommerce business. Someone in our Trends community has actually built out an eCommerce as a service business.

Remember, some of the best companies in history were created during recessions, because they force companies to provide things that people need versus what they want.

1. What are some things that SMB can do right now to counteract the negative effects of COVID-19 on their business? (any examples of some that did this well, if you have them)

It sounds brash, but first and foremost, SMBs need to cut their expenditure to ensure a longer runway. No one knows how long this will last. Many advisors are telling their startups to aim for up to 2 years of runway.

Something to keep in mind, regardless of how quickly restrictions ease, is that the economy is a complex group of entities that are all related. Even if parts of the economy start to heal, the damage to the cycle is likely already done and we will likely see some form of decreased economic activity for a while.

1. Any surprising industries that are emerging or thriving during this time? Why do you think that is?

Here are some industries that we’re seeing surge during this time. I wouldn’t call any especially surprising, but I also don’t expect that many will last. Anything that is really solving the problem of “an unreasonable amount of time being spent at home” will subside in coming months/years.

1. What impacts do you think COVID-19 will have on the consumer and how they spend, post coronavirus?

I think there will be many long-term effects that stick around after this pandemic “ends”. I use quotations intentionally, as I think this will forever change certain aspects of the way we live.

Just like prior recessionary periods, there will likely be a decrease in discretionary spending (ie: things that you don’t need, but during healthier economic times, you’re happy to pay for). This is in the short or medium-term, and will eventually reverse.

In other words, this pandemic won’t forever change how much people spend (in the long-term), but instead what people choose to spend money on. For example, will universities still be able to charge $50k/year? Maybe not. Students are already asking for refunds.

It’s difficult to say what is to come, but below are some predictions that I think may hold for many years to come.