Customer behavior is changing during Covid-19 times
How different is your world today? In conversations, Indian CEOs and strategy heads are already noticing changes in behavior among Indian customers since mid-March. Uday Kotak, Managing Director at Kotak Mahindra Bank, calls the present time the AC, or After Covid period .”The virus is going to be with us for a while, and call the time before March 2020 as Before Covid, and after March 2020 as After Covid”.
In todays era, customers everywhere according to industry insiders, are playing it safe. For instance, Maruti Suzuki CFO Ajay Seth says that since the recent reopening of sales offices, they are noticing customers in showrooms showing a preference towards the smaller car. Customers have become cost and savings focused, and are therefore not considering premium and midsize segments. Purchases, according to other auto observers, is also moving towards pre-owned cars rather than new ones.
This trend is only likely to intensify in the coming months. People look at their friends, family and neighbors for buying signals.
Banks have noticed that business customers have taken advantage of the loan moratoriums even though they have sufficient working capital. They are conserving cash until the epidemic’s impact becomes clear. In the FMCG sector as well, Marico CEO Saugata Gupta says that customers are becoming more value seeking, which is leading towards sales for bottom of the pyramid products. There has also been a surge in home cooking among middle-class customers, he notes, and a shift towards healthy options.
In addition, CEOs at M&M Financial Services and L&T Finance Holdings are seeing a very rapid shift towards digital adoption, even among rural customers. Part of the reason is simple practicality — because physical branches for businesses have been closed, call centre staff helped customers across segments set up apps and wallets, as well as online payments on their phones. Companies like Blue Star and Maruti Suzuki are also encouraging customers to try out virtual demos and digital experiences to purchase products.
Will such digital adoption stick? Digital channels in payments and loan applications are more convenient, and time-saving. Once customers get used to that, they are going to avoid queues and physical branches as much as possible.
On the other hand, purchases of big-ticket products via virtual demos? This is really unlikely at scale. Customers want touch and feel before they spend money on something like an air-conditioner.
In sectors like real estate, Godrej Properties Executive Chairman Pirojshah Godrej has a different take. Covid19 will “increase people’s desire for the security home ownership offers, he says, pointing out Chinese consumer behavior. Residential real estate purchases in April showed strong year on year growth in China, after the peak of Covid faded.
Overall however, trends are clear. The After Covid era is an unnerving time, and even the most persuasive salesman is not convincing people to make big spends.
That means that shops and businesses will be hit as wallets stay in pockets, and purses remain closed. Businesses will find themselves stretched through the next quarter.
