10 June 2020
Mirror, mirror, on the wall…
by Ben Saunders
Speculation about the shape of life after coronavirus has been a prominent feature of the last few months, with commentators and consumers alike seeking clarity. Is this the end of the world as we know it? An acceleration of existing trends? Or merely a hiccup before a swift return to the status quo ante? Google searches for ‘new normal’ rose sharply from early March to a peak at the end of April and remain high. Consumer sentiment trackers abound. Inboxes bulge with emails from gurus claiming that their unique approach has never been more relevant than in these unprecedented times.
As lockdown restrictions ease and choice replaces necessity on the decision-making throne, many of the questions will begin to find their answers. Early indications are that the new normal could look quite a lot like the old normal (albeit with more hand sanitiser). Intu recently surveyed 2,000 regular shopping centre visitors[1] and found that 81% plan to visit shopping centres as often or more frequently than before once lockdown ends. 63% intend to spend at least the same amount. The snaking queues outside newly reopened IKEA and Zara stores and the experience of shopping centres across Europe (including several of our clients) are both similarly suggestive of a desire to return to previous behaviours.
Early indications can be misleading, of course. One swallow does not a summer make. China reopened with a bang – the so-called ‘revenge shopping’ phenomenon – which fizzled out quickly, and the threat of a second peak could yet dampen the appeal of bricks and mortar retail as “a source of escapism and light relief from a dystopian reality.”[2] Much about the retail recovery remains uncertain and is subject to an array of non-Covid factors.
Economically, there’s widespread consensus that the UK is heading for what the Chancellor has described as “a severe recession, the likes of which we haven’t seen”[3], which will put pressure on disposable income into 2021. However, it is also worth considering the impact of lockdown, furlough and redundancy on purchasing power for the rest of 2020. For some, restricted purchasing opportunities over recent weeks have left them in a stronger financial position now than when lockdown began. A record £7.4bn in consumer credit was paid back through April alone[4]. For others, though, the impact of coronavirus has been devastating. Over 8 million workers have been furloughed, many on a significantly reduced salary, and thousands more made redundant – to say nothing of the self-employed[5]. The polarity of post-pandemic purchasing power could well mean that some brands and categories bounce back quickly, while others take much longer.
Another factor, discussed by David Taylor and his colleagues at brandgym, is consumer satisfaction with the changes they have had to make over recent months. Taylor suggests that “snap-back” is more likely in the case of low-satisfaction changes (such as takeaways in place of restaurants or DIY haircare in place of hairdressers); high-satisfaction changes (such as online fitness classes in place of expensive gym memberships) are more likely to stick[6]. And the longer lockdown lasts, the more likely that temporary shifts in behaviour become permanent habits. A similar dynamic will inform the extent to which e-commerce continues to thrive when alternatives become available again.
Still a further consideration is the time it will take to restart global supply chains, many of which have ground to a halt over the last 6 months. This delicate process is complicated by the possibility of a second wave of the virus, leading researchers at University College London to suggest that “gradually easing lockdown measures over 12 months would minimise supply chain impacts compared to lifting restrictions more quickly, over two months, and then introducing a second round of lockdowns.”[7] There may therefore be a lag between demand, which could recover quickly, and supply, which may lag behind in some cases.
Much as shoppers may wish to return to their pre-coronavirus spending habits as soon as restrictions allow it, the speed and shape of the retail recovery will be determined by more than consumer goodwill and government permission. As uncertainty lingers, speculation about the ‘new normal’ looks set to be the new normal.
[1] https://www.intugroup.co.uk/en/insights/the-new-normal-retail-during-and-post-covid-19/
[2] Grazia, Face masks, appointments and quarantined shoes: shopping’s new normal
[3] https://www.ft.com/content/0df5844c-1e51-44cb-a3ed-b68373f7d05e
[5] https://www.theguardian.com/money/ng-interactive/2020/may/30/cash-coronavirus-financial-shape-money
[6] https://thebrandgym.com/will-covid-19-change-everything-or-nothing-for-brands/
[7] https://www.ucl.ac.uk/news/2020/jun/slow-easing-lockdowns-may-be-better-global-economy
