The pandemic from China certainly
has set in motion certain behavioral changes conceivably an unintended consequence
of the same. The need for social distancing and the urge to avoid crowds make
people think alternatively to meet their needs. Shopping is turning
increasingly online so would be the food deliveries. People visit eateries to
enjoy and experience. Yet the same experience for instance is to be missed
given the prevailing lockdowns that have become part and parcel of life in the
last thirteen months and so. The people would have to opt for the second best
option perhaps, the online food deliveries. It is not that the people were not
accustomed to online shopping for their grocery needs, their daily vegetable
and fruit needs, their daily needs for food from eateries and of course
expanding to consumer durables to books to CDs to clothes and what not.
The pre-pandemic online buying
behavior was driven by demographics. It was generally the young who felt these
things were cool and thus comfortable and thus have to be engaged in. it was
more of a heft thing within the peer circles. Anyone engaged in the old sort of
offline retail would perhaps be perceived to be looked down and thus would have
enough incentives to opt for online shopping. The traditional crowd would more
prefer to continue with the offline or physical shopping given their comfort with
their medium. They were uncomfortable with the changes that would accompany in
the online format. Therefore, one could safely say that the online buying
behavior was more of a choice driven than a compulsion driven. It was driven by
an urge to experiment, by a feeling of convenience, by a feeling to free themselves
of these routing shopping chores and thus use their cognitive surplus more
productively. It was not something that they had to do because there were no
alternatives nor because they felt alternatives offered a poor choice.
Yet with the pandemic prevailing,
the behavior seems to undergo a rapid change. The continuous lockdowns have
created in two different extremes. The neighborhood grocery store which had
been much vilified got a fresh lease of life. Since the government closed the
hyper markets or supermarkets and malls, the only things that remained open
were the grocery stores for the essentials. The crowd did not have too many
options but opt for grocery for needs of convenience. Therefore, the essential neighborhood
kirana stores once again became the preferred choice. In contrast, there was
the alternative that started to find an appeal. It was the online grocery
shopping. People tend to shop online as stated above for many aspects yet
groceries perhaps remained low on priority in online shopping. This changed
something rapidly. There was of course the given labour shortages, the online
delivery system did come short. There were long waiting queues. The slots were
rarely available. Many a times one would have to wait for days before finally
managing to book the slot for online deliveries. This too helped the grocery
stores quite a bit in terms of pulling the crowd from online to the physical
format.
Yet when one examines the behavior,
the people tend to take time to develop comfort. Once they develop the comfort,
they would prefer to stick to the behavior rather than change the same. When people
got accustomed to buying online, they tend to continue to engage in the same
even after the pandemic fully subsides. In retail shopping, what is of
importance is the category management. People should know where the goods are
available. Each shop may its own merchandising plan. The customer base once it
gets used to the same would find it difficult to switch to other stores
precisely because of this. Similarly, the online platforms too have their own
category management. The customers take time to develop comfort with the
categories and the assortment provided. They tend to take time to become
comfortable with the payment options available on the store. The comfort takes
some time to result in. Once the comfort levels are set in, the customer is
generally locked into the system and there does exist switching costs even
though they appear negligible in theory. This is what would delight the
retailers whether offline or online.
When one would examine the data
maybe once the pandemic subsides and normal life is restored, one might find
that the structural break would be observed in the shopping patterns pre and
post covid. Such a structural break is often observed when there is an
exogenous event that would transform the people’s behavior as an intended or
unintended consequence. Incidentally, when the demonetization happened in late
2016, there was a structural break in payment mode on the part of the
individuals or institutions. There was rapid increase in the shift towards the
online payments models whether the plastic currency or digital wallets or
through online banking. The launch of UPI further reinforced the same. The current
round of pandemic obviously would have increased the pace of digital payments. Along
with the same, there would be a structural break in terms of people shifting
towards online purchases. These purchases would no longer be typical items but
also through essentials which was not so covered in the earlier days. It would
be interesting to see how the super or hypermarkets would tend to view the same
as the post covid life begins maybe in the next few months or perhaps the next
year or so.
The structural breaks in human
behavior are a result of certain events as indicated above. These events are
usually discrete and well-marked. Once the pandemic is over, there would have
developed a certain comfort with the online purchases. Given the hesitancies of
the past disappeared perhaps out of compulsion and maybe self-protection, the habit
is likely to continue for the foreseeable future. The firms which would have
made a mark in the current dynamics are likely to benefit from the continuing
customer patronage in absence of any adverse event. The switching costs would
be relatively higher more so out of the comfort issue rather than prices or
other factors per se. The pandemic atmosphere has unwittingly created a
structural break for something new industry and habit to gain critical mass
altogether.
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