Analyzing consumer trends catalyzed by the pandemic
At least once in our lives, we have all imagined ourselves in a movie.
No, not the long process of pursuing a career in acting, developing a portfolio and going through countless thankless auditions before landing a role in a small-budget indie project, but more like the events of our real life as it is — playing out on a big screen in a packed theatre.
It is fairly safe to assume that is what many people felt when the COVID-19 pandemic hit the country.
When the pandemic hit Bangladesh, it was uncharted territory for all – from policymakers to businesses to the general populace. The government probably did not have the clearest idea of what a lockdown would constitute, grocery stores did not know what products to stockpile and the public hit the panic button on their monthly shopping routine.
Behaviorally, that was one of the first and biggest changes at the consumer level. Unsure of what the lockdown would mean for availing daily groceries, many in the country bought non-perishable items in bulk. While the scenario in Bangladesh was not on the same scale as viral videos from the West that showed people jostling in supermarkets to buy a small mountain’s size of toilet paper rolls, the anxiety was evident — from corner stores of small neighborhoods to the big-name superstores.
Where people shopped from also saw a major shift from the onset of the pandemic. While the majority of the urban middle class would ideally prefer to shop at kitchen markets and retail grocery stores, concerns over social distancing, hygiene and one-stop convenience pushed many to shop from larger superstores and from online services.
The supermarket industry — that has over 250 outlets across the country — reported a staggering 50 percent surge in sales in the very first months of the pandemic. Retail franchise Shwapno saw its sales double, while Unimart — the newest entrant in the market — confirmed 40 percent higher sales, stated a Lightcastle report.
Chaldal, the country’s leading online grocery delivery service, saw a spike in its orders – both in terms of number and average unit volume – straight off the bat as COVID-19 hit. In the first month or so, the company was handling 5,000 orders a day, and had to limit its daily number of orders, and hired 300 new employees to deal with the mounting pressure. The average order value at the time stood at Tk 3,750 – over thrice of its pre-pandemic average of Tk 1,300 mentioned in a Daily Star report.
While groceries and household supplies shot to the top of shopping lists, items like personal care, clothes and accessories were pushed to the bottom. While the likes of Chaldal were inundated with offers, the overall e-commerce market took a nosedive, and the trend was clear: if you’re not selling essentials, you’re not selling at all.
The country’s overall e-commerce market in late April 2020 saw 15,000 orders daily combining groceries, essentials and food, down from 100,000 just two months ago, and when factoring in that the market was worth Tk 8,000-crore, it showed a significant shift in consumer trends.
However, as the dust settled on the initial helter-skelter, businesses realized that they needed to innovate to serve customers, and many did. Online stories like AjkerDeal and PriyoShop expanded their catalogue from electronics and apparels to include groceries, while superstores collaborated with food delivery services to provide groceries to people’s doorsteps.
Pharmacies and health and hygiene supplies providers, who are another of the biggest gainers from people’s awareness to steer clear of the coronavirus, also moved their products and services online, offering digital payment options and home deliveries. From fabric masks and hand sanitizers to full-blown PPE kits and pulse oximeters, any health and hygiene need could be met on the internet.
However, it was not just the bigger businesses that adapted to these changes. Even small convenience stores and pharmacies began providing orders via phone, payments via mobile financial services and contactless home deliveries to their niche customer bases. It enabled people without smartphones and access to debit and credit cards to stay home and get their shopping needs fulfilled.
While the pandemic caused job losses and hit businesses – small and big alike – hard, there was also the flipside of this transition in consumer behavior. For instance, the demand for homemade food items also saw a sharp rise, with many homemakers and culinary hobbyists taking to social media platforms like Facebook to advertise and sell ready-to-eat and frozen snacks and confectionery. As early as July 2020, some estimates said as many as 2,000 such new businesses had started operating, catering to people who either did not have access to a cook or house help anymore, or opted for the convenience of buying things they would otherwise make at home, in order to cope with work-from-home stress.
In terms of lesser-obvious shifts in behavior, there are two examples to consider.
Even when most people’s incomes were hit, demand for bicycles and motorcycles increased right after the movement restrictions were eased in mid-2020. Bicycle sales increased multifold mostly in the capital, when a lot of offices and businesses reopened but the risks of transmission in public or shared transport still remained high. Retailers in Old Dhaka’s Bongshal reported that not just young people but people in their 50s and 60s were buying the two-wheelers. Customers said it had a double-sided benefit: making social distancing easy on commutes, and facilitating exercise.
Motorbike sales, however, increased also in suburban and rural areas, owing to the fact that public transportation had become costlier owing to distanced seating and limited capacity, and the fear of being in a vehicle with strangers.
Presumably, the other reason why the sale of two-wheelers increased could be attributed to the logistics and courier services, which saw a major boost as online orders and home deliveries became the norm for many consumers and businesses. Most short-distance home delivery service providers use bicycles, while those who travel longer distances and possibly carry heavier packages opted for motorbikes, and the demand spike seems like no coincidence when considering that over one lakh jobs were created in a year in the sector.
The second of those cases is footwear. Bata, a name ubiquitous to footwear in Bangladesh, incurred their first annual loss in 59 years of operations in the country last year, and did not recover until the first quarter of 2021. Its closest market competitor, Apex, did not fare better either, reported an article in The Business Standard.
While this may seem like a random observation, there are behavioral aspects to it. People in this country most often buy new shoes surrounding Eid or Pahela Baishakh, or at least weddings or other major family events — which means there is a celebratory and social element attached to it. As the pandemic has primarily changed how we observe social and cultural festivals, the need for spending on shoes has become a secondary priority. The other reason that this is interesting is that contrary to some of the previously mentioned behavioral shifts – which may not revert post-pandemic – this one may.
It is important to address reversible and irreversible behavior changes before this train of thought comes to a halt. While the COVID-19 nightmare is still far from over, it is already possible to imagine what changes will stay with us. The pandemic has redefined priorities for everyone, and many of those changes have made our lives better.
Take digital transactions for example. The pandemic has exposed the potential of online banking and mobile financial services, to the point where one can pay for almost anything from a virtual wallet in their phone (smart or otherwise). The digital-first transaction ecosystem has also changed how consumers think of spending, which has shown a 50 percent month-on-month growth of credit card transactions. For businesses, how much they can offer seems like the only limit of how much they can achieve on this front.
Especially for a city as populated as Dhaka, not having to physically go to a shop for every household need is a blessing, as is the convenience of being able to pay through the phone and have things delivered at your doorstep. Customers shifting from retail markets to superstores is another trend that was already happening, and was just accelerated by the pandemic. Business growth has been sharper for retail superstores than traditional kitchen markets, although supermarkets’ business share in the total market is only 1.6 percent. In Myanmar and Philippines, that market share is 50 percent, in Sri Lanka it is 43 percent and even in a country as vast as India, the share is eight to nine percent, observed an article in The Business Standard. It is only natural that Bangladesh goes in that direction, because it provides them convenience, and in the right supply chain model, can be beneficial for farmers and producers.
The motivation to be one-stop does not stop with being a physical business selling only products. Pathao, which started off as a humble delivery service not long ago, has expanded its services to incredible lengths. With it, it is not only possible to hail motorbikes or cars for commuting, but also deliver packages, order food, groceries and medicine, shop for stationeries to clothes to smartphones to musical instruments, watch live TV and get a doctor’s advice on any health issue, or even top up your phone. Not that every user of their app would avail each of the services, but the fact that they have the option is a great example of the thinking and innovative minds behind Pathao.
Call it innovation, call it adaptation, or call it whatever you may – the COVID-19 pandemic has accelerated change in the fabric of human civilization, and those who will understand and harness it best will have the last laugh.