With a possible call for a lockdown looming in South Africa, people are stockpiling for the worst case scenario. Although some may think it’s too early to be taking such panic-driven action, it seems this behaviour is perfectly aligned with global consumer behaviour trends caused by the different stages of the Coronavirus outbreak.
A recent Nielson’s report highlights that there are key consumer behavioural changes that occur parallel to each stage of the virus’s evolution. Nielson identifies that these consumer changes are being mirrored by every country that is currently trying to flatten the curve. Nielson identified the following stages together with changes in consumer behaviour at each stage:
|Stage||Coronavirus Event Markers||Consumer Behaviour Change|
|Stage 1 Health-minded Buying||Minimal localised cases of Covid-19 generally linked to arrival from another country.||Consumer’s interest rises in products that support overall maintenance of health and wellness.|
|Stage 2 Reactive Health Management||First local transmission with no link to other location and first Covid-19 related death/s.||Prioritise products essential to virus containment, health and public safety. E.g., face masks|
|Stage 3 Pantry Preparation||Multiple cases of local transmission and multiple deaths linked to Covid-19||Pantry stockpiling and shelf-stable foods and a broader assortment of health-safety products; spike in-store visits; growing basket sizes.|
|Stage 4 Quarantined Living Preparation||Localised Covid-19 emergency actions, percentage of people diagnosed positive continues to increase.||Increased online shopping, a decline in-store visits, rising out-of-stocks, strains on the supply chain.|
|Stage 5 Restricted Living||Mass cases of Covid-19. Communities ordered a lockdown.||Severely restricted shopping trips, online fulfilment is limited, price concerns rise as limited stock availability impacts pricing in some cases.|
|Stage 6 Living a New Normal||Covid-19 quarantines lift beyond region/country’s most-affected hotspots and life starts to return to normal.||People return to daily routines (work, school, etc.) but operate with a renewed cautiousness about health. Permanent shifts in the supply chain, the use of e-commerce and hygiene practices.|
Although South Africa has yet to have any deaths, our own consumer behaviour is following this trend almost exactly. Derek Cikes, COO of online payment solution Payflex has been following the effects of Coronavirus on retail closely since the outbreak and says that South Africa is somewhere between stages 4 (Quarantined Living Preparation) and 5 (Restricted Living).
“We’ve seen a significant increase in online shopping both in our own data and at our merchants. South Africans are looking to online stores to keep goods flowing while we all prepare for a possible lockdown. But we’re also seeing the limitations and strain put on online retail because of this surge in users,” says Cikes.
In line with Nielson’s stage 5 attributes, South Africa is clearly seeing the strain put on online grocers and their supply chain due to the demand of social distancing and self-quarantine. Checkers launched their app sixty60 to major SA cities promising to deliver your groceries within 60 minutes only to have to adjust that promise due to increased demand for the home deliveries. Pick ‘n Pay’s online store is also showing signs of a supply chain disruption as a large percentage of goods are unavailable or sold out.
In order to ease the strain on the supply chain caused by panic buying, both Checkers and Pick ‘n Pay have implemented rationing, meaning that consumers are only allowed a certain number of each product per purchase. This action hopes to ensure that all South Africans are able to get what they need for the weeks ahead. Other online grocery apps such as OneCart are seeing an unprecedented increase in users. For example, OneCart is usually able to deliver groceries within an hour, but because of increased demand, now have a 2 to 3 day delivery time.
In its Situational Threat Report Index, Bain & Company states that the concept of the shopping journey in physical stores is taking on a new meaning and importance, given the potential for transmitting the virus at each interaction.
According to Bain & Company’s index, the world is currently sitting at a level 6 global threat which is called Markets and Public in Multiple Major Nations Reacting Strongly. The index combines official data with Bain’s own modelling. It evaluates Coronovirus’s effect on global business, grading it from 0 (a negligible threat) to 10 (severe global recessionary conditions).
South Africa is no different, with stores and businesses scrambling to find innovative solutions to keep customers safe and secure. For example, a Spar franchise in the north eastern suburbs of Johannesburg recently put up perspex glass panes at each till to create a physical divide between shopper and cashier while delivery services such as Woolworths allow the drivers to drop the goods in a safe area outside the house without coming into contact with customers. Uber Eats and Mr D have implemented similar regulations.
Bain & Company also note that in most segments, the outbreak will probably reduce traffic and revenue. They say that retailers of all types must be prepared to act quickly to mitigate the impact of such turbulence, while also learning from the experience of their counterparts in China and other hard-hit countries. And even as they strain every sinew to address short-term disruption, retail executives also need to begin medium-term planning for an eventual recovery.
Falling in line with Nielson’s stage 6 “A New Normal”, Cikes believes that there will be a permanent change in the way South Africans use e-commerce.
“If there was anyone who was reluctant to use online shopping as a viable way to get both necessities and luxury goods, Coronavirus is sure to change this. It’s forcing people to get online and this may change the way South Africans shop forever. This will also push retail to think about bringing their own stores online if they haven’t already,” says Cikes.
Content provided by Nielson
New York On Lockdown
As I walk through Brooklyn Bridge Park, gazing at the magnificent Manhattan skyline on the East River, at first glance it looks as crowded as it usually does. However, if you look closer, it’s not your typical mixture of tourists with their cacophony of foreign languages, photographers with tripods, or teenagers on skateboards. The park is filled with lone joggers, parents in yoga pants pushing double strollers and carefully guarding kids on scooters. No one plays volleyball in the sand by the river. No one picnics in the barbecue area. Everyone keeps a friendly and polite distance, some people wear face masks. And yet, it doesn’t really look like social distancing, or the lockdown that it is–ordered by the mayor and the governor of New York in an effort to contain the spread of the Coronavirus.
That peaceful picture of joggers and children playing shouldn’t fool anyone. The five boroughs of New York City – Brooklyn, Queens, Manhattan, Staten Island and the Bronx — are hit hard by the rapidly spreading Coronavirus. With the death toll rising – 678 patients had died in overcrowded New York City hospitals by March 28, and the number of cases in New York state has surpassed 53,000; the five boroughs of New York have become the epicenter of the pandemic.
The healthcare system is overwhelmed. I spoke with four medical professionals in the city and they all confirm the disturbing reality that is in the news. The hospitals don’t have enough protective gear, single use masks have been reused, hospitals do not have enough beds and ventilators. Medical personnel intubate patients non-stop, assisting them with breathing. The city hospitals have set up makeshift tents to triage COVID-19 patients as well as to act as morgues. The government’s delayed response to the virus’s spread is costing many, many lives.
One thing that is striking about New Yorkers – my home of seventeen years – is how people come together and support each other. After the terrorist attack on September 11, 2001; during the power outage in 2003, when the entire city went dark for hours; and after the devastating hurricane Sandy in 2012.
On the day when Donald Trump was elected president in 2016, New Yorkers, predominantly liberal democrats, were especially sensitive with each other, calmly sharing their sadness and expressing worry for the future of their country. Today, when schools, non-essential stores, bars and restaurants are closed, and many people are isolating and trying to follow social distancing guidelines, members of communities come together to help each other: buying food for older neighbors, helping with disinfecting door knobs and elevator buttons. Mental health professionals volunteer their services to the anxious and scared. At grocery stores and pharmacies only a few people are allowed in at a time, people are waiting outside, standing about two meters apart, and the doormen pour out hand sanitizer into people’s palms.
Besides solidarity and respect, there is also fear and anxiety. Service and food industry workers are out of work, facing months of hardships. According to the New York State Labor department, during the first days of the lockdown, in some parts of the state, there was a 1,000% increase in unemployment claims as 1.7 million people called to file for benefits. Well over a million children from financially strained families relied on school lunches, and those are now provided at meal sites. But that also means the disparity in incomes in New York has been underscored by the Covid 19 impact, and the inequality between the haves and have-nots will continue to be exposed.
Forbes headquarters in New Jersey has been working remotely since the first week of March. We quickly re-organized: the entire company of 400 people has migrated into a virtual workplace, with a highly mobilized virtual newsroom. Besides holding daily meetings and video calls, our teams get together for virtual hangouts to keep each other’s spirits up.
The city authorities were slow to respond to the Covid-19 spread. For weeks, when it was clear the crisis was imminent, eight million New Yorkers commuted in crowded subways, went to crowded restaurants and bars, and also traveled to and from crowded international airports, breathing in each other’s air.
In the absence of the pandemic team, fired by Trump in 2018, the federal government’s response was slow to respond to the disaster. The Trump administration failed to prevent this crisis underestimating the danger of Covid-19: “We have it totally under control,” he said in January, when the virus was already spreading. “It’s one person coming in from China, and we have it under control.” The government failed to test people in a timely manner. In New York, Mayor Bill De Blasio and the governor Andew Cuomo stepped in and tried to help the hospitals secure supplies and additional testing stations. They are still trying.
Meanwhile, the city is contemplating closing parks and other public places. Maybe even prohibiting people from leaving their homes, or perhaps prohibiting them from leaving New York itself. For the next few weeks, the Big Apple will stay confined indoors. Stay home, don’t spread, save lives.
–Katya Soldak, Forbes Staff, Business
Here’s How Much It Could Cost If We Stop Social Distancing
Topline: This week, President Trump floated the idea of easing up on social distancing measures on the theory that the damage caused by shutting down the economy might be greater than the cost of letting the virus run its course—some models suggest, however, that reopening the economy too soon could be exponentially more expensive.
- If the United States were to abandon aggressive social distancing measures after 14 days, more than 125 million people will contract the virus, some 7 million could be hospitalized, and 1.9 million people will die (accounting for other factors like infectiousness and hospitalization rates), according to a model built by the New York Times.
- If social distancing goes on for two months, the model predicts that 14 million will contract the virus, with fewer than 100,000 deaths.
- There’s no debate that the broader economy is going to suffer even at the current rate of spread. Morgan Stanley is predicting a 30% drop in GDP next quarter. U.S. GDP is currently $21.43 trillion. A drop of 30% would mean a value-loss of more than $6.4 trillion (for context, the economic relief bill signed by President Trump this afternoon is worth about $2 trillion).
- If the outbreak worsens due to relaxed social distancing measures, it’s not unreasonable to anticipate even greater economic losses.
- Economists can calculate the average value of one life saved using a model called the value of a statistical life. It’s a fuzzy metric used by some government agencies that is based on how much a person is willing to pay to reduce the risk of death. Right now, that figure hovers around $10 million.
- “If we could prevent a million deaths, at the usual way we value [them] of around $10 million each, that’s $10 trillion, which is half of GDP,” says James Hammitt, a professor of economics in Harvard’s health policy department.
- University of Chicago economists have arrived at a similar conclusion: they’ve found that under “moderate” social distancing measures, 1.7 million lives and at least $7.9 trillion could be saved.
Big number: The average cost of a hospital stay for a mild case of pneumonia is $9,763, according to Peterson-KFF analysis (pneumonia is commonly associated with COVID-19, the disease caused by the coronavirus). The median total cost balloons to $88,114 for the most severe cases that require more than four days of ventilator support. Seven million hospitalizations for patients with mild cases would cost more than $68 billion. If 17% of those patients required ventilator support, as was the case in one Chinese study, the cost of hospitalizations alone could add up to a staggering $161 billion, and that’s before the cost of other health complications related to the virus is accounted for.
Crucial quote: “Anything that slows the rate of the virus is the best thing you can do for the economy, even if by conventional measures it’s bad for the economy,” University of Chicago economist Austan Goolsbee told the New York Times.
Key background: In some ways, all of this discourse is more than a century old. A new paper released yesterday found that during the1918 flu pandemic—the closest historical analogue for the current coronavirus outbreak—cities that intervened earlier and more aggressively to slow the spread of the virus through social distancing and isolation of cases suffered no greater economic damage than those that didn’t. “On the contrary,” the authors write, “cities that intervened earlier and more aggressively experience a relative increase in real economic activity after the pandemic.” Seattle, Oakland, Omaha, and Los Angeles, for instance, implemented stronger containment measures than Pittsburgh, Nashville, and Philadelphia and all saw a much larger surge in job growth after the crisis was over in 1920.
Tangent: Texas Lieutenant Governor Dan Patrick suggested earlier this week that grandparents might be willing to die to preserve the economy for their grandchildren. “No one reached out to me and said, ‘as a senior citizen, are you willing to take a chance on your survival in exchange for keeping the America that all America loves for your children and grandchildren?’” he said. “And if that’s the exchange, I’m all in.” His and Trump’s comments sparked a backlash among progressives on social media on Tuesday, when the hashtag #NotDying4WallStreet trended on Twitter as users voiced their fears of the pandemic, and of the government’s response to it. “I’ll let Wall Street flat line before my grandma does,” wrote one Twitter user.
– Sarah Hansen, Forbes Staff
As Wealthy Depart For Second Homes, Class Tensions Come To Surface In Coronavirus Crisis
Topline: As New York City’s coronavirus cases exploded in recent weeks, residents fleeing to second homes have come under intense scrutiny and push-back, prompting officials in multiple states to create highway checkpoints screening for New Yorkers and a national travel advisory for the entire Tri-state area, highlighting the dramatic roles class and wealth will play in the pandemic.
- With over 56,000 coronavirus cases in New York, privileged New Yorkers with secondary homes are fleeing the City with massive effect on vacation home communities: the population of Southampton has gone from 60,000 a few weeks ago to 100,000 and rental prices in Hudson Valley rocketed from $4,000 to $18,000 per month—posing a threat to small-town hospitals that are ill-equipped to handle caring for high numbers of coronavirus patients.
- In wealthy New England island communities like Nantucket, Martha’s Vineyard and Block Island that are heavy with secondary homes and short on hospital infrastructure, officials are going so far as to cancel all hotel, Airbnb and VRBO reservations while stationing state troopers and the National Guard to maintain flow on islands and, in the case of Rhode Island, instating 14 day mandatory quarantine on all people traveling to stay in the state from New York, New Jersey or Connecticut.
- As outrage has grown at the privileged fleeing the city while middle and working classes remain confined in New York City apartments, there’s been social media clapback at ostentatious displays of wealth in isolation: Geffen Records and Dreamworks Billionaire David Geffen ultimately deleted his Instagram of his $570 million megayacht captioned: “Sunset last night..isolated in the Grenadines avoiding the virus. I’m hoping everybody is staying safe” after it sparked outrage on social media.
- New York City’s poorer boroughs are hit hardest by coronavirus: Brooklyn and Queens, where median income is $56,015 and $64,987, respectively, remain the epicenter of COVID-19, compared to Manhattan with average income of $82,459, which has been less permeated by the virus and is home to many of Manhattan’s wealthiest enclaves—and those most likely to have residents with second homes elsewhere.
- On Saturday, President Trump said he was considering quarantining parts of New York, New Jersey and Connecticut, then, backed down and issued a domestic travel advisory for the tristate area that discourages residents of these states from non-essential domestic travel after “very intensive discussions” at the White House on Saturday night, said Dr. Anthony Fauci on CNN today: “The better way to do this would be an advisory as opposed to a very strict quarantine, and the President agreed.”
- “Due to our very limited health care infrastructure, please do not visit us now,” reads a travel advisory from Lake Superior’s Cook County in Michigan, exemplifying vacation towns’ plea to travelers and second home owners across the country to stay away.
Background: Coronavirus cases in the United States have skyrocketed to 124,000, with deaths doubling from 1,000 to 2,046 in two days. Since those with COVID-19 can be asymptomatic for days, their presence in remote communities may be deadly, as they can spread the virus and wreak havoc on rural hospitals. The clash between wealthy and poor, also creates state-versus-state hostility, as federal support is limited and essential to states overcoming coronavirus.
– Alexandra Sternlicht, Forbes Staff, Under 30
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