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Op-Ed: These Are The Six Stages Of Changes In Consumer Behaviour Led By The Coronavirus Pandemic

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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. 

(table source)

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

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Facebook Reports Slower Q2 Advertising Growth While Google Reveals A Rare Revenue Decline

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The headwinds of Covid-19’s economic impact in the second quarter were strong enough to slow down even the ad-funded tech giants.

In its second-quarter results released on July 30, Facebook reported $18.7 billion in revenue, an increase of 11% despite the slowdown of advertising spend as marketers navigate the ongoing crisis. The results included $18.3 billion in ad revenue, a 10% year-over-year increase. Revenue from other operations totaled $366 million, up 40% from second-quarter 2019.

While Facebook maintained growth during the second quarter, its advertising rival Google did not. Around the same time that Facebook released its results, Google’s parent company Alphabet reported a rare decline in revenue, falling 2% year-over-year to $38.3 billion. Revenue from Google Search and other areas totaled $21.3 billion, down from $23.6 billion in second-quarter 2019. However, ad revenue on YouTube increased 6% to $3.8 billion, which the company said was driven by direct-response advertising.

In a statement, Ruth Porat, chief financial officer of Alphabet and Google, said revenues were “driven by gradual improvement in our ads business and strong growth in Google Cloud and Other Revenues.”

“We continue to navigate through a difficult global economic environment,” she said.

Both Facebook and Google have been known for their steady and massive quarterly growth despite concerns from advertisers, consumers and regulators around issues such as data privacy and content moderation. In 2019, Facebook reported revenue growth of 28% in the second quarter, 28% in the third quarter, and 25% in the fourth quarter. Revenue then grew just 17% in the first quarter of 2020 during the final three months before the pandemic prompted many advertisers to either pause or slow spending on various digital and traditional platforms.

Google’s growth story has been somewhat similar. Year-over-year revenue grew 17% in the first quarter of 2019, 19% in the second quarter, 20% in the third quarter, 17% in the fourth quarter before slowing to 13% in the first quarter of 2020.

On an earnings call today with analysts, Porat said advertising revenue “gradually improved” through the quarter with a “modest” improvement already in July.

“We do believe it’s premature to say we’re out of the woods, given the fragile nature of the economic environment,” she said.

The results come at a time of turmoil for the ad industry during the pandemic. In late June, marketing research firm eMarketer said it expected U.S. digital ad investment to increase just 1.7% this year—or $2.2 billion—compared to the previous growth estimate of 17%, or $22 billion. However, the slowed spending should be no surprise. In fact, during the early weeks of the crisis back in March, a survey of 400 media buyers found that 74% thought the pandemic would have a larger impact on ad spend than the 2008 financial crisis.

Facebook and Alphabet—along with other tech giants like Amazon and Apple—also have been under increased scrutiny by lawmakers. On Wednesday, Facebook CEO Mark Zuckerberg and Alphabet CEO Sundar Pichai along with the CEOs of Apple and Amazon spent the entire afternoon testifying to members of Congress. While the hearing was meant to focus on issues of antitrust, the four executives also touched on other issues ranging including data privacy, content moderation, and political influence.

While ad revenues were slower over the past three months, engagement was not. According to Facebook, engage on Facebook’s properties in terms of daily active users (DAUs) and monthly active users (MAUs) also increased in the second quarter, with DAUs increasing 12% year-over-year to 1.79 billion and MAUs increasing 12% to 2.7 billion. Across its “family” of apps—which includes Facebook, Instagram, Messenger, and WhatsApp—DAUs totaled an average of 2.47 billion for June 2020, an increase of 15% over the same period last year. The family monthly average was 3.14 billion in June—up 14% year-over-year.

According to a Facebook statement about its results, the growth in usage reflects “increased engagement as people around the world sheltered in place and used our products to connect with the people and organizations they care about.” However, the company said it’s recently seen “signs of normalization” as lockdown measures around the world have eased. Meanwhile, total ad impressions in the second quarter increased 40% although the average ad price decreased.

“Our business has been impacted by the COVID-19 pandemic and, like all companies, we are facing a period of unprecedented uncertainty in our business outlook,” Facebook said in a statement about its quarterly results. “We expect our business performance will be impacted by issues beyond our control, including the duration and efficacy of shelter-in-place orders, the effectiveness of economic stimuli around the world, and the fluctuations of currencies relative to the U.S. dollar.”

In July, Facebook has also dealt with a boycott over its practices and policies around moderating hate speech on the platform. The boycott—organized by civil rights groups including the NAACP and Anti-Defamation League—has been joined by hundreds of larger and smaller advertisers. Addressing the boycott on an earnings call with analysts, Zuckerberg said the company has agreed to an audit by the Media Ratings Council, and added that he’s “often troubled by the calls to go after internet advertising, especially during a time of such economic turmoil like we face today with Covid.”

“Some still seem to wrongly assume that our business is dependent on a few large advertisers, and while we value every single one of the businesses that use our platforms, the biggest part of our business is serving small businesses,” he said. “Our advertising is one of the most effective tools that businesses have to find customers to growth their businesses and create jobs.”

When an analyst on the call later asked how the boycott might be resolved, Facebook Chief Operating Officer Sheryl Sandberg said the company is still talking with civil rights groups and advertising trade organizations such as the Global Alliance for Responsible Media. She added that Facebook is “going to keep working hard at this, not because of advertiser pressure but because it’s the right thing to do.”

“It’s an interesting situation we find ourselves in because I think often times when companies are boycotted, it’s because they don’t agree with what the boycotters want,” she said. “And that’s not true at all here. We completely agree that we don’t want hate on our platforms and we stand firmly against it. We don’t benefit from hate speech. We never have. Users don’t want to see it, advertisers don’t want to be associated with it.”

By Marty Swant, Forbes Staff

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With proper investment in youth, Kenya’s potential for progress is unlimited

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By- Ruth Kagia and Siddharth Chatterjee

Africa’s demographic boom has been hailed as its biggest promise for transforming the continent’s economic and social outcomes, but only if the right investments are made to prepare its youthful population for tomorrow’s world.

Consider this. Every 24 hours, nearly 33,000 youth across Africa join the search for employment. About 60% will be joining the army of the unemployed. Africa’s youth population is growing rapidly and is expected to reach over 830 million by 2050. Whether this spells promise or peril depends on how the continent manages its “youth bulge”. 

President Kenyatta once said that “The crisis of mass youth unemployment is a threat to the stability and prosperity of Africa, and it can amount to a fundamental and existential threat”.

Investing in young people especially so that they are prepared for the world of work is the main mission of Generation Unlimited (GenU), a global multi-sector partnership established to meet the urgent need for expanded education, training and employment opportunities for young people aged 10 to 24.

On 05 August 2020, Kenya will launch the Generation Unlimited initiative. This initiative will bring together key actors from the public and private sector as well as development partners to help put into a higher gear this defining agenda of our time to ensure that we have prepared our children for a prosperous future by giving them the education, training and job opportunities that fully harnesses their potential. With a median age of 18, Kenya’s youthful population represents a real potential to reap a demographic dividend and accelerate its economic progress.

Kenya has one of the youngest populations in the world. With the right investment in their talents, skills, and entrepreneurial spirit, young people present an extraordinary opportunity for transformation, growth, and change.

Three quarters Kenya’s population is under the age of 35. Across Africa there are 200 million people between the ages of 15 and 24, a demographic that is expected to double by 2045.

One of the greatest challenges facing governments and policymakers in Africa is how to provide opportunities for the continent’s youth, in order to provide them with decent lives and allow them to contribute to the economic development of their countries. As things stand, around 70% of Africa’s young people live below the poverty line.

In Kenya, the pillars for achieving GenU objectives are in place, with various initiatives for instance to strengthen education system through the recently-launched competency based curriculum and government promotion of programmes to enhance technical and digital skills.

The fruits of such initiatives can be seen through numerous youthful innovations from Kenya that continue to receive international attention.  For instance, inspired by his great urge to communicate with his 6-year-old niece who was born deaf, Roy Allela, a 25-year-old Kenyan invented Sign-10, a pair of smart gloves with flex sensors to aid his cousin’s communication with the other members of the family.

The flex sensors stitched to each finger aid in quantifying the letters formed from the curve of each finger of the glove’s wearer. The gloves are then connected through Bluetooth to a mobile phone application that vocalizes the hand movements.   This innovation won him the Trailblazer Award by the American Society of Mechanical Engineers.

Gen U’s solution is to forge innovative collaborations with young people themselves. Since launching in 2018, the movement has brought onboard leaders from governments, foundations, and the private sector around the world. Its launch in Kenya underscores its government’s commitment to engage young people in pursuit of the Big 4 Development Agenda as well as Vision 2030.

President Uhuru Kenyatta is a global leader for the Generation Unlimited initiative. In Kenya, Gen U’s activities are coordinated by the Office of the President and the United Nations.

President Uhuru Kenyatta with UN Secretary General Antonio Guterres. Kenyatta was on Monday unanimously endorsed by world leaders to champion a new UN intervention on youth education, training and employment.
President Uhuru Kenyatta and the UN Secretary General Antonio Guterres were unanimously endorsed by world leaders to champion a new UN intervention on youth education, training, and employment at the UN General Assembly in 2018. [Photo/PSCU]

Shifts in today’s global economy demand that young people acquire skills aligned with dynamic labour needs, but local education systems have been slow to adapt. In many countries in Africa, school enrolment is up, but learning outcomes for young people remain poor. Most leave school without the skills the contemporary job market needs, and are ill-prepared for a world in which low-skilled jobs are increasingly automated.

A million young people join the workforce every year in Kenya, applying for jobs in a formal sector that can only absorb one in five of them. Some, however, find work at least intermittently in Kenya’s vibrant informal sector, which accounts for more than 80% of the country’s economy according to the World Bank.

Rather than focusing on opportunities in the formal sector, partners in the Gen U movement will look at strategies for supporting the informal sector with better infrastructure and an improved business environment. In doing so, it is hoped that it will be transformed into a recognised and legitimate sector.

Such initiatives have the full support of the recently launched Kenya Youth Development Policy, which seeks to underscore issues affecting young people. Technology will play a central role, and sector-based strategies will be central to the government’s approach.

The Kenya Youth Agribusiness Strategy, for example, will enable Kenya’s youth to access information technology for various value-addition ventures in Africa’s agribusiness sector set to be worth $1 trillion by 2030.

The Coronavirus pandemic has seen countries face changes in entire social and economic systems. Key industries, including manufacturing, healthcare, public services, retail, transportation, food supply, tourism, media and entertainment have been hard hit by the pandemic. The pandemic is an inflection point that is giving the old system a nudge. The post-COVID-19 world will be founded on a tech-savvy workforce that will inevitably comprise young people.

Calling on urgent action for young people, UN Secretary-General António Guterres has called on governments to “do far more to tap their talents as we tackle the pandemic and chart a recovery that leads to a more peaceful, sustainable and equitable future for all”.

In the run-up to the end of the SDGs era, we must ramp up the current level of investment in young people’s economic and social potential. As the vision of Generation Unlimited states, if the largest generation of young people in history is prepared for the transition to work, the potential for global progress is unlimited.

As President Kenyatta has noted, “the current generation of young people has the potential of expanding Africa’s productive workforce, promoting entrepreneurship and becoming genuine instruments of change to reverse the devastation caused by climate change.” 

Ruth Kagia is the Deputy Chief of Staff to President Kenyatta. Siddharth Chatterjee is the United Nations Resident Coordinator to Kenya. Mrs Kagia and Mr Chatterjee co-chair the Generation Unlimited Steering Committee in Kenya.

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OPEC And Its Allies Are Ready To Boost Production, But Here’s Why An Oil Market Recovery Isn’t Guaranteed

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After record production cuts in April intended to prop up the market amid a demand crisis caused by the coronavirus pandemic, the world’s largest oil producers are expected to ease up on the restrictions and begin to increase their output next month.

KEY FACTS

  • Saudi Arabia, Russia, and the other members of OPEC+ will meet Wednesday to discuss the current market situation and debate future production limits, the Wall Street Journal reported over the weekend, adding that most delegates in the organization support loosening restrictions.
  • As lockdown measures ease across the globe, demand for oil is slowly beginning to rise again as shipping and air travel resume. 
  • Oil prices are still down significantly from pre-pandemic levels, however, with the Brent international benchmark priced at about 30% of January levels. 
  • The International Energy Agency said Friday that while global demand for oil had recovered strongly in China and India in May, world demand is still projected to decline during the second half of the year before recovering in 2021. 
  • The recent spike coronavirus cases and new lockdowns are creating “more uncertainty”: additional lockdowns could discourage travel and international trade, which would put more downward pressure on prices.
  • The risk to the oil market is “almost certainly to the downside,” the IAE said. 

KEY BACKGROUND

In April, the members of the Organization of Petroleum Exporting Countries (OPEC) and its allies agreed to record oil production cuts of 9.7 million barrels a day as the coronavirus decimated global demand for crude oil. The agreement put an end to a weeks-long price war between Russia and Saudi Arabia that added even more pressure to an already-struggling market. 

CRUCIAL QUOTE

“If OPEC clings to restraining production to keep up prices, I think it’s suicidal,” a person familiar with Saudi Arabia’s thinking told the Journal. “There’s going to be a scramble for market share, and the trick is how the low cost producers assert themselves without crashing the oil price.”

Sarah Hansen, Forbes Staff, Markets

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