Consumer Behavior: Trends vs. Fads

"Start designing for a post-vaccine future of what's still done best offline: discovery, rich experiences, and community."

2020 has been a wild year of adaptation for most, commiseration for many, and wistful celebration for some. The 'K shaped' demand shock has been well-documented across industries due to government lockdowns and consumer fears surrounding the pandemic, resulting in odd boom-times for some industries and corresponding depressions in others. From cooking at home to remote work to the decimation of travel, many consumer behaviors have changed dramatically in 2020.

This week, we came across a consumer behaviors and trends study from Coefficient Capital that is worth sharing for its nuanced data and exploration of what is arguably the toughest question surrounding the pandemic: what trends will continue to stick after the pandemic, and what trends are merely passing fads?

While many specific behaviors seem to be passing fads (e.g. puzzles and baking), we believe there are several general trends in consumers that will continue beyond the pandemic.

Convenience

Businesses that cater to convenience - not having to leave the home - have seen incredible gains during the pandemic (e.g. Doordash, Instacart, to name a few). In fact, according to the study above, convenience has been an absolute requirement from consumers during the pandemic and this is likely to stick in a post-pandemic world:

- 45% of all consumers prefer to shop online for groceries
- 66% of all consumers surveyed actually said they preferred exercising at home

Convenience used to be measured in physical distance to the nearest provider of a particular product or service. Now, convenience is defined as the fewest clicks between purchase and consumption - the lowest cost of search.

The Unbundling of Everything

Consumers also increasingly want a la carte customization options in product and service offerings. For example:

- younger consumers on average use a higher quantity of brands than their older counterparts, but each brand tends to be more niche in nature
- younger consumers desire experiences or products that are 'unbundled' and offer high levels of customization (Netflix and Youtube for TV/music alternatives, Cash App & Venmo for simple banking alternatives)

Health Made Easy

From digital fitness apps to meditation apps to on-demand healthy food delivery, the health-conscious trend is here to stay with Millenials and Gen Z. Consumers increasingly want to make healthier choices, but also want these choices to be more convenient and cost-effective:

- 81% of Millenials - and 66% of all consumers - say they'd prefer home fitness solutions to gyms
- Calm and Headspace (meditation apps) had record downloads during the early months of the pandemic

Digitally Native

Finally, all businesses were forced to adapt to some degree to the digital-first world after the pandemic hit. Regardless of industry, a digitally native business must optimize their operations through mobile payments, mobile marketing, and mobile customer support. These are table stakes in the 21st century.

In sum, great businesses will always put their customers' needs first. This principle simply won't change. But the means of achieving this ideal certainly will. Organizations that adapt to the new ways of doing business in a mobile-first, digitally-native world will be primed to take market share and succeed, and those that don't will be left behind.

How to be a C.E.O., from a decade’s worth of them (Corner Office)
+ "Are there some qualities — beyond the obvious, like hard work and perseverance — that explain why these people ultimately got the top jobs? I’ve noticed three recurring themes. First, they share a habit of mind that is best described as “applied curiosity.” They tend to question everything. They want to know how things work, and wonder how they can be made to work better. They’re curious about people and their back stories. And rather than wondering if they are on the right career path, they make the most of whatever path they’re on, wringing lessons from all their experiences."

Lessons from Brexit on how (not) to negotiate (Harvard Business Review)
+ "Principle #1: Build strong relationships ahead of time. During negotiations, understand what your counterpart cares about."

Slack is the right tool to work the wrong way (Cal Newport)
+ "Slack replaced a single in-box with distinct chat channels, moved group discussions into a persistent chat format, and made all of these discussions searchable. For teams straining under e-mail’s shortcomings, Slack arrived like a digital analgesic, curing multiple pain points all at once. This palliative effect propelled Slack toward its astronomical valuation just six years later. The problem with this trajectory is that no one stopped to ask if it made sense to optimize this style of work in the first place. Though Slack improved the areas where e-mail was lacking in an age of high message volume, it simultaneously amplified the rate at which this interaction occurs."

How one NBA player turned a $350,000 salary into $600MM (Huddle Up)
+ "From a financial perspective, NBA paychecks weren’t what they are today. The majority of athletes made more money off endorsements than they did through their contract. Bridgeman, as a role player, wasn’t as fortunate earning no more than $350,000 in a single season. Enough to live comfortably, but certainly not what you expect for an NBA player. Here’s where it gets interesting... In an effort to prepare himself for life after basketball, Bridgeman spent his offseason working at a local Wendy’s drive-through to learn the business model of fast food restaurants. While other players were taking advantage of offseason freedom, Bridgeman was putting in the time and essentially building his empire. By the time retirement came, Bridgeman had already purchased three Wendy’s. Seeing an opportunity to scale the business, he doubled down investing in over 160 locations over the next 20+ years. He also invested in the Chili’s franchise, owning more than 120 at one point (Source)."

The new consumer - consumer trends in 2021 (Coefficient Capital)
+ "85% of generation Z consumers believe brands should be about something more than profit, according to a recent Wunderman Thompson survey."

Shopify's 2021 future of ecommerce report (Shopify)
+ "We unlocked five predictions using data from 1,000,000+ merchants and survey insights from consumers around the world. This report is your guide to a new era of commerce."

100 must-know statistics about long-term care: pandemic edition (Morningstar)
+ "From a personal financial standpoint, long-term care has been a deeply problematic area for consumers for many years. An extended long-term-care stay can be catastrophically expensive, adding an extreme wild card to retirement plans without long-term-care insurance. Unfortunately, the long-term-care insurance market has been troubled itself, resulting in increased premiums on many policies and a number of insurers dropping out of the business altogether. To help readers understand the key issues in the long-term-care space, I've assembled a now-annual compendium of statistics on long-term care. Each statistic includes a link through to the original source of the information; I've aimed to use the most current figures I could find from objective sources, wherever possible."

Car dealers opting out of the electric vehicle revolution, by the numbers (Marker Media)
+ "150: That’s how many Cadillac dealers have opted to no longer sell the brand rather than invest in electric car infrastructure. This was the ultimatum from GM to the dealers: Install $200,000 worth of electric car charging infrastructure, heavier lift equipment to accommodate weightier electric vehicles, and specialist tools, or accept a buyout and give up the Cadillac brand. The buyouts were attractive—$300,000 to $1 million, the Wall Street Journal reported—and about 17% of the country’s Cadillac dealers accepted the exit offer."

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