Shoppers stock up on toilet paper and other supplies as Canadians purchase food and essential items … [+]
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In retailing, it is easy to observe rapid-fire changes in shoppers’ purchase behavior.
A big sale sign brings people in to shop who otherwise would have walked by. A new more convenient or time-savings service, like buy-online-pick-up-in-store, gets people to switch from the old ways of shopping to new ways. A new retailer offering more, better, different, or cheaper products – think Amazon and so many other disrupting retailers – causes people to change their preferences in places to shop.
But while purchase behavior – what people buy and where they shop – can change on a dime, their underlying consumer psychology – why they buy – is far more stable and predictable.
What’s more, retailers that understand the psychology of shoppers can use those insights to influence shoppers’ purchase behavior. Or conversely, retailers in tuned with the psychology of shoppers can change their offerings in accordance with changes in consumer psychology.
That is exactly what we are seeing today. A change in consumer psychology – fear and anxiety brought on by the rapid spread of COVD-19 – is causing a run on pantry and household staples, cleaning supplies, and medicines.
Equally predictable is that after the coronavirus runs its course, demand for these items will subside sharply. And depending on how quickly the virus threat diminishes, people may be delayed in buying refills of supplies they stockpiled.
But what if more lasting change to consumer psychology is left in the wake of the coronavirus? What if our awareness that our physical being can be easily overcome by a disease of unknown origin that we have little control over changes how we look at our world and behavior in it, even to our shopping and consuming choices?
Could this coronavirus crisis be a tipping point that results in a “new normal” for consumers?
It very well could, depending on how deep and wide it affects the U.S. That is the consensus of three experts in consumer psychology that I polled, Ph.d.’s all but with different vantage points in the field.
But they all warn that assessing the long-term potential of consumers’ behavioral and underlying psychological change is complicated.
Buying things gives people a sense of control
“Consumers are people first,” says Erica Carranza, vice president of consumer psychology at market research firm Chadwick Martin Bailey (CMB). “Psychology tells us about why people do what they do. If companies don’t understand that, they can’t figure out what to do next.”
Consumers are complex creatures. “Consumption is driven by very strong motivations, like emotion, identity, and social connection. Those motivations aren’t going anywhere,” Carranza continues. “But the values, habits, and norms that shape what we consume and how we consume could shift dramatically.”
Through the things people consume and how they consume, they get a feeling of control, what Carranza describes as the “sense of agency” in psychological terms. But the threat of contracting an infectious disease takes that sense of agency away.
“Because of this virus, people have heightened mortality salience, which refers to reminding people of their own mortality,” she says. “Right now we are all walking around with this heightened state of mortality salience and that creates a sense of existential anxiety. While the effects are harder to predict, it does tend to make people more likely to spend in ways that support their core values and support their self-esteem or to spend in ways that they feel says something important about who they are.”
In the short term, this uncertainty is a barrier to discretionary shopping in general, as well as a barrier to shopping in stores.
Longer term, it may predispose people to make choices that are based on their underlying sense of identity. So, for example, people may be more likely to choose environmentally-conscious brands in the future, a trend that we already see in the culture. And it may predispose them to indulge in more luxury purchases as significant to their self-esteem.
Group identity also influences consumer motivations
Jorge Barraza, professor of consumer psychology at the University of Southern California, concurs but adds that it is not just people’s internal motivations that drive purchase behavior. It is also influenced by one’s group identity as well.
Just like this disease, group behavior can be contagious too. “We are fundamentally built to attract other people,” Barraza explains. “We get a sense of certainty and security from the people that we identify with. At times of uncertainty, we are actually more susceptible to that kind of outside influence from people in our group.”
Since luxury purchases, in particular, have a strong social component, this also suggests many may make purchase choices that are deemed more luxurious.
Michael Barbera, chief behavior officer at Clicksuation Labs and who worked for over 14 years in the Department of Defense in research and intelligence analysis, explains how that might play out in the store.
“Take as an example you are looking at three bottles of wine on the shelf, one that is $9, one $19 and another $99,” professor Barbera says. “If you are buying a bottle for yourself, you are likely to choose the $9 bottle. But if you were buying it to take to a friend’s house for dinner, you will choose the $19 bottle because you don’t want to appear to be a cheap friend.
And he adds, “The $99 bottle is placed on the shelf as a decoy to anchor the consumer to cognitively process the middle option ($19) as a reasonable price.”
Given people’s uncertainty that causes them to turn inward to make purchase choices that confirm their identity, we may see them rejecting the $9 bottle to trade up to the $19 bottle of wine for themselves. This effect could play out at in any retail category from beauty, jewelry, apparel, fashion accessories, the list goes on.
And with the uncertainty also having a strong group identity aspect, consumers may spring for the $99 bottle for friends. Therefore, retailers should be sure displays are anchored with a high-priced alternative, especially in popular gifting product categories as well as luxury items.
“In times of uncertainty or stress, people are more selfishly oriented,” professor Barraza shares, which may incline them toward more hedonistic, indulgent purchases that make them feel comfortable in the near term.
Seeking comfort in an uncomfortable world
“In times of crisis, the research shows people will engage in more comfort-seeking behavior,” Barraza continues.
CMB’s Carranza shares an example from her own life. “Someone gave me a $25 gift card for Home Goods. I went and bought pretty little abalone-shell trays to organize my medicine cabinet. I spent more than $25 on them, but now my medicine cabinet looks beautiful and I feel more prepared.”
With the purchase of beautiful trays for the medicine cabinet, both more luxurious than utilitarian housewares trays and driven by a newly-emerging need to organize the medicine cabinet, Carranza underscores how that purchase gave her a greater sense of control in the face of an uncontrollable situation.
That is an example of a short-term change caused by the present feeling of threat, like the hoarding of household staples we are seeing. But longer-term, Carranza foresees consumption habits acquired through the crisis may extend into the future.
Purchasing habits ready for disruption
“Consumption behavior is habit driven, as well. Habits are hard to disrupt,” Carranza says. “But something this big, that causes these kinds of intense negative emotions is an example of the kind of thing that can disrupt habits.”
Clicksuation Lab’s Barbera sees one significant change in consumption habits arising from this crisis. It will push consumers toward more healthy, environmentally-conscious choices.
“The CDC and World Health Organizations are stressing the importance of proper handwashing and doing it often. This is bound to influence people to live healthier lives, which is a win for retailers selling healthier foods and sustainable products,” he says. “It will move consumers to evaluate things from a different perspective.”
Professor Barraza thinks now is a time for retailers and marketers to leverage consumers toward more sustainable and healthy choices.
“This is an opportunity to shift our focus on sustainability and that it is not only good for the environment but good for us specifically. So, for example, the time is ripe for clear messaging around the notion of buying and sourcing products locally.”
And the time is ripe not just for locally-grown food, but more responsible, sustainable, and locally-sourced and produced consumer goods in all different categories. “People are becoming much more aware of the supply chain in general and how much we depend on China and Asia in particular,” he continues.
“As humans, people are looking for signals in the environment to tell us what is the right choice and why we should spend more for one brand or another,” Barraza says, and I would add, why we should shop in one place or another.
Retailers and marketers can use this health crisis to help their customers live healthier lives, as well as build healthier businesses in the short and long term.
The short and long of it
In the short term, people will be spending more time at home and avoiding crowded shopping areas. This will incline them toward making more online purchases, which may become a hard habit for brick-and-mortar retailers to break once the immediate threat to health subsides. This underscores the need for retailers, large and small, to offer meaningful online experiences to keep their connection with consumers intact.
And with more time at home, people are more likely to feel the short comings of their home environment. Short term, it may make for more home decorative purchases, like a new rug, chair, or pillow. Longer term, it may lead consumers to consider major home improvement or redecorating projects.
Spending more time at home will also be good for craft and hobby retailers, especially if they can fulfill demand through online shopping.
Consumer psychology controls purchase behavior
“This is providing an opportunity for people to change their habits which will change their behavior in the long run,” professor Barraza says, which is why retailers and marketers need to understand the psychology of consumers so that they can anticipate what they might want now and in the future.
Traditional economic theory, Clicksuation Lab’s Barbera believes, provides very little guidance in that regard. “It hypothesizes that people make decisions based upon their best utility. On the other hand, behavioral economic theory hypothesizes people make decisions based on experiential, emotional, even irrational things.”
Right now consumers are in the throes of deep emotional, irrational fears. They are seeking comforting experiences that will bring them a sense of control which in turn will make them more comfortable. Buying things, or having the sense of agency that comes from making consumption choices, is one way they can regain a feeling of control and greater comfort.
So they hoard household supplies, not because there is any evidence that they will actually need them, but the very act of buying them gives them comfort because they are doing something.
Consumption plays an important role in the lifestyle of American consumers. That won’t go away. But retailers and marketers are well advised to plan for potential long-term changes that this crisis may bring to their underlying psychology and the values that underpin their purchasing decisions.