“The longer that Covid has gone on, the more likely it is that enforced changes in consumer habits become learned and persistent.' Spending money in the new normal is different, and consumer spending behavior is shifting.
Anticipating fiscal reactions to the shifts in consumer behavior caused by the Covid-19 crisis isn’t easy. But careful observers can find plenty of indicators for how people live and spend money in the new normal.
He uses the example of China’s consumption, which has largely recovered back to 2019 levels. There, online channels have increased penetration in one year to a level he says normally would have taken four or five.Denied choices, consumers have had to accept what they previously thought of as inferior alternatives, such as elearning or telehealth, creating for some businesses what Cockrell calls “an endowment of customer acquisition.
Here are four points Cockrell shared with Penta to help investors navigate the changing world of consumer behavior.Looking at individual consumer-led changes can mask their significance; the totality of smaller consumer changes, like home consumption and changing traffic patterns, is meaningful. That’s why Cockrell encourages investors to consider the competitive advantages of companies. For instance, some apps and tools replacing face-to-face workplace communication seem to have relatively low technology barriers and are easy to replicate, meaning they lack ability to scale and continued steady profit and revenue growth can be unsustainable.
“Lower-for-longer interest rates and strong government intervention in the private sector has generally made the rich richer,” Cockrell says. “But the direct consequence of Covid in terms of economic disruption and job losses has affected people who’ve lost their incomes, and who don’t have capital much more negatively.”
Though not easy to measure, examples abound. For instance, Rolex recently introduced a line of traditional watches with vivid face colorings, and people are experimenting with cosmetics and beauty treatments like bright hair colors.
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