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.
It’s important to keep in mind many changes, despite the circumstances, aren’t from left field. Nathan Cockrell , co-director of global research at Lazard Asset Management characterizes what we’re seeing as a fast-forward of shifts that were already underway.
“On the offline-to-online transition, this looks like it has created a step change, but the direction of travel was already established,” he says. “The longer that Covid has gone on, the more likely it is that enforced changes in consumer habits become learned and persistent. I definitely subscribe to the idea that something’s changed that is somewhat irreversible.”
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.
“That kind of gives us a picture of what ‘normal’ might look like,” Cockrell says.
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.”
He believes there’s stickiness to these changes, from slow-to-adopt groups like older consumers shifting online and from regional laggards—such as online grocery’s uptick in Japan, where it was previously a marginal activity.
“If the Japanese are changing their behaviors, then that tells me that something bigger’s occurred,” he says.
