CONSUMER analysts are saying that every crisis triggers a change in the behavior of the buying public. This current health crisis is no different. Since the start of the pandemic, we have seen a major shift in how consumers are spending and what they are spending on.
From the pre-pandemic “experience economy”, we have shifted to what is now referred to as “essential economy”.
The "experience economy" is the idea that products and services can outcompete by creating an experience that customers value. Where experience becomes the priority and competitive advantage. The decade preceding the COVID-19 outbreak, characterized the experience economy where people will spend on anything and everything that will allow them to experience, at its best, a certain product or service.
So what are the examples of the experience economy?
Top on the list is travel. People, regardless of age and social standing, were saving and spending a good amount of money on travel, whether it's local, regional, or international. The Piso-fare and the seat sale promos of the different airlines and the Air BnB accommodations afforded more Filipinos to realize their dreams to travel. It’s an experience that they consider an accomplishment and an important event in their life which they want to share on their social media.
A good amount of their spending is also on entertainment, such as concerts, movies, clubbing, karaokes, or visit to amusements parks.
Dining experience or eating out is also part of the list. While home-cooked meals are still the best, more people are opting to dine out to experience the vibe of the new restaurant or the latest entree on the menu.
One can also notice the mushrooming of spas, skincare clinics, and salons which all provide a sense of well-being and self-pampering, an experience desired by many as home and work environment becomes more stressful.
And there’s the penchant for fashion and gadgets that consumers consider as a status symbol, like using the latest cellphones or laptops or owning those branded shoes and bags.
This experience economy even gave birth to that term coined by the millennials, YOLO or “You only live once”… so we better experience it all now!
But the pandemic put a stop to all these. With the lockdowns and quarantines, we have confined in our homes… no travels, dining out, or visit our favorite spas or movie houses. Suddenly, we have no use for those branded shoes and bags. Though we have the resource and means, we lost the privilege of experiencing these niceties of life. We are in what is now known as the “essential economy”.
The pandemic caused people to rearrange their priorities and to focus more on the essentials such as food, health, savings/emergency funds, and protection.
It was observed that worldwide, there has been a marked increase in food purchase and consumption. People are allotting a big portion of their budget to stock on food supplies, in anticipation of more and longer lockdowns and quarantines. Food delivery services such as Food Panda and Grab Food also showed growth in their customer base, with Food Panda reporting that their user base grew by 8 times since the start of the pandemic.
As may be expected, this health crisis made us more conscious of our health. We are now spending more on vitamins and supplements, and exercise gadgets and equipment aimed at improving our physical health and boost our immune system. In addition, the high sales for plants are also attributed to people needing to de-stress and work on their mental health.
The pandemic has taken its toll not only on our health but also on our finances. Many were caught financially unprepared at the onset of the pandemic, even those who thought they were financially stable. Having to go through this made them appreciate the importance of savings and having emergency funds for those rainy days.
With many of the virus-infected people getting hospitalized and some even dying, more people are now looking for medical and protection coverages for themselves and their families. No wonder the life insurance industry grew by 5.9%, in a no-growth environment last year. There’s also a growing interest in HMO products. Consumers are now prioritizing the purchase of products that will provide them financial protection and the means, in case a family member, especially the breadwinner, gets hospitalized or passes away.
Furthermore, to provide for their long-term requirements, people are investing more in stocks, mutual funds, or investment-laden insurance products since the market price is on a bargain.
We do not know where the essential economy will shift to once the pandemic is over. It may shift back again to the experience economy since people felt deprived and would want to make up for those quarantined days. But I personally hope that this pandemic has taught us one important lesson. That while there’s nothing wrong to have those “experiences” again, let us be mindful that at the end of the day, the essentials are what really matter.