The Myth Of A World After: A European Recovery Perspective
Expectations of a world after COVID-19 and the new normal have been exaggerated. Human nature shows us that bad habits often overcome good intentions.
Yes, of course, consumers have massively and quickly shifted to more local, digital, and environmentally friendly behaviors. The growing importance of values-based consumption for a minority of affluent consumers will urge brands to embrace business resiliency. However, in the next couple of months, we expect that:
- Consumers’ desire to buy ethically will increase, and firms will struggle to deliver.
- The recession will settle in, and price will trump ethics for most European consumers.
- The gap between economics and ethics will increase polarization.
Don’t get me wrong: The crisis will lead to lasting changes, and we expect new waves of the pandemic in Europe before the end of 2020. But it’s extremely difficult to predict the political, societal, and economic impacts of the current crisis in the medium to long term. In the next two to five years, there are many potential scenarios. Will the current crisis lead to excessive consumption and intense cultural activity as it did during the roaring ’20s after World War I and the Spanish flu? Or will it lead to World War III and an economic downturn of such magnitude that the 1929 crisis and subsequent Great Depression will pale by comparison? History doesn’t repeat itself in the exact same way, but it’s fair for CMOs to expect systemic risks to massively increase in the next decade. In this context, it’s key to anticipate some trends that will likely affect brands:
- The evolution of how consumers perceive time and space will drive design.
- The explosion in remote working and shift to rural living will reshape city centers.
- New modes of transportation will reshape local commerce.
- The end of mass tourism will make safe travel a premium experience.
- The rise of local brands will force global firms to localize marketing and operations.
However, rather than installing net new behaviors, the crisis will primarily accelerate preexisting trends. That’s why in the short term, companies should reestablish trust and reboot their digital strategies, bearing in mind that:
- Digital touchpoints will be central to European customer engagement. CMOs should think about digital as more than websites and apps. They should join conversations and build a dialogue with customers by turning voice and language innovation into a conversational strategy.
- Marketplaces and mature digital brands will emerge stronger. Amazon’s or Zalando’s results speak for themselves.
- Digital commerce growth will not offset the decline in physical retail sales. Between the end of 2019 and the end of 2020, we expect digital will grow from 12.3% of total retail sales to 15%. Online spend in the UK will also continue to surpass that of continental Europe, with 25% of retail sales coming from e-commerce in 2020. Italy and Spain will grow the fastest, but fewer than 10% of their retail sales will be online.
If you want to know more about this, feel free to schedule a conversation with us through our inquiry system or read the full report associated to this blog post and video: The Myth Of A World After: A European Recovery Perspective.