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Home / Business

Covid 19 coronavirus: Three behavioural trends that will reshape our post-Covid world

By Eddie Yoon
Harvard Business Review·
4 Jun, 2020 09:37 PM7 mins to read

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Covid-19 changed consumers' shopping habits. Photo / 123RF

Covid-19 changed consumers' shopping habits. Photo / 123RF

Typically, consumers' supermarket shopping habits are stable and slow to change. When people do dramatically change their behaviour around buying food and beverages, it's usually driven by a major life event such as having a baby, moving to a new town or changing jobs.

The Covid-19 crisis is, of course, changing everyone's life at once — and anyone who's been to a grocery store can bear witness to the industry's whiplash. During one week in March, US grocery store sales spiked 77 per cent over the previous year, while restaurant sales declined by 66 per cent. In late April, grocery sales were still running 8 per cent above average, with restaurants down 48 per cent.

Now, with the majority of US states poised to reopen businesses, everyone is wondering what the "new normal" will look like when it comes to shopping, cooking and eating.

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In 2017, I wrote about how the number of consumers who both loved to cook and cooked a lot — cooking superconsumers — had shrunk by a third over 20 years to just 10 per cent of the US population. Cooking, I argued, was undergoing a shift similar to that experienced by sewing: It was once something nearly everyone did frequently but was becoming a hobby enjoyed by a small minority.

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As millions of people shelter in place, that appears to be changing. A study done by Hunter, a food and beverage marketing communications firm, noted that 54 per cent of Americans are cooking more than they were before the pandemic, and 35 per cent say they "enjoy cooking more now than ever." If the number of cooking enthusiasts triples and stays there, it will have ramifications.

That extreme scenario is unlikely, but it is probable that the "new normal" will include a shift toward more eating at home, which includes both cooking/groceries and takeout/delivery. The surprising truth, however, is that the food and beverage industry has relatively little agency in what the future looks like.

Specifically, three factors having nothing directly to do with food will influence the future of grocery shopping — and many other industries, too.

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Work from home

The first factor is how many employees can and do choose to work from home permanently. Cooking is correlated with time spent at home, and working at home is likely to permanently increase post-Covid. Google has said a majority of its employees can work from home until 2021. Twitter CEO Jack Dorsey told employees that they'd be allowed to work from home permanently, even after Covid. According to the US Census, about 5 per cent of American workers primarily worked from home in 2017, up from over 3 per cent in 2000. The Bureau of Labor Statistics noted that in 2018, 29 per cent of workers had the option and ability to work at home. Both numbers will surely increase as a result of the many weeks in which most professionals found ways to be productive outside the office.

How much will it increase? That is a function of two key factors, namely what employers can gain from more work from home and what employees want. A survey of chief financial officers noted that they planned to shift 20% of their employees to remote work to save costs. According to a consumer pandemic study by the Cambridge Group, 44 per cent of Americans fall into archetypes that are highly worried and are taking more extreme measures to socially distance. An average of the two ranges suggest that 20 per cent to 30 per cent of workers could end up working from home a meaningful amount.

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This massive migration to work from home will be concentrated among high-income workers in high-income geographies. Of Americans in the top 25 per cent of household income, 62 per cent had the option to work from home, more than double the average. Seven of the 10 metropolitan areas with the highest per capita income are in California, New York and Massachusetts. These local markets will be the canary in the coal mine for much of the restaurant, grocery and other industries.

Dinner for one

The second factor is the continued increase in single-person households. This increase is one of the major reasons for the decline in cooking overall. According to the US Census, single-person households increased from 17 per cent in 1969 to 28 per cent in 2019. From 1984 to 2018, the annual number of marriages declined by 16 per cent, to 2.1 million per year, while the US population increased by 72 per cent in that same time period. Birthrates in the U.S. fell in 2018 to 3.8 million births, the lowest number since 1986.

Don't be dense

The third factor is investors' and executives' realisation that consumers no longer desire density, and numerous industries must rapidly revamp their value propositions and business models accordingly. Scale, which was previously a massive competitive asset, is increasingly a big liability.

In the food business, drive-thrus will likely become ubiquitous, not just for fast food but for grocery stores and sit-down restaurants. This will require capital expenditures. Delivery demand will grow, forcing grocers and restaurants to find profitable ways to facilitate that. Smart restaurants may even become minigrocers, selling related food items (shredded cheese with a pizza) as consumers seek to consolidate trips.

Outside food-related industries, consumers' wariness of density will mean fewer open-plan work environments, crowded elevators, skyscrapers and crowded commutes. It may lead to a dramatic rethinking of living in big cities. Softbank took a $6.6 billion write-down on WeWork but stands to lose even more as the fundamental value proposition of WeWork — working side by side with strangers — has become wholly undesirable overnight.

The business model of higher education is predicated on densely packed classrooms and dormitories, which is why so many schools are at risk of bankruptcy. Airline industry profits rose as they increased their load factor from 75 per cent in 2005 to 85 per cent in recent years, but that strategy has gone out the window. Entire schools of thought related to business strategy — from asset utilisation to cost leadership to economies of scale — need to be fundamentally reassessed for their viability in a post-pandemic world.

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If work from home dramatically increases, household sizes continue to decrease and people continue to fear density, there is no going back to the old strategies that drove profits and growth. Investors and executives need to realize that Band-Aid solutions will only prolong the pain. Instead of trying to preserve legacy strategies and business models predicated on notions that are being upended, they would be better off creating new categories built on higher levels of working from home, continued growth of single-person households and protection from "stranger danger."

As it turns out, cooking may not the only category going the way of sewing.


Written by: Eddie Yoon
© 2020 Harvard Business School Publishing Corp. Distributed by The New York Times Licensing Group

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