How Coronavirus has Impacted the Five Drivers of Megatrends
Coronavirus (COVID-19) impact at a glance
COVID-19 has had a significant impact on socioeconomic and technological factors that shape consumer behaviour and disrupt businesses globally. Across industries and markets, organisations have had to navigate challenges and realign for a different future. Almost two years in, we explore how the health crisis and resulting global economic recession have changed the five drivers of megatrends.
Shifting economic power: Uneven recovery shaping the global economy
The COVID-19 pandemic has deepened the divergence in the global economy. Advanced economies experienced a deeper contraction in 2020 amid the pandemic, compared to emerging and developing markets. The pace of economic recovery remains uneven across the world, leading to market polarisation and creating an uncertain environment for business in the short and medium term. Among emerging markets, economies such as India, Indonesia and Brazil are facing ongoing difficulties with the pandemic, while some highly indebted developing economies will be more vulnerable post-pandemic.
In the long term, emerging and developing markets, particularly those in Asia Pacific, will continue to drive the global economy. Consumers in emerging economies will continue to catch up with advanced economies in terms of GDP per capita, creating huge opportunities for businesses.
Population change: Short-term disruption to urbanisation, long-term impact on health trends
The pandemic triggered a degree of reverse migration back to rural areas, due to job losses and lack of livelihoods for low-income (often migrant) workers. Knowledge workers also left cities during lockdowns, looking for open spaces. Given this, the share of the global population living in urban areas declined slightly, dropping to 56% in 2020, from 57% in the previous year. The lure of the cities, and the future of cities themselves, will have different dynamics moving forward.
COVID-19 has brought health awareness to a new level, with consumers embracing healthier habits and routines more than ever, as well as focusing on holistic health. The new health habits formed during lockdowns are expected to stay, creating long-term opportunities for businesses that can help consumers to achieve their holistic health goals.
Environmental shifts and pressures: Consumers broaden focus to include both green and social activism
While environmental concerns remain strong among consumers, they lost some traction during the height of the pandemic, with COVID-19 shifting attention towards immediate socioeconomic concerns. This has impacted ethical purchasing decisions, resulting in a new social purpose. After one of the most unpredictable years ever in 2020, consumers are more politically and socially-conscious than they were before the pandemic.
While social activism is likely to stay, with nearly 40% of consumers expecting increased political and social unrest in the future, environmental concerns are also rising, with 46% of people surveyed expecting climate change to impact their lives more in five years time than it does now (Voice of the Consumer Lifestyles survey, 2021).
Technology: The accelerated shift to digitalisation is here to stay
Although more than half the global population is connected to the internet, the COVID-19 pandemic underscored its role in society. For internet-connected consumers, who were suddenly homebound, that connectivity became a lifeline. Consumers transitioned activities such as work, school and play to digital channels almost overnight. This shift by consumers to more digital living is here to stay. As a result, companies have become more reliant on technology to engage and serve homebound consumers. More than 70% of industry professionals said they accelerated some technology-related investments due to COVID-19 and 68% expect consumers will judge them more on their digital prowess post-crisis.
Changing values: Shock of pandemic results in consumer’s re-evaluating priorities and values
COVID-19 has up-ended consumers’ lives globally, wreaking fear and escalating anxiety. Many are reconsidering their values, priorities and behaviour, with some permanent shifts evolving.
The shock of being forced to stay at home, disconnected from friends and family, and fear for their health and financial security has made consumers more determined than ever to make more of their lives and be the best they can, accelerating the shift in important values and priorities, such as living healthy and more simpler lives. The pandemic brought out the caring side of more people globally. During lockdowns, consumers of all ages and types experienced life with limitations and fear. Communities came together to support each other and those less able, and rallied to keep local businesses running. Ethics, inclusion, diversity, welfare and equality influence consumers more now than ever before, reshaping their beliefs and values.
Key Takeaways for Business:
These five drivers of megatrends comprise undeniable facts about the world. Although the drivers themselves do not change, the trends within them do and COVID-19 has shifted some focus within each of them. Understanding the impact is as important as understanding the megatrends themselves. So what does this mean for business?
For further information, please contact Alison Angus, Head of Lifestyles on alison.angus@euromonitor.com