Mckinsey & Company: Adopting innovative technologies, clear value proposition key for spurring consumption
By Wu Zheyu
04:17

COVID-19 paralyzed the world – especially business activities – for a period, leaving many industries plunging into an abyss of misery, while not those sectors who adopt fast-driving innovative technologies and have clear value proposition, as live streaming and healthcare lead the growth amid pandemic recovery, said Daniel Zipser, the senior partner at Mckinsey & Company.

Talking about the new trends that emerged in the economic recovery, Zipser listed live streaming as one of the most promising sectors that are destined to flourish even during the post-pandemic time.

"Live streaming is definitely one of the trends we've seen accelerating throughout the year. So is social commerce, which was [at] an infant stage last year while now [it] actually became part of the day-to-day life of Chinese consumers," Zipser added.

During the lockdown period, with shops closed and people stuck at home with little to do, an easy hobby to nurture is online-shopping. The consumption trend is likely to prevail. A March survey from the China Consumer Association found that users liked shopping this way because it's more social and interactive. According to iiMedia estimates, China's live streaming e-commerce is expected to grow to 129 billion U.S. dollars this year.

Zipser also noted some other trends which now have seen as substantial amplification and importance.

"Consumers now have [a] greater interest in healthcare, and their attention [has] shifted more towards quality products, as well as a continued trend to a premium transition, which is something which I found very interesting and insightful to watch throughout the year." 

The eagerness for healthcare is undoubtedly a common interest shared by global consumers, and they are increasingly embracing new ways and methods as long as it's efficient.

For example, telehealth means the use of digital information and communication technologies, such as computers and mobile devices, to access health care services remotely and manage one's healthcare. According to a survey conducted by PwC's Health Research Institute, 5 percent of American consumers reported that they or a family member used telehealth for the first time during the pandemic. Applied to the broader U.S. population, this could mean about 16.5 million Americans have started using telehealth in the past couple of months alone. Eighty-eight percent of these new users said they would use it again.

Brands with unclear value proposition underperformed

An interesting finding by  Zipser on consumers' evolving attitudes and behaviors during the coronavirus pandemic is consumers are actually becoming more picky and choiceful.

"Besides the excitement of trending sectors which have been changing, we also see some brands struggling. Under such environment, consumers will think twice before they purchase. If retail spaces could not provide modern and premium environment, consumers would become more cautious. They would hesitate that, 'should I really buy there? Or is it actually better for me to buy online or in a much, basically, nicer and more experience-driven retail environment?'" Zipser further elaborated.

A conclusion Zipser drew from the current spending trend is that brands with unclear value proposition easily underperformed.

"Companies are benefiting from the digitalization driving growth. At the same time, you also do observe that actually those brands and retailers have not outlined a clear path of value proposition are underperforming in the current environment," Zipser said.

Industry insiders found that there's clearly a trend of polarization, as on one hand, people have less incomes and have to be selective when they consume, and on the other hand, there's increasing popularity toward premium segments. Brands and companies and segments stuck in the middle may find it even harder to survive. 

"Consumers are holding back their spending in an ambiguous environment where they don't exactly know what the future will bring," Zipser added.

As to how should businesses lift consumer spending, Zipser pointed out that innovation is the key.

"Companies need to look into new ideas and new methodologies to generate demand. The amount of innovation we have seen companies have been driving is remarkable when it comes to how to engage with live streaming and social commerce. Winners are the ones who actually erected fast-driving innovation, particularly digital innovation in the China market," Zipser illustrated.

A report by Boston Consulting Group (BCG) put forward some suggestions on how to adapt to the new reality to ensure near-term business continuity, also echoed with some similar points of view.

The report said, to stabilize demand and supply, firms will need to ensure products and services serve the preferences of customers, whose consumption patterns have changed to accommodate their low purchasing power. The report suggests the use of data analytics to help companies make informed decisions when cutting costs and boosting brand confidence.

"Firms will have to hire and maintain a dedicated team to track data, assess business impact, and plan for different scenarios," the report added.