How Changing Consumer Behavior Impacts D2C Brands

As safety, health, hygiene, and convenience are accorded high importance by consumers, brands are changing their production and supply chain strategies accordingly.
How Changing Consumer Behaviour Impacts D2C Brands

Almost overnight, the pandemic changed consumer behavior globally. Suddenly, safety, security, health, hygiene, and convenience emerged as major purchase drivers. Likewise, companies, especially D2C (direct-to-consumer) brands, adopted technology tools within months, which would otherwise have taken years. 

The nationwide lockdown in March 2020 led to changes in consumer behavior. Despite no shortage of goods, with almost 1.3 billion people confined within their homes, consumers began purchasing products impulsively. Ready-to-eat foods, groceries, toiletries, sanitizers, medications, and face masks more quickly vanished from shelves. Consequently, within days there was a shortage of essential commodities across stores. 

Disruptions and Changes

Meanwhile, more than two years down the line, Coronavirus continues to remain a threat in various geographies to some extent or the other. As a result, prolonged disruptions in business have triggered profound changes in consumer buying habits, forcing companies to respond in diverse ways to the evolving situation. While most companies deployed digital, hybrid, or omnichannel means to keep BCPs (business continuity plans) running, some realized the importance of the D2C model. 

Though hopes abound that the pandemic will soon become an endemic disease and, like the seasonal flu, only be part of ongoing annual threats, as new variants and waves keep emerging, consumers and companies cannot fully let their guard down. 

In such a scenario, companies have had to reimagine how to keep their supply chains humming while evaluating which business model will be most feasible in the new normal. For many entities, although the crisis has posed challenges, they have capitalized on the situation by creating opportunities. 

Such companies have customized their marketing strategies as per the changing consumer dynamics and the trend toward impulse buying. D2C brands dealing with personal care products, which recorded an uptick in sales, were one of the big beneficiaries of a heightened health and hygiene focus.

While sales of some goods are expected to plateau once the pandemic wanes worldwide, some of the behavioral changes will remain over the long run. This includes the greater comfort levels while shopping online, which consumers were earlier wary of.  Another significant change is the shift towards impulse buying, which has increased prominence in the post-pandemic phase. Typically, impulse buying behavior among consumers is an unplanned purchase of any product or service. This buying behavior is spontaneous, occurring when a consumer is overcome by a sudden, powerful, and/ or persistent urge to purchase an item immediately.  

Impulse Buying and Supply Chain Distortions

When the pandemic peaked in the second wave, impulse buying led to shortages of essential items as extreme fear drove consumers to stock up on products they felt would soon run out of stock. While stocks may have lasted in normal circumstances, the sudden surge in impulse buying and stockpiling of items at home ended up accelerating the feared outcome, triggering distortions in the availability of most items. 

For companies and policymakers, it meant a greater focus on adjusting inventory levels and trying to drive higher efficiency in supply chain management processes. Simultaneously, companies and the authorities kept communicating with customers that there was no need to panic as sufficient stocks were available and current shortages were largely due to stockpiling and temporary disruptions in the supply chain. Despite these reassurances, most customers played safe by buying additional goods. In essence, the hoarding of goods created an artificial scarcity in many instances. 

Here, one must differentiate between impulse buying in normal circumstances and a crisis. In the former, impulse purchases are mainly driven by deep discounts, special sales, and engaging marketing campaigns. During disruptive situations, however, consumers are keen on fulfilling the need for buying food, medicines, and other essential items because they are unsure about the intensity and longevity of the event. Additionally, the possibility of product shortages, fear of crowded stores, and shopping in inconvenient locations have all affected consumers’ shopping patterns. 

In the case of FMCG and D2C brands, events of the past two years encouraged companies to increase the production of goods, particularly essential commodities, to manage the sudden surge in demand. But this was easier said than done, considering the stringent social distancing and other allied restrictions. Supply chain disruptions have also forced companies to diversify sourcing models that were overly dependent on China. 

Today, it’s clear the traditional brick-and-mortar model won’t help in keeping BCPs going during periods of disruption. Like D2C brands, legacy companies also need to adopt hybrid or omnichannel models so they can keep catering to their target audiences even in challenging circumstances. 

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