Effect of COVID-19 on Sri Lankan Consumer Behaviour and the Post-COVID Consumer

By Sameera Jayathilaka and Sumith de Silva

The novel infection, COVID 19, which was originated from the city of Wuhan, China in December 2019 has become a worldwide recession affecting 203 countries, infecting 1,432,373 people and 82,114 deaths as at 7^th April 2020. This has badly affected the world economy in many ways as several countries have temporally shut down their industries and highly investing in the health sector to overcome this issue. The epidemic presents many challenges to consumers, brands, and policymakers around the world. 

Sri Lankan consumers and brands have become a victim of this crisis after the decision made by the government to lock down the country from mid-March 2020. This decision has impacted both the consumer and the seller. This article attempts to discuss the role of the government, the influence of technology, marketers’ role and the effect on the Sri Lankan consumer decision-making process.

The Role of the Government

Sri Lankan Government is playing a significant role by taking every possible preventive action to overcome the challenge through the contribution of military forces, health sector professionals and other relevant authorities. Their immediate action was to impose curfew all over the country. This decision was announced a few hours before imposing a curfew. This made the consumers panic and they tried to take immediate action to buy essentials goods and trying to stock goods for future needs. All the retailers were packed and busy selling their stuff to consumers. However, this was not approved by the health officials as they observed that the consumers were not practicing recommended health practices in this crucial situation. 

Thereafter, the government decided to lift the curfew on a regional basis and consumers were given about six hours to purchase goods and obtain other essential services.  It was observed that the instructions which were given by the officials were practiced only at some places such as supermarkets and banks etc. In other places, people seemed to be ignoring the given instructions and the authorities could not control the consumers.  Therefore, the government decided to deliver essential goods to the consumer’s doorstep by allowing essential goods and government-owned retailers. This was a good decision and the process yet to be improved with a very good mechanism to reach the consumers in several areas. However, consumer affairs authority was actively involved in protecting consumer rights and taking legal actions against consumer rights violations. Recently, the government has decided to stop importing all items except medicine and fuel and this will greatly impact consumer buying behavior in the future. These practices led to open the eyes of the Sri Lankan consumers to assess the ethical business practices of business organizations and the other traders. In a more competitive business world, business ethics are severely challenged and hence marketers need to be ethical than ever in serving the consumer. This seems to have created a new directional dimension in trade and commerce in Sri Lanka.

Technological Impact

Technology can play a major role in this kind of situation by making a common platform to connect the buyer and seller by creating online market places as a solution for the recommended social distance by health experts. In general, even though the online trading was quite common and familiar with a particular consumer segment in the country, it was not that much popular in Sri Lanka even though, the population is 21.4 million and only 7.16 million Sri Lankans are using the internet (www.interworldstats.com).  Yet, out of this 21.41 million, only a very few are using online platforms for trade and commerce

However, there was a trend of opening new online shops and the entrance of existing retailers to provide online services through their web sites. Many malpractices were recorded related to online selling, as some of the reputed online shops were overcharging from the consumers and taking advantage of this critical situation. Those opportunistic sellers were highly criticized by Sri Lankan consumers through social Media and were complained to the relevant government authorities. Online shopping was not a new experience for urban consumers in Sri Lanka yet, the rural consumers are yet to be adopted to the online shopping experience. Market research studies show that there are 31.8 million mobile phones in the country, which is 149% of the population. The total internet users in Sri Lanka is around 10.10 million and 6.4 million people are accessing social media.  This gives the enormous potential for innovations in goods and service delivery.

In this technology diffusion, the laggards who were reluctant to adopt new technology even had to use innovative technological tactics to fulfill their needs and wants. The challenge of social distancing paved the path for the new service innovations too. If this trend continues, there we could expect significant advancements and changes in products and service distribution strategies and tactics of business organizations. For example, the distribution of medicines, consumer goods, and medical advisory services, etc. could be highlighted. Another important aspect of the home delivery of essential consumer goods has made the Sri Lankan consumer understood the price advantages compared with consumer buying behavior in modern supermarkets.

Role of Brands and Marketing

Brands and marketers have to play a vital role to overcome the situation by serving and caring for their customers ever than before. The situation has created a sudden increased demand along with many restrictions which made the consumer challenged to behave in decision making. Therefore, the distribution of both products and services played a significant role than advertising and sales promotions as they have nothing to bother about consumer demand. Unfortunately, only a few reputed brands were seen serving actively in the market while others were invisible. Consumers were highly criticized for some popular brands for different reasons such as mobile service providers, leasing companies and other essential goods providers. Large scale retailers closed their shops during the outbreak and gradually they started operations by getting orders. However, the consumers are still complaining against them for poor service and not responding to hotlines.

The role of small scale retailers were significant during the crisis as they were actively involving the process by delivering goods to their consumer’s door step. Especially, government retailers like “Sathosa” and Cooperative societies were actively involving the process by providing a considerable service than expected by consumers. However, some complaints were seen against them for their assortment pack of essential goods that were not worthy for money. It is very much important to understand the contribution and the enormous potential of the Cooperatives Societies have in the country. Cooperatives have a membership in the country than any other business organization. At present, there are 8.2 million members attached to a cooperative society. There are around 306 Multi-Purpose Cooperative societies in the country with a membership of   4.9 million approximately all over the country. They possess the best distribution channel in terms of physical assets and human resources. However, they lack the digital marketing skills and competencies to make their presence effective than any other business model. As there is a growing trend among Sri Lankan consumers to manufacture or grow our products locally, cooperatives could be the best business model to fulfill consumer demand, especially for daily needs. As a national strategy, Cooperatives need to be strengthened to gain scale advantages by restructuring the business model. Further, there are nearly 13,000 Sanasa Thrift and Credit Cooperative Societies in Sri Lanka. More than 70% of the membership of these Cooperative societies represent the rural village community and having a lack of digital know-how. Therefore, if the cooperative and Sanasa societies could be guided for a digital transformation, the local economy could be boosted through effective communication strategies with cooperative business organizations. Among the possible strategies, cooperative societies could raise awareness of the cooperative membership on new digital marketing platforms, developing innovative distribution strategies for service delivery e.g. consumer goods, services for livelihood and small business development, micro-financing, health care, and medical services, etc., and developing new mobile applications on the services offered to members could be highlighted.

Health and Safety Rules

New health rules and practices were introduced by government health sector professionals for self-protection and public security to be safe from the virus. People were advised to keep distance, wear a mask, wash their hands and many other practices. Those practices were new to Sri Lankan consumer culture and lots of consumers could be seen in the market place without caring for health advice.

Household Economy and Purchasing Power

The situation has badly hit on the household economy and the purchasing power of Sri Lankans, the majority of the workforce are representing the private sector and daily wage employees. Therefore, daily wage employees are in deep trouble after imposing curfew all over the island. Three types of consumer categories can be identified based on their economic power 1. Consumers who have the money yet, cannot purchase since the products are not available 2. Consumers who want to buy products yet the money is in their bank account 3. The consumer who doesn’t have money in hand or their bank accounts. Beggars and helpless people are also suffering due to the situation as all towns are empty without people. Some people are spending more on buying things without a proper plan without considering the future need for money.

Consumer Buying Decision

The buying decisions of Sri Lankan consumers are depending on panic nature.  Similar to other countries the supermarkets are filled with busy consumers. Theoretically, the consumer buying process is lengthy with different stages such as need recognition › information search › evaluation of alternatives › purchase › post-purchase evaluation.  But in this situation, the consumer buying process is limited information search › purchase › post-purchase evaluation as most of the time they are not buying on their real needs and they buy and stock as they fear scarcity. They haven’t enough time to evaluate competitors and compare goods to one another due to the rush of the supermarket and limited time given for them to shop.

This was a significant change of Sri Lankan consumer behavior as their buying process and decision has shortening and consumer dissonance can be seen commonly as some traders are charging higher prices and selling low-quality products. However, online buying has become a trend among consumers as it’s risky than physical buying and there is enough time for them to select and evaluate products. It was highlighted that many consumers were not aware of the nature of goods, available storage facilities in their homes, their eating capacity, expiry dates, and other evaluation criteria when they buying products.

Consumer Decisions Making Process	Pre COVID actions	COVID actions	Post-COVID actions
Need Recognition	Identified the real need through problem identification	The need was backed up by the situational and emotional factors	Identify the real need and act accordingly
Information Search	Search information on all 4Ps through both online and offline sources	Highly concern about where products are available	Will search both online and offline sources while prioritizing online sources
Evaluation of alternatives	More sophisticated as lots of alternatives available	No more alternatives and limited time available for the evaluation	Moderate sophistication
Buying Decisions	Lengthy and more sophisticated	Panic and quick decisions	Relatively short and less sophisticated
Post Purchase Evaluation	Had more room to switch to alternative and evaluate again	Limited opportunity to take actions	Both digital and physical alternatives are available

Post-COVID Consumer

With this experience, the following consumer characteristics could be expected during POST-COVID Consumer behavior.

• There will be an increased emphasis by both businesses and consumers on innovative strategies and tactics for goods and service distribution. Examples of products and services that will have a great potential will be medical services, home delivery of essential consumer goods, online education, virtual business consultancy and working from home.
• The post-COVID consumer may be more looking for business organizations who are more having ethical marketing practices.
• It is expected to see the Sri Lankan consumers be more inclined towards preferring local products. Small and medium enterprises need to be optimistic to exploit this as an advantage to promote local products.
• Consumers would become less sophisticated than the pre-COVID era as they tend to make panic decisions during the COVID season and there will have to shorten the buying process than the pre-COVID era. 
• Consumers may tend to believe Government and small scale retailers rather than large scale private retailers as they actively served by those channels than large scale retailers which will create an emotional bond.  

Summary

COVID 19 has impacted the Sri Lankan consumer behavior massively. The consumers are shifting from physical buying to online buying. The consumer buying process and decision-making process have shortened due to the high demand for goods and lack of availability of these goods or alternatives. Consumer over demand for goods can be seen due to uncertainty and it has created a panic buying behavior among consumers. Only a limited number of brands are serving their customer actively in this pandemic situation and they should act responsibly to keep their loyal customers. Therefore, brands have to come up with a consumer-centric approach to maximize the opportunities in the market and could focus on more CSR projects to win consumer minds. There is a kind of customer-oriented services which are still not available as the impossible nature of their services in this situation such as beauty salons and entertainments. There should be a proper distribution plan for the government and private sector organizations to reach their consumers efficiently. Policymakers should have a proper plan to face the present crisis, after the crisis and possible future crises. 

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