Gen Z and COVID-19 - Securing Marketability in a Rapidly Changing Era

The New Normal: Market changes brought on by the COVID-19 era

As the COVID-19 crisis reshaped the market, understanding the shift in purchasing behavior led by younger generations has become more important across every industry. Savvy companies are likely gathering deeper insights into Gen Z and Millennial consumers to understand their attitudes and quickly adjust their marketing strategies to keep up with the trend. If they are not doing so now, they may end up losing the position they currently hold.

Woman shopping wearing mask the new normal

To begin with, in the United States, ecommerce usage rose from 16% to 27%, while in the UK it increased from 18% to 30%. Travel and tourism products saw a 90% decline in March and April, department stores saw sales fall by 50%, but food delivery services saw sales rise by 90%.

In Korea, too, the scale of change was striking. As of August 2020, online shopping transaction volume reached a total of KRW 14.3833 trillion, which is an increase of KRW 310.47 billion year over year, or 27.5%. Not only groceries and food delivery services, but also home appliances, electronics, telecommunications devices, household goods, cosmetics, and more all saw tremendous growth.

Mobile shopping transaction volume also rose by 27.8% compared with 2019, reaching KRW 9.3265 trillion.

Consumer migration to online and mobile should be viewed from two perspectives:

First, products that used to be consumed offline have moved online.

Second, products, services, and retail brands that are available only in digital form, and can only be purchased digitally, have expanded.

If you're curious about how 2021 packaging trends are changing to suit the current market: Click here!

Online-only shopping services

Netflix, Watcha, and online subscription services

As movie theaters, performance halls, and other traditional venues became harder to access, the range of paid video content that people can enjoy at home expanded through virtual concerts, VOD viewing, and online streaming services.

From paid online streaming of musicals to online ballet performances, not just filmed movies but entertainment content across the board has become something people can enjoy from home. As a result, people are able to enjoy a richer range of cultural experiences without being constrained by time or place, and in fact across all regions.

Fashion brands sold only online

Fashion is usually something people prefer to buy offline because fit and materials matter so much, but as Instagram Shopping features and fashion curation apps such as Zigzag and Brandi have grown, more online-only fashion brands that can minimize fixed costs are appearing.

Even luxury brands with high consumer involvement, such as Prada, have added online shops to their websites after COVID-19, showing that the fashion market is also expected to shift significantly toward contactless services.

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Food delivery services such as Coupang, Baemin, and Shuttle

Beyond typical delivery foods like fried chicken, jokbal, and jjajangmyeon, many more food products have begun supporting delivery services.

From products sold offline and expanded online, such as braised pork ribs sold at traditional markets or brownies sold by independent bakeries, to time-sensitive items like ice cream and bingsu, a wide variety of products have shifted toward online sales. As a result, consumers can now enjoy a much broader range of foods at home.

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Will consumer spending that moved online continue?

To be honest, it is no surprise that online purchase rates rose in the contactless era. The more important question is whether these changes in purchasing behavior caused by COVID-19 will return to normal or whether the era of the New Normal will continue. To understand this behavior, a New Normal prediction model was developed by considering not only consumers’ own judgments, but also past behavior patterns, how much they currently enjoy buying, and the psychology of habit.

According to the NNP approach, Gen Z and Millennials will continue to spend at least some of their time on digital media. That includes video streaming and online gaming. Social media, on the other hand, is expected to return to pre-coronavirus levels. Meanwhile, Gen Z and Millennials are expected to consume traditional video media such as TV and movie theaters less in line with the current trend.

Gen Z and Millennial consumers are also expected to maintain changed purchasing patterns in terms of the items they buy. Not surprisingly, many young consumers increased spending on products used at home, health and wellness items, and everyday necessities, while reducing purchases of impulse-buy products. And this simpler spending style is expected to continue. To be more specific, due to the effects of COVID-19, 10% of consumers increased spending on packaged food and beverages, 12% on home appliances, and 6% on health and self-care products. To cover this additional spending, they delayed spending on alcoholic beverages by 8% and on expensive items such as electronics and cars by around 20%.

Why not try something different and design a package that fits the continuing online consumer market?

Turning change into a springboard for growth:

An essential survival strategy: omni-channeling online and offline

In fact, omni-channeling between online and offline had already been gradually progressing even before COVID-19, but the pandemic has made online sales not just a simple sales strategy but a necessity. Cafes and bakeries now have to compete on delivery apps, and mobile grocery shopping services such as B Mart are also accelerating.

However, delivering a brand’s atmosphere and identity through online sales can be more difficult than expected. That is why you need to come up with a way to communicate your brand’s unique image and differentiation online as well.

One way to help with this is to create packaging with design elements that reflect your brand essence. Just as Diptyque instantly brings to mind black-and-white ink-like illustrations, or McDonald’s brings to mind a fry box with a bright yellow M on a red background, packaging fully conveys a brand’s image to consumers. Even without visiting a department store or a physical shop, thoughtful packaging design alone can deliver your brand identity, which young consumers always want and ask for, right to their doorstep.

Why not use custom boxes with brand identity not only for retail containers but also for shipping boxes delivered to customers’ homes, and add more color to the online experience?

If you want to check out McDonald’s changed packaging design, click here!

Making full use of digital channels, including mobile

Make the most of ecommerce platforms driven by young consumers. Run marketing campaigns on social media channels where you can communicate with consumers instantly and lead them straight to purchase behavior. It is said that 60% of Gen Z and Millennial consumers were influenced to buy when ads appeared on social media while they were at home during the COVID-19 pandemic!

In addition, prolonged lockdowns reportedly gave consumers the courage to try new products and brands they had not yet encountered in the real world. During the pandemic, 69% of younger consumers purchased a new product they had never used before, while 43% of older consumers tried something new.

If you want to profit from these new consumption patterns, you will need to do more than simply open an online store; you must continue to prompt consumer response by offering new digital offers. And even if purchases are made online, the product is delivered offline, so don’t forget to provide a pleasant unboxing experience!

Create packaging that gives your customers a different kind of experience

If you bought something you loved from a beautiful website, but it arrived in a dull shipping box with the product carelessly crumpled inside, of course your satisfaction would not be very high. This is also why online luxury fashion websites like NET-A-PORTER and Farfetch pay so much attention to gift wrapping and packaging options. Or think about Puradak! Even if it is not all that different from other chicken brands, doesn’t its carefully designed packaging make it feel like a “luxury brand in the chicken world”?

Designing beautiful packaging sounds like a good idea, but do you think it might be too expensive? Think about this for a moment. Just as people have become used to paying shipping fees in exchange for delivery service, they are also already quite used to paying extra for gift wrapping options. If the product is in a low price range, or if the packaging itself is too expensive, adding it as a paid service can actually improve consumer satisfaction even more!

When products are delivered through shipping, packaging plays a bigger role in customer satisfaction. For younger consumers like Gen Z, these details go beyond satisfaction and act as a crucial catalyst for delight. If beautiful packaging boxes and neatly arranged cartons make consumers happy, why not aim for unboxing videos to appear on YouTube?

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