The Future of Shopping and Food Retail: Consumer Behavior Lessons from New Zealand’s Lockdown
New Zealand has a penchant for being early. Every December 31st, they’re one of the very first countries to send fireworks into the sky and ring in the new year.
In the summer of 2020, New Zealand finds itself ahead of the rest of the world. Unlike New Year's Eve, there are no fireworks or elaborate celebrations. But in the era of COVID-19, there’s little denying that New Zealand is much further along than most. Instead of being one of the first countries to enter the new year, they are one of the first countries to enter the ‘new normal’.
As the rest of the world continues to battle COVID-19, it looks to New Zealand for clues as to what a post-pandemic future may look like.
For marketers, economists, and business owners, this revolves around specific questions: What is the future of food shopping and consumer behavior? Will people go back to stores, or continue to shop more and more online? Will the buying experience itself go back to normal, or will it be forever changed?
These are difficult questions to answer. A recent Deloitte survey across 15 countries (not including New Zealand) captured consumer trends across the globe. The results? It depends.
Consumer confidence fluctuates month to month, as does consumer anxiety. It depends on the country, the type of spending, and these sentiments change dramatically on a nearly weekly basis. Since most countries remain in some stage of lockdown, the post-COVID future of consumer behavior remains murky.
New Zealand as a Case Study for Food Retail and Shopping
Here’s where New Zealand comes in.
The island nation of 5 million is nothing short of a COVID-19 success story. Before an outbreak of two new cases were discovered at the end of June, New Zealand did not report a single case of COVID for over three weeks. When they lifted their formal restrictions on June 9th, they were one of the first countries to do so. By looking at New Zealand, we may get a glimpse into what the retail experience looks like in a post-COVID consumer environment.
At the forefront of this consumer behavior research is Dr. Rosemarie Martin-Neuninger of the University of Canterbury in New Zealand and Dr. Matthew B. Ruby, of La Trobe University in Australia. The team is particularly interested in examining the changes to the retail food experience.
As they describe, “We’re motivated by the current rapid changes to the retail environment. We hope our findings will provide long-term lessons on how consumers shop during national or global emergencies. The insights might help grocery stores and governments to be prepared for future events.”
In ongoing research, they are examining the nature of this change, by comparing consumer food purchasing and eating habits in Australia and New Zealand during three different phases: before the COVID-19 pandemic, during the height of the COVID-19 restrictions, and the current time now that restrictions have been lifted. These comparisons may provide us with the clearest picture yet of what “the new normal” of consumerism looks like, particularly for food retail.
While we await these findings, it’s also informative to look at how consumer behavior shifted throughout the country’s different lockdown stages. New Zealand again provides a unique case, as it is one of the only countries which have spanned the entire gamut from national lockdown to nearly full normalcy.
Conveniently, Dr. Martin-Neuninger and Dr. Ruby have recently published a paper in Frontiers in Psychology, which contextualizes food retail within COVID-19. With this as our guide, let’s take a shopping-eyed view at the New Zealand lockdown.
Consumer Behavior Across the Lockdown Stages of COVID-19
Their COVID-19 response system is organized from 1-4, with 4 being the most strict. In a span of 75 days, they went from Level 4 (nationwide lockdown), to Level 1 (normal life with precautions).
Level 4 - “Lockdown” (March 25th - April 26th)
Level 4 represents national lockdown. People were not permitted to leave their homes except to get basic supplies or seek medical attention. Only essential services such as markets, pharmacies, and gas stations were deemed essential and allowed to remain open. For grocery stores and supermarkets which stayed open, restrictions were placed on the number of people allowed inside at any given time.
As in other countries, the call for the national lockdown was met with rushes to the store and panic buying. As the authors point out, many supermarkets (in New Zealand and elsewhere) had to implement policies to curb this behavior and prevent shortages, which included temporary limits, reducing their hours, and deliberately asking customers to “shop normally”.
Many stores were unable to keep up, especially for online shopping and pickup. As a result, New Zealand Supermarket chain Countdown opened up its first-ever dedicated e-Store in early April to help cope with this surge in demand. The Auckland based store-operated 24-hours, seven days a week, and completed more than 7,500 online orders a week.
Level 3 - “Restrict” (April 27th - May 12th)
Once progress had been made containing the pandemic, the lockdown de-escalated to a Level 3. This meant that a wider range of businesses was allowed to open, provided they did not interact directly with customers. “Anecdotally, people felt more relaxed as the number of cases each day started dropping,” the authors report.
Under Level 3, takeaways were allowed to function if they maintained physical distancing, and they experienced a large and immediate demand. Supermarket regulations were maintained and newly opened businesses pivoted to contactless interactions with customers. Restaurants moved to a takeaway model and experienced a large uptick in consumer demand.
Level 2 - “Reduce” (May 13th - June 7th)
Transitioning to Level 2 represented the most significant alleviation of restrictions. Customers were admonished to observe physically distancing, but all shops were allowed to open. Consumer behavior shifted from essential shopping such as food to more discretionary spending for the first time since lockdown. And in fact, there may have even been a newfound exuberance for shopping. “Malls seemed to be busy and TV news reports here in New Zealand suggested that people were shopping more than the same time last year for food, garden plants, and appliances but less for hospitality and clothing.”
Level 1 - “Prepare” (June 8th - Present)
Level 1 is where, as of the publication of late June 2020, New Zealand currently finds itself.
International travel is still restricted, but domestic life has largely returned to normal. Businesses of all kinds have returned to normal operations, and safe distancing is encouraged but not formally required. People are free to move however they'd like, but are encouraged to track their movements via the New Zealand Tracer App. Over half a million New Zealanders have voluntarily downloaded and are using the app.
Early reports indicate that consumer spending both online and in-stores has continued to rise, nearly matching pre-COVID numbers. As senior economist Satish Ranchhod told the New Zealand Herald, "COVID-19 saw New Zealand go hard, go early, and then go shopping".
The Future of the Food Retail Shopping Experience
Beyond these sweeping changes to consumer behavior as lockdown levels have subsided, the shopping experience itself has changed. Using data from previous pandemics, as well as behavioral science, the authors provide a compelling case that the in-person consumer experience has shifted. Overall, this shift in consumer behavior is typified by a heavier reliance on heuristics.
Given elevated levels of anxiety associated with being in stores, consumers are likely to make decisions much quicker. They won’t have the time or mental bandwidth to deliberate carefully over their choices or to make comparisons. Instead, they’ll be much more likely to utilize shortcuts in their consumer thinking.
The authors speculate that this will translate specifically into a higher reliance on pricing heuristics (e.g. selecting a product which is on sale and appears cheap by comparison), and a greater reliance on brand familiarity (e.g. selecting a product from a well-known brand).
This goes beyond phases of panic buying seen in the early stages and may represent a more enduring change to the in-person food retail experience. The authors’ current work will also provide insight into the degree to which these, and other heuristics were at play.
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Overall, what’s true for New Zealand may be true for many countries. And as such, it may provide a glimpse into what’s in store for the future of consumer behavior. As the authors indicate, “We hope our findings will provide long-term lessons on how consumers shop during national or global emergencies. The insights might help grocery stores and governments to be prepared for future events.”
This piece was originally written in June, 2020
Photo by Aaron Sebastian via UnSplash
About the author
Matt Johnson, PhD is a researcher, writer, and consumer neuroscientist focusing on the application of psychology to branding. He is the author of the best-selling consumer psychology book Blindsight, and Branding That Means Business (Economist Books, Fall 2022). Contact Matt for speaking engagements, opportunities to collaborate, or just to say hello
References for New Zealand’s Retail and Consumer Behavior
Business Desk (June 9th 2020) Covid-19: NZ went hard, early, and then went shopping, New Zealand Herald
Liu, C.-W., Hsieh, A.-Y., Lo, S.-K., and Hwang, Y. (2017). What consumers see when time is running out: consumers' browsing behaviors on online shopping websites when under time pressure. Comput. Hum. Behav. 70, 391–397. doi: 10.1016/j.chb.2016.12.065
Martin-Neuninger, R., and Ruby, M. (2020) What Does Food Retail Research Tell Us About the Implications of Coronavirus (COVID-19) for Grocery Purchasing Habits? Frontiers in Psychology, https://doi.org/10.3389/fpsyg.2020.01448
New World (2020). COVID-19 Update. Updates From the New World team About COVID-19 and Our Stores. Available online at: https://www.newworld.co.nz/covid-19
Rogers, S. and Pieters, L. (June 4th 2020) Small positive signs in the consumers’ dual-front crisis, Deloitte Insights
Suri, R., and Monroe, K. B. (2003). The effects of time constraints on consumers' judgments of prices and products. J. Consum. Res. 30, 92–104. doi: 10.1086/374696
