A thought leader for entrepreneurs recently wrote that "shifts in revenue streams" associated with consumer habits developed during the pandemic may create opportunities for entrepreneurs. There is a great deal of data to support this conclusion.
A recent McKinsey study concluded that consumer purchasing decisions had shifted towards essential goods with an emphasis on value. This is not a surprising conclusion as unemployment during the first three months of the pandemic was greater than the increase in unemployment during the first two years of the 2007-08 recession. (Pew Research). Consumers who have lost a job (or fear losing one) are more likely to hunker down and spend their dwindling resources on things they really need (essential goods) rather than unnecessary things (luxury goods).
The same McKinsey study saw a massive shift in consumer spending, with a 30% growth in digital shopping. Importantly, the trend was not limited to the U.S. or even western countries, but continued through China, Russia, India and Japan. Consumers across the globe it seems are far more willing to do their shopping online than ever before.
Accounting firm PwC also notesthat consumers expect these trends to last, with families spending more time working from home and spending their free time at home as well.
So how should entrepreneurs direct their efforts towards these new trends?
- Entrepreneurs should develop a plan, with both intermediate benchmarks and long-term goals, to guide their decision making and hold themselves accountable.
- Entrepreneurs should expect that a significant portion of their customer interactions will be online. Consumers will reward those platforms that are easy-to-understand and easy-to-use.
- Customer support -- from product support to product returns -- should be integrated into the online experience and made to be as simple as possible.
- Brand awareness and advertising will also take place online, as consumers spend more time looking for deals on the Web.
Thought leaders looking forward see entrepreneurs not only in the context of developing start-ups, but also as taking a leading role in turning around the larger economy. Bessemer Venture Partners Partner Talia Goldberg sees entrepreneurs as critical to economic growth as the pandemic draws to a close.