How Covid-19 is changing consumer patterns in SE-Asia

Fri, Jun 19, 2020

Dhruv Vohra

WHILE Covid-19 may be among the most devastating of all black swan events to hit South-east Asia, it is by no means the first - and like previous crises in the world, it is introducing long-lasting changes to consumer behaviour and digital adoption.

Bain and Facebook have been studying the exponential growth of digital consumer behaviour in South-east Asia for three years. As we move into the second half of 2020 and the next normal, we examine what has changed and what hasn't, and we consider what the future will look like for companies.

Covid-19 is intensifying the move online and serving as a catalyst for important changes. Online purchasing, digital consumption and average online basket size all have risen substantially and will continue to grow at record-setting rates, providing an opportunity for traditional businesses, large marketplaces and disruptive business models to thrive.

Worried consumers stockpiled basic goods during the pandemic, looking for value and trusted brands. They cut back on apparel and consumer electronics. And, in record numbers, they started buying online. Our analysis of buying patterns of 8,600 consumers in six South-east Asian countries found that while 47 per cent of consumers decreased offline purchases, 30 per cent increased their online spending.


Our analysis helped us identify six critical themes in South-east Asia among digital consumers who have made purchases online in the last six months.

"At home" and contactless here to stay: South-east Asia's digital consumers report that they intend to stay at home for shopping and leisure more than they did pre-Covid. The region's consumers are 1.5 times less likely to dine out or visit a cinema than their counterparts in the US. Meanwhile, consumers in South-east Asia are embracing innovative contactless services. Even in the region's cash-dominant markets, contactless payment platforms have achieved high growth in both users and transaction volumes.
Discovery of new apps accelerates: The pandemic has opened up more options to the region's consumers - 77 per cent of surveyed digital consumers tried a new app that they plan to continue using post-Covid-19.
Essentials are moving online: Consumers across South-east Asia are spending more online during the pandemic, with essential goods such as fresh or packaged grocery accounting for many of their purchases. Roughly 83 per cent of those shopping online say they are likely to continue their increased spending online after restrictions are lifted.
Value for money is a key consideration: Facing economic uncertainty, digital consumers now are more thoughtful about their purchases and are turning their backs on splurges and impulsive spending. Value for money is a key purchase criterion for 57 per cent of South-east Asia's digital consumers.
Reliable brands are on the rise: Forty two per cent of digital consumers surveyed said they had bought more established brands in recent months. In addition to consumer trust, established brands have the robust supply chain to ensure their products are available. That's important because one out of three digital consumers in South-east Asia will switch brands when they do not find preferred brands, according to a survey by Toluna, a global online research panel and survey technology provider.
Health and welfare top of mind: When asked to prioritise their purchasing criteria, 39 per cent of digital consumers in South-east Asia cited health and wellness as a top priority. In the Philippines, 81 per cent of consumers say they are likely to be more health conscious in the future.


Consumer goods companies that come out of the pandemic the strongest will be those that have adapted quickly to these long-lasting changes in consumer behaviour and digital adaption.

For example, some companies have swiftly increased product availability and visibility online, targeted digital engagement across platforms or optimised pricing and value perception while offering a dynamic mix of SKUs. Some have focused on improving their supply chain resilience or adapting purposeful messaging and offerings. Others have redesigned their operating norms and consumer reach models.

Heineken Vietnam launched three innovations at the height of the pandemic in April: the non-alcoholic lager Heineken 0.0; a brand named Bia Viet to serve the mainstream market; and a new sleek can for Tiger Crystal. It also pivoted on brand messaging, replacing its pre-Covid "Inspire" to "Still fun at home". It shifted marketing budgets to key online influencers and social commerce.

The beverage swiftly moved to replace restaurants, bars, cafes and other on-trade channels by partnering with local food delivery providers for "food combo" pairing promotions. It also teamed with e-commerce marketplaces, including dedicated online stores. At the same time the brand launched an in-house, direct-to-consumer beer delivery offering named Drinkies to promote at-home consumption.

With its ride hailing business suffering, Grab redeployed more than 100,000 drivers in six markets to deliver food and essential supplies. In Malaysia, Grab added new offerings for at-home purchases by accelerating the launch of GrabMart, an on-demand delivery service that connects offline retailers to consumers, focusing on essential goods.

Singapore grocer NTUC FairPrice doubled down on its online grocery presence, leveraging offline store inventories. Indonesian retailer Matahari is exploring ways to maintain the recent 17 per cent monthly growth of its online business in a post-Covid world. For example, to replicate the in-store experience, Matahari provides "live buying".

As Covid-19 rewrites the rules, such flexibility will be a key to survival. Companies that view the pandemic as a catalyst for change and an opportunity to get closer to their consumers will maintain their footing and grow stronger in the recovery.

Praneeth Yendamuri is a Bain & Company partner based in Singapore
Dhruv Vohra is Facebook's industry director, Digital Natives & Technology