We ran a quick poll for people who used to drink a coffee (or two) everyday at the barista next to their office, asking how WFH during COVID had impacted their coffee+work association.
Let me explain why this quick poll.
There’s a lot of talk about how COVID and the resulting lockdown has resulted in a compression of demand and supply across sectors and across categories.
In most of the articles i read and discussions I am part of , people talk about how demand for most non-essential items will take a long time to pick up and reach the old levels.
No arguments there.
But I think for most non-essential spends, we need to ask what is the elasticity of behavior.
What is behavior elasticity?
I am defining this as the # of days it takes consumers to get back to the old patterns of spending.
Yes, it will vary by the spend-category . Essential and non-essential spends will have very different elasticities.
Hence I have chosen coffee for this poll.
Why Coffee for this poll ?
Few reasons:
- For many like me, coffee is an essential spend 🙂
- Its reasonably addictive to nudge consumers to find alternates – espresso machines, other brews etc
- For years, marketing dollars were spent to leverage the power of association. For regular coffee drinkers, work/productivity may have a strong association with coffee. Is this association broken down easily
- Lockdown has been in effect for long enough to build new habits .
So the key question is – once offices open, will coffee drinkers be behaving as earlier?
If yes, how soon?
I think demand elasticity (not in the traditional price based elasticity) will follow behavior elasticity. And could be a big component of how fast demand recovers.
E.g. I think for the coffee shops, there may be loss in business due to
- People losing jobs – say 10-15%
- People working from homes post opening of lockdown – another 10%
- People who will be at work but don’t buy coffee anymore – This could be the make or break – hence the poll.
What do you think?