Living 2020 in a New Normal

Living 2020 in a New Normal

Malaysians Have Adjusted Living for the Bumpy Journey Ahead

Troy Donnell

It is an understatement to say COVID-19 has created a massive disruptive change. For Malaysia, we have had strict COVID-19 standard operating procedures in place for nearly all of 2020. While these measures are in place for our health and safety, the pandemic is having a tremendous impact on our economy (our GDP contracting to -17% for Q2 2020) and is affecting many businesses and Malaysian’s willingness to spend.


With lower consumer confidence, low spending intentions and the unemployment rate at an all-time high, 92% of Malaysians said they have changed their spending behaviors to further save on expenses, while 62% are choosing to shift their spare cash into savings.1

With consumers not willing to spend as much and being more cautious of their finances, we see an increase in consumers selecting the regular priced items rather than premium across most supercategories (except for dry groceries). As a result, industry players find that their biggest challenge at this point of time is on profitability and a need to review their pricing strategies. They need to consider the likely shift toward value-for-money products as consumers redefine the significance of the FMCG goods they buy. Industry players should work on understanding the why behind current purchases because as economic conditions worsen, value propositions that match consumer needs are going to become more important. It’s up to each brand to continuously assess consumers’ perception of value.

Malaysia Living the New Normal 1


We also need to remind ourselves that not all consumers have been impacted the same way, and both insulated as well as constrained shoppers purchasing patterns have differed during the new normal. For constrained shoppers, they will spend to survive, cutting down on discretionary products, trading down price tiers, comparing store prices and seeking flexibility in quantities since they work from paycheck to paycheck. While insulated consumers may still tighten their belts to be fiscally practical and to weather the uncertain times ahead. The latter may seek for in-home convenience, or increase trials or premiumize on certain out of home replacements. 

Regardless of the type of shopper, consumer spending patterns in FMCG have closely mirrored the short-term changes in our economy due to the COVID-19 pandemic. From early March to full Movement Control Order (MCO) in April, Conditional Movement Control Order (CMCO) in May and until now, a period of Recovery Movement Control Order (RMCO), the FMCG landscape has showed a rollercoaster of purchasing trends and only in July’20 have we seen encouraging recovery across the majority of categories.

Malaysia Living in the New Normal 2

As expected, the trends significantly vary by category throughout the different stages of MCO. These trends reflect the dramatic environment that we are living in. For many consumers, it will mean an ongoing recalibration of lifestyles and meaningful changes in what they expect from brands and the retailers selling them. Certain new lifestyles, such as the homebody economy, is something we are predicting to stay in the long term. Companies have the opportunity to seize that interest and respond with affordable, accessible and branded take-home experiences.

Malaysia Living in the New Normal 3


With an unknown and prolonged timeline for recovery, Nielsen anticipates four emerging consumer patterns for FMCG purchasing based on a ‘basket’, ‘homebody’, ‘rationale’ and ‘affordability’ reset. These four resets were cultivated by concerns on the economy, job security and a new found comfort in adjusted living condition. These resulted in consumers closely considering what, where, why and how much will they spend and consume in the immediate future.

A ‘basket reset’ reflects what are the FMCG products within consumers baskets. Here, we anticipate a more careful evaluation of what is deemed essential to buy as Malaysian consumers prioritize what meets their health and safety needs by trying certain products leading to category expansion and creation of new preferences. This will create a critical window of opportunity to translate pandemic-minded consumption into continued, essential routine. 

Within ‘homebody reset’, we expect Malaysian consumers’ embracing the do-it-yourself mentality and increased willingness to use technology and online platforms to fulfill their needs. Most consumption will happen at home, so we expect to see accelerated growth within E-commerce channels. We also expect that proximity stores will continue to play a significant role and continue to rapidly grow as one in five Malaysian consumers are enjoying staying at home and prefer to venture out less if possible2. We also see convenience stores adjusting their assortment quite similarly to a minimarket in certain areas, offering more take home products.

When it comes to the ‘rationale reset,’ we predict consumers will rebalance their wallet priorities. How they spend their spare cash shall be adjusted to either changing needs or their financial situation. They may switch to smaller luxuries that still fulfill needs but at the same time rewards spare cash saving. Some will bring the out-of-home romantic candlelight dinner to in-home, while some will take further cost-cutting measures with lesser consumption or cheaper but still belly-full alternatives. However the end result may lead to a more significant cost cutting measure in total. 

The latter is relatable to the ‘affordability reset’ we have expected in the minds of our consumers. We are predicting consumers’ increasing need for value, resulting in Malaysians closely scrutinizing pricing and potentially making trade-offs on brand choices. So as economic conditions worsen, value propositions that match consumer needs are going to become more important. It is important to identify the gaps & provide options across price tiers but also remain truthful and transparent in pricing decisions.

In Malaysia, as industry players we have a critical window now understand how to effectively engage with these adjusted consumers and key to our success will be our ability to:

  • Understand the evolving retail landscape including the rise of smaller format proximity outlets
  • Focus on your supply chains to ensure availability and be mindful range optimisation is on the radar for many retailers 
  • Embrace the homebody economy… and discover ways of engaging with this adjusted consumer
  • Acknowledge some of the most important attributes now lie with safety and immunity, nutrition and the packaging that makes the product last longer, so consider how these elements can be incorporated into your R&D and communications agendas  
  • Consider reviewing your pricing strategies as profitability remains a top priority for our retailers
  • Understand the differences between constrained and insulated shoppers and the implications on their future purchasing decisions

Brands and retailers that can respond to these changing consumers’ needs and behaviors and reconfigure their strategies for the future are most likely to succeed as we close out 2020 and beyond.


1The Conference Board Global Consumer Confidence Survey Q2 2020, produced in collaboration with Nielsen.

2Nielsen Shopper in the New Normal 2020