- Consumer spending was kept conservative and limited to daily necessities.
- People were more mindful in spending their funds and admits changes in shopping behaviors during the pandemic.
- As e-commerce booms, a 10% increase in online customer base felt across all product categories.
- Apparel, footwear, and travel remain at low priority for consumers around the world apart from China.
Under the state of economic uncertainty brought about by the COVID 19 pandemic, five universal consumer behaviors surfaced in a McKinsey market study.
Drastic changes in consumer sentiment occurred this year due to the disruptive spread of the novel COVID-19 virus. As people strive to adapt to the economic reality that was adversely affected by the pandemic, consumer spending was kept at a low and conservative-level compared to the pre-crisis records.
McKinsey, a prominent consulting institution, has launched in-depth research to understand the impact of COVID-19 on consumer sentiment and stated behavior. In mid-March of 2020, the consumer survey was released in 45 countries within the Americas, Europe, and Asia.
In conducting the study, researchers have used the local language of every country. Data gathering was scheduled weekly, bi-weekly, or monthly. For every country, results are sampled and weighed considering the respondent’s age and socioeconomic status.
After the successful fielding, McKinsey’s team of analysts listed five consumer traits that surfaced amid the pandemic as a conclusion.
Shopping Preference for Value and Essentials
Consumers are hesitant to release funds amid the pandemic season due to disrupted economic cycles. Despite the slow re-opening of operations in almost every state, consumer confidence in the economic recovery has slightly dropped since early April this year. Notably, consumers in China and India were recorded as more optimistic in their economic outlook than the United States and other nations.
Due to the lingering financial uncertainty, consumers show an evident change in the spending mindset. A significant percentage of respondents admitted to a shift in their purchasing behaviors during the pandemic. On this chart, it lists three shopping habits that generally show how people became more careful in spending their funds.
In efforts to curb expenditure during the unstable economic situation, consumers limited purchases to mainly daily living essentials, such as grocery and household supplies, while reducing unnecessary purchases. Also, due to months of quarantine period imposed on almost every affected country in the world, following necessities, consumers were inclined to spend home entertainment and personal grooming products.
Despite rising spending intent differences on expected spending records monitored from April to June, industries like apparel, footwear, and travel remain as a low priority for consumers apart from China. Interestingly, consumer spending in China, India, and Korea reports positive spending intent in expanding more categories, which include food takeout and delivery, beauty products, non-food children items, fitness and wellness, and gasoline.
Diverting to Online Shopping
Even though the pandemic has adversely affected many industries, COVID-19 caused an impetus that spiked up the digital economy through e-commerce. Every sector offering online platforms has mostly observed a 10 percent rise in the number of their online customer base during the pandemic. Due to the community’s digital reliance, many consumers say they plan to continue shopping online even when physical stores go back to normal operations.
For e-commerce markets with moderate online conversion rates before the pandemic, such as the United Kingdom and the United States, the e-commerce boom will expand across all product categories. However, in highly e-commerce exposed markets such as China, the increase in users is not expected to grow as significantly. Moreover, the share of wallets online is expected to increase.
In markets like China, with a high rate of online shopping before the pandemic, although total consumer participation in online shopping is not expected to go up substantially, the share of wallets spent online is expected to increase.
As part of the digital economy boom, other digital and contactless services such as pickup, delivery, and drive-through service have been observed with high adoption rates. While some of these consumer preferences are deemed temporary practices considering the virus situation, analysts say many home-based solutions to regular activities may be adopted for a longer-term.
Consumers Adapt to Available Resources
With limited movements around the world, COVID-19 inevitably disrupted the supply chain for some brands and products. As a response to the unprecedented reality, consumers have been seen adaptive in their shopping behavior. When their preferred options are not available, consumers resort to buying alternative brands and checking out from new retailers.
Like to what mentioned earlier, value has been the number one consideration in purchasing an alternative product. Consumers also take into account product availability and quality. Being tagged organic is also one of the reasons consumers are willing to buy and try another brand.
Also, government-imposed lockdowns drastically affect consumer loyalty. In China and the USA, more than 75 percent of consumers were reported to be open to experimenting in their shopping. On the contrary to nations with less restricted lockdowns like Japan, there records only 33 percent. McKinsey analysts forecasted that these consumer habits are expected to sustain even after the height of the COVID-19 crisis. In fact, major markets such as China and the USA have about 60 percent of consumers plan to stick with their new adapted behavior even after the current pandemic.
As the COVID-19 pandemic challenges humankind, consumers were seen to be drawn toward brands showing visible concern for public health and wellness. According to the survey, consumers tend to patronize brands that have expressed care for their own employees’ welfare. In ways such as providing healthy and hygienic packaging and disinfecting services, it conveys care and concern for customers’ health during the health haphazard situation.
Brand empathy is actually key in attaining long-term brand loyalty. In this sense, empathy means businesses will take steps to understand their customers and find out how a customer really feels, and share their perspective. Without empathy, customers will simply account as numbers that add up rather than people to nurture.
A COVID-19 pandemic is an unprecedented event that drastically affected the current living generation of people. All imposed regulations and business activity that takes place during this crucial time are likely to be remembered long after COVID-19 has ended.
Consumers have shown an intention to resume some of their out-of-home activities soon, and shopping is first on the list. Large events and air travel, on the other hand, lists as last in the plan. In most countries, 70 percent of survey respondents are ready to resume their normal activities outside their home.
For more than three-quarters of consumers who have adapted and changed during prolonged health crises, the easing of government restrictions won’t be enough to make them step outside the security of their houses. A larger population would prefer to wait for the signal of health authorities. They are waiting for a guaranteed solution, which for now can be the development of a COVID-19 vaccine and treatments.