Council Post: How Are Consumers Responding To The Current Crisis?

CEO and Founder, Streetbees

“Unprecedented” will undoubtedly go down in history as the 2020 word of the year. Brands, governments and the public have all been plunged into panic thanks to Covid-19. The pandemic has thrown every industry on its head. While the United Nations estimated the global economy could lose up to $2 trillion, understanding the true cost of the pandemic requires a deeper understanding of what’s happening in people’s lives.

However, the long-term impact on consumer spending comes down to more than whether people have remained employed. Are prolonged financial uncertainty and fear of a second wave leading to even tighter purse strings, or will price slashes and greater freedom help give the economy a boost?

The Greater Good?

What complicates things further is that attitudes toward the global economy aren’t always reflected in how consumers feel about their personal finances. According to our consumer intelligence company’s Global Economy Confidence Index, while there has been some improvement, the majority of consumers still have a pretty bleak outlook on what’s happening and what’s to come.

Multiple reports show consumer confidence dropping to its lowest level since the 2008-09 financial crisis, which most of us remember all too clearly. I was looking for my first job in the middle of the recession, having just left university. I was one of the lucky ones, though, because I got into consultancy toward the end of that year. While there are some definite similarities between then and now, I’d say the current situation is worse. It’s impacting every single industry and every single country, and there’s the added anxiety of falling ill or losing loved ones. 

Despite this, when looking at consumers’ attitudes toward their personal finances, things are looking far more positive than you’d expect. Our research found that although confidence is lower for those still in lockdowns and those with financial dependents, more people are feeling positive about the situation than not. 

European countries tend to be the least optimistic about their personal situation, most likely because this was one of the hardest-hit areas in the world. Germany, France and the United Kingdom — those ranking lowest on our Financial Confidence Index — are actually less likely to have lost their jobs than the rest of the world. However, they are more likely to have had their pay reduced or been asked to work remotely.

Lockdown Spend

As people worry about job security at both a country level and an individual level, consumers are shopping less both in frequency and quantity, while spending on luxury or “nice to have” items has dropped significantly.

When the pandemic first hit, there was an assumption that online shopping would skyrocket — particularly when you look at the impact the 2003 SARS outbreak had on China’s e-commerce industry. While this did prove true, we found that many opted to simply shop less, rather than switching to online. This means that while brands with a strong digital presence and customer journey were at an advantage, it wasn’t a guarantee for success.

Consumers have been forced to reprioritize their outgoings, venturing out of their comfort zones and finding new ways of living. From at-home beauty treatments to greater investment in vitamins and supplements to cancelling international holidays, brands are left scratching their heads over whether certain trends are a result of financial insecurity, fear of infection or consumers simply finding new preferred habits. 

What can businesses expect for the coming months? Here are three key trends that aren’t going anywhere.

1. Prioritizing Sustainability And Ethical Shopping 

Environmentally conscious consumption was a hot topic at the beginning of the year, and since the pandemic breathed new life into single-use plastic, sustainability is more of a priority than ever. It’s not all bad, though: The term “anthropause” was coined in response to the lockdown helping nature recover, highlighting the negative impact humans have on the natural world. 

Research our company conducted in 2019 found that while 80% of consumers claim to prioritize sustainability in their lives, only 4% of purchasing decisions are actually driven by it. There was still a huge disconnect between intention and action, but has Covid-19 changed this? The pandemic has led to more conscious spending; whether because of availability or financial ability, consumers have been forced to become more thoughtful over where and when they’re spending their money. 

Our research found that a third of consumers have changed their sustainability habits in response to the pandemic, most in ways that will have a positive impact, such as recycling more, buying more sustainable products and reducing waste.

2. The Role Of Mood And Emotion In Driving Consumer Choices

Yes, happiness has risen since March, especially in countries where restrictions are being lifted, but that doesn’t mean it won’t drop back down in response to second waves and widespread recession. With clusters appearing within countries, brands must take a more localized approach, understanding how different groups of consumers are feeling depending on the context of their current situation. This will not only help create more effective communication strategies, but also provide more personalized experiences that will connect better with consumers.

3. The Need For Intimate Connections 

We know that what people have missed the most during lockdown is the ability to socialize with friends — yes, they miss eating at a restaurant, but it’s about the experience rather than the food itself. This has led to at-home recipe boxes from popular chains, not just to make up for a loss in revenue, but to keep the connection with the consumer alive and help them recreate the experiences they’re missing. 

People need people — it’s human nature. Socialization plays a vital role in consumers’ lives, and with localized lockdowns being common, brands will need to continue facilitating these experiences to stay relevant. 

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