The EY Future Consumer Index on global behavior and sentiment shows that people emerging from lockdown remain deeply cautious.
With the coronavirus pandemic continuing to play out around the world, business leaders are trying to anticipate what will come next. How will the attitudes and behaviors that consumers have adopted in lockdown change, as their freedom is slowly restored? The most significant development we’re tracking globally is the emergence of what we call the “Anxious Consumer.” To understand the new consumers COVID-19 is shaping, we’ve widened the scope of this edition of the EY Future Consumer Index to include consumers in China. China was the first country to quarantine large parts of its population and was the first to start relaxing those restrictions. What can the way its consumers are returning to their old lives tell us about how consumers globally might change as their freedoms are restored?
Of course, China is a country like no other, with its unique economic and political system. We need to be careful when drawing comparisons with the rest of the world. And every country is at risk of further waves of infection, deep recession, and uncertain recovery. Those caveats aside, we think there are new consumer attitudes and behaviors emerging in the country that are useful indicators for other organizations.
Is the caution we all feel here to stay?
In lockdown, people around the world have been worrying about how the pandemic will change the way they live their lives. By looking closely at China’s emergence from lockdown, we can get a perspective on how the pervasive sense of caution might persist or evolve in other countries, as they remove or ease their restrictions.
Our Index suggests that as Chinese consumers are able to return to “normal life,” many remain deeply concerned about picking up where they left off. If we see this trend repeat in a significant way across other markets, organizations around the world will have to adapt to serve a far more worried and cautious consumer. When people make decisions about what they buy and how they spend their time, risk will be front of mind.
Out of lockdown, but not out of the woods
The Index suggests that, compared to consumers in the rest of the world, those in China are feeling more optimistic about some areas of life. They are twice as likely to expect an economic recovery within the next 12 months, and almost twice as likely to say they are confident about the future.
However, while lockdown is largely over for them — unless we see further waves of pandemic — they don’t feel out of the woods. Consumers in China remain deeply concerned — and almost as concerned as consumers globally — about the impact of the crisis on issues like the health of their family and their freedom to enjoy life. Forty-eight percent strongly agree that the way they live will significantly change in the long-term as a result of the outbreak; 49% strongly agree that their values and the way they look at life have changed.
Long-term expectations: 48% of consumers in China strongly agree the way they live will significantly change in the long-term as a result of COVID-19.
Consumers are cautious, but they’re ready to spend
In the first edition of our Index we showed how the crisis is creating new consumer segments. Four segments describe how consumers are changing in the early phase of the pandemic. Another five are defined by the behaviors and attitudes consumers say they will adopt once they feel the crisis is over. For this latest edition of the Index we’ve updated the percentage of consumers in each segment and included China for the first time.
As you can see from the chart, consumers in China are far more likely to be in the segment we call “Hibernate and spend” and far less likely to be in “Cut deep.” This could be an encouraging sign for organizations that are looking to China as a lead indicator of how fast consumer sentiment will rebound. While the consumers who have lived in a coronavirus world the longest remain cautious, they are at least spending more again. What does this mean for the Chinese consumer’s spending habits? Overall, Chinese consumers are now spending more in a wider range of categories. But some categories are rebounding much faster than others.
We asked people how much they expect their household spending to change across a range of categories over the next month, assuming their current social distancing situation continues. This identified big shifts to fresh food (62% expecting to spend more or significantly more), personal care (47%), beauty and cosmetics (29%), and clothing and footwear (33%). As people go back out into the world, they want to eat a healthy diet and look after their appearance. This should give cheer to producers who want to sell products that address these needs in other markets.
Good health, currently one of the best defenses against COVID-19, is a high priority for the Anxious Consumer globally. Fifty-four percent of consumers say whether a food product is “healthy and good for me” has become a more important attribute over the past month. It’s second only to availability, which was cited by 59%. In China, it’s the number one attribute (cited by 74%). When we ask consumers what they think they will value most when shopping five years from now, it’s second only to quality and in China it’s number one.
We see the same encouraging signs when we look further into the future. China’s consumers are far more likely to be in the segments we call “Back with a bang” and “Cautiously extravagant.” And it’s interesting to note how few are in the “Return to normal” segment.
This is further evidence that Chinese consumers feel positive and are looking to a bright future. But the Index suggests they are changing their preferences and behaviors fast, and very few plan to go back to life as they used to live it.
The Anxious Consumer has risk front of mind
One critical question is whether the new behaviors and sentiments described by our segments will stick. Consumers can make bold statements about how they will behave when this is over, but when will that be? Will we discover an effective vaccine? How quickly could it be manufactured at scale and given to people who need it? How long will inoculation last? What will happen to economies and people’s livelihoods in the meantime? Nobody yet knows.
We think that more consumers, faced with no clear answers, will adopt an “always-on-emergency mindset.” This is a worldview characterized by a heightened sensitivity to risk, both real and perceived. It’s one of the 150 drivers of change we’ve modeled in our FutureConsumer.Now program. We use it to describe the way that a rise in global shocks that feel beyond the control of any individual — like terrorist attacks, natural disasters and financial crises — changes the way that consumers behave and react to them.
A new normal emerges as people become accustomed to crisis. Events that would have had a significant impact feel part of business as usual. That doesn’t mean that people become blasé about them; on the contrary, it creates a consumer who is defined by a greater sense of general alertness. People are more cautious and pragmatic, both in their day-to-day lives and in their decisions around travel or event attendance, for example.
Looking at the global data, our Index highlights some of the significant ways that consumers around the world expect to live more risk-aware lives. Overall, 52% said they will change the way they shop. Of those, 70% said they will be more aware of hygiene and sanitation when they go shopping; 60% will consolidate their shopping trips into less frequent, but larger purchases; and 44% will do more of their grocery shopping online.
Online grocery shopping: 44% of global consumers will do more grocery shopping online.
When we asked people what else would change for them, 36% said they will eat differently. Of those, 68% plan to cook for themselves or their families more often. And 46% say that if they eat in a restaurant, they will be more likely to choose one that has more space between customers. The post-lockdown risk attitudes of consumers in China are an insight into how consumer attitudes elsewhere might change, and what it would take for companies to remain relevant. There are two standout imperatives we want to share in this bulletin.
Imperative 1: Make the consumer feel safe
If you want to serve the Anxious Consumer, you must go the extra mile to help them feel safe. Perhaps it’s no surprise that, as the chart below shows, consumers in China are today less worried about returning to certain activities than consumers elsewhere. They have the longest experience of living with coronavirus and they came out of lockdown first.
Yet in absolute terms they do still remain extremely cautious about returning to many of the activities that were once part of their normal, every-day lives. For example, 64% are uncomfortable or extremely uncomfortable with the idea of going to the movies and 61% feel the same about going to a bar. This suggests the pandemic has affected consumer attitudes at a deep level.
Will time alone change these attitudes?
One encouraging sign is that Chinese consumers are much less concerned about shopping in a grocery store. Like consumers everywhere, they’ve needed to visit such stores to buy food. That means they’ve seen for themselves how stores have changed the shopping experience to make them safe and — critically — to make them feel safe.
There is a learning here for businesses that need to entice consumers back into a communal space: how will you reinvent the experience you offer so consumers feel the risk has been minimized? In most of the countries we are tracking, people don’t yet have full freedom of movement. Their feelings about re-engaging with activities are based on what those experiences used to be like, not what they might be in future.
In the early stages of the crisis, organizations have taken important but basic steps to keep the consumer safe and to reassure them. Shops are installing plastic screens. Hotels are emailing customers about their new deep-clean protocols. Clothing retailers are talking about how orders are handled for hygienic packing and delivery. As companies look to more permanently de-risk the consumer experience, investment in digital capabilities will be critical.
Imperative 2: Accelerate digital
In the heavy lockdown stage, companies showed that they could be very agile, creating simple but effective ways to minimize in-store physical touch and proximity, for example. But as we move into the next phase of the crisis, digital will be critical. Companies need to quickly redefine their digital strategies and hit the accelerator. “How can we ‘e-’ everything?” is the question asked by one of our clients.
The shift to digital was happening already. The cashless society was already becoming well established in many countries. Globally, this trend will accelerate. Relative to a month ago, 62% of consumers say they are paying with cash less often. Instead, 59% of consumers are using contactless more, 54% are paying more often with smartphone apps, and 42% are using their credit cards more often.
What could this lead to?
We expect to see greater use of the smartphone as an interface generally. Why touch a public ATM screen, for example, when a code number typed into your phone could confirm your identity? Voice commands and face ID will be used more widely. Cashier-free stores will become more appealing.
New shopping experiences will become possible as personal technologies become more integral to everyday life, people become more comfortable sharing personal data, and other barriers to adoption fall away. Ideas from the margins could enter the mainstream. Consumers may be more willing to share their biometric data to get clothes that fit perfectly without having to try them on. Haptic technology could allow people to “feel” products without physical contact.
Here are three opportunities:
- Can you create a map of the journey your customer takes, from acquisition to loyalty, and work out how to replace any physical touchpoints that are no longer possible with digital ones? For example, what’s the best way to provide a virtual demo of a product that would normally be experienced in a store?
- Can you encourage anxious consumers back into a shared physical location like a clothing store or bar by rethinking how that location works and using digital technology to help consumers reembrace the physical? For example, live-streaming sales events from inside the store could be a simple way to show that shopping with you is fun and safe.
- Can you give anxious consumers greater transparency across your manufacturing, supply chain and delivery process, so they know you take their concerns seriously and can feel comfortable about buying from you?
The race to serve the Anxious Consumer
Companies must adapt to a new kind of consumer — one with priorities, attitudes and behaviors shaped by the experience of living though a global humanitarian crisis. This will require digital change at an extraordinary pace. Can leaders implement five years of digital progress in six months?
The bottom line is that consumer-facing companies have shaped their business strategies, product portfolios, and marketing or engagement around a consumer that values purpose and innovation. But that is not what the Anxious Consumer values. Their buying decision isn’t a trade-off between value and cost, or value and some felt expression of their identity — it’s more about “Is what I’m buying or experiencing worth the risks I’m taking?” This is a new challenge. But it’s one that companies that act now can turn into an opportunity.
We surveyed 12,843 consumers across the US, Canada, Brazil, UK, France, Germany, India, UAE, Saudi Arabia, China, Japan, Australia and New Zealand during the week of 4 May 2020. The survey questionnaire covered current behaviors, sentiment and intent.
The Future Consumer Index shows that the experience of the pandemic has made consumers around the world understandably cautious. Evidence from China shows that this caution doesn’t just disappear when a lockdown is eased. Companies everywhere must adapt to serve the Anxious Consumer.