How COVID-19 is influencing consumer behaviourJune 4, 2020
It’s been three months since the World Health Organisation declared the COVID-19 outbreak to be a ‘Public Health Emergency of International Concern’. Despite continued efforts by governments and organisations across the world, the virus continues to spread unabated. With as many as 2.4 million cases across 185 countries and territories, it is a catastrophe unlike anything we have experienced so far.
As the novel coronavirus’ effect on the global economy continues to escalate, it’s growing toll on income and spending intent are changing dramatically, which in turn is ushering in a paradigm shift in retail sentiment and behavior.
Why Consumer Sentiment is Changing?
Economic Uncertainty – There have been shockwaves along the global economy in the wake of the pandemic, and alongside this, the effects of individual financial insecurity are coming to the fore. Amidst the worldwide lockdown, a recent WGSN report outlines a fortnight increase of 14 percent in the number of adults in the USA who are concerned about the economic impact of the escalating crisis, compared to the fortnight prior. The report also suggests how ‘concerns about their financial well-being will change the value equation for many consumers in their discretionary spending.’
According to a McKinsey & Company research that focus on 12 countries hit by the pandemic, consumers from Africa, Asia, and the Americas exhibit more optimism than their European counterparts when it comes to their respective countries’ economic recovery after COVID-19. The study highlights that 52 percent of Indian consumers expressed optimism about the nation’s economic recovery in a survey conducted March 29, 2020. On another survey done on April 05, 2020, the numbers jumped to 56 percent.
Impact on Household Income – Worldwide lockdowns and other containment measures are taking a serious toll on jobs and earnings. Increasing number of households are bracing up for a dip in income which further is compelling consumers to adopt new purchase and viewing behavior. The McKinsey & Company research reveals that about 30 and 50 percent of consumers globally expect their household income to continue to fall over the next weeks. Consumers from the United States, most of the European countries, Japan, and India, are documented to have expected a dip in their income by 25 to 49 percent.
The result will be a drop in discretionary spending. Moreover, as documented by many researches, spending on anything apart from necessity and health safety will take a backseat.
What Will be the Prominent Changes?
Increasing Reliance on Digital Retail – Limited access to physical stores, social distancing, quarantining and working from home is accelerating the hold of digital connectivity in day to day lives of consumers and the e-commerce industry is reaping all the benefits. Given the restricted living conditions that global consumers are living in, most consumers are taking the wise decision – buy online and…