Coronavirus Will Transform Consumer Behaviour
With shuttered shops, restaurants and hotels, and at one stage a third of the global population ordered by their governments to stay home, the coronavirus (COVID-19) outbreak is having dramatic and sweeping impacts on economies and consumer markets worldwide. Whilst the plunge in consumer confidence and spending growth can eventually recover, other impacts will be long-lasting as the pandemic can transform both consumer behaviour and the way companies across almost all industries do business.
Food & non-alcoholic beverages will be the only spending category with positive growth in 2020
Global consumer expenditure growth is forecast to fall by 4.3% in real terms year-on-year in 2020 (down from 2.4% real growth in 2019). As COVID-19 is set to bring about a global economic recession, total disposable income is set to decline by 3.7% in real terms in 2020 over a year earlier (down from 2.6% real growth in 2019) due to job losses and depressed investment income gains.
While consumers cut back their spending, food & non-alcoholic beverages will be the only category to record positive spending growth in 2020, since lockdowns and self-isolation prompted them to stockpile. Transport is expected to be particularly hard hit, as people stay home (thereby not using either public or private transport) and cancel all their summer travel plans.
Global Consumer Expenditure Growth by Category: 2019/2020
Source: Euromonitor International from national statistics. Note: Data for 2020 are forecasts.
Lasting changes in consumer behaviour, values, and priorities
Just as the SARS epidemic nearly two decades ago gave rise to Alibaba and transformed e-commerce in China, the COVID-19 pandemic is likely to transform not only consumer behaviour but also their values and priorities, with long-term implications for industries.
In the COVID-19 era, consumers and their behaviours will be characterised by lower disposable incomes, stress and anxieties about the future, and paramount concerns over hygiene, physical health, and mental wellbeing. As well as being more cautious and selective in their purchasing decisions, they will practice thriftier and more self-sufficient lifestyles, as they move away from conspicuous consumption and reassess their needs, values and priorities. Consumers, having spent the worst of the pandemic doing everything virtually, will also shift towards buying and doing more things online.
Brands and businesses successfully emerging out of this pandemic will most likely be those which are prepared for the “new normal” of digital consumer engagement, e-commerce, cashless payment, and at-home consumption. Additionally, businesses will be expected to put people and their wellbeing before profits. Successful companies will be those who understand the health and safety concerns that dominate the thinking of their consumers (and employees) and create value by focusing on hygiene, health, and wellbeing.