Study Finds US Consumer Behavior Will Change for Good Due to COVID-19 Pandemic
While US consumers have a more optimistic outlook than European consumers, they remain less optimistic than Chinese consumers; Spending cuts could have potentially dangerous consequences for the health of the unemployed
[New York, NY], [July 23, 2020] –The COVID-19 Consumer Outlook study* conducted by Simon-Kucher & Partners, a global strategy and marketing consulting firm, revealed that while uncertainty remains high amongst US consumers, the outlook is generally more favorable as compared to European consumers. In the early weeks of the study, which surveyed more than 12,000 international respondents and was conducted through three different pulse surveys over the course of the month of June, 60 percent of US consumers revealed that they felt uncertain about their financial outlook – four weeks later, that number remained steady at 61 percent. Interestingly, despite still being in the midst of the virus outbreak, US consumers have a more optimistic outlook as to what the future will bring as compared to those surveyed in other countries – more than one quarter of those surveyed from the US expressed an optimistic outlook, as compared to 15 percent in the UK and 18 percent in Germany, where the spread of the virus is much more contained. However, Chinese consumers expressed the greatest level of optimism with 42 percent expressing a favorable outlook.
Despite Uncertainty, Non-Essential Spending also Remains High
Despite the uncertainty, a consistent 66 percent of US respondents acknowledged that they are continuing to make non-essential purchases. The number of US consumers making non-essential purchases is higher than in the UK (54 percent) and China (55 percent), but not as high as Germany (73 percent).
Of course, the willingness to spend on non-essentials does differ drastically between US consumers who believe the COVID-19 pandemic will be over within three months versus those who predict the pandemic will last a year or longer. In fact, those who think the pandemic will last a year or longer indicated that they are cutting back on spending at restaurants and bars by 41 percent, as compared to only 17 percent by those who think it will be over in three months.
“What we are seeing is that are consumers are not so much cutting categories or non-essential purchases entirely, but more shifting the amount they are willing to spend or the frequency in which they make those purchases,” said Ricardo Rubi, Global Head of Consumer Goods & Retail at Simon-Kucher. “Thus, brands need to make sure they have the right assortment and prices to capture this new behavior -- having products that cover different price points and better stocking consumers up since they are not buying as often.”
Unemployed Consumers are Cutting Back on Spending…and their Health Could be put at Risk
While the health impacts of COVID-19 have been catastrophic, the wellbeing of US consumers has also been devastated by skyrocketing unemployment numbers. Although it is not surprising that in a post-COVID world, those who are unemployed expect to cut back on spending more than those who are employed in a number of areas such as at-home entertainment (-38 percent vs -21 percent) and leisure travel (-67 percent vs -52 percent), it is worrisome that one of the most impacted areas is medical expenses. Those who are unemployed indicated that they are cutting healthcare-related spending by 40 percent, as compared to only 16 percent by those who are employed.
“Unfortunately health and economy are directly tied right now, with potential longer-term impacts after the crisis is over,” said Rubi. “People feeling that they need to cut medical expenses due to their financial situation is one problematic side effect, particularly here in the US.”
Changes in Consumer Behavior are Substantial and Likely Long-Lasting
While it’s no surprise that the way people shop has been impacted during the virus outbreak, it seems like some of these new preferences will last long after the health crisis is over. The two areas that will likely see ongoing boosts are cleaning supplies and grocery – respectively, US consumers spent 25 percent and 12 percent more in these categories during the pandemic, but anticipate they will continue to spend seven and three percent more than they spent pre-coronavirus even once things are back to “normal.”
Of course, online shopping is another area that is experiencing a surge. The number of US respondents who indicated they are doing more online shopping (54 percent) is fairly similar to those in the UK (59 percent) and China (51 percent), but significantly higher than in Germany (38 percent).
“It makes sense that grocery and cleaning supply budgets will rise. The fact that people are otherwise anticipating cutting budget across the board tells us there may not be a quick bounce-back to ‘normal’ levels as we think,” said Vincent Duong, Senior Director at Simon-Kucher. “Brands will thus need to plan for that and set their strategy and growth expectations accordingly – reviewing their assortment, reassess their promotional calendar, exploring new channels, and of course optimizing their pricing strategy.”
Full report available upon request.
*About the survey: The COVID-19 Consumer Outlook was conducted by Simon-Kucher & Partners through three pulse surveys between June 1, 2020 and July 1, 2020. More than 12,000 respondents were surveyed across the US, the UK, Germany, and China, including more than 3,000 US respondents. The study focused on changes in consumer trends due to the coronavirus pandemic.
For further information please contact:
Rachel Pope
tel.: (617) 231-4551
e-mail: rachel.pope@simon-kucher.com
Simon-Kucher & Partners, Strategy & Marketing Consultants:
Simon-Kucher & Partners is a global consulting firm specializing in TopLine Power®. We help our clients achieve growth and profit targets by applying practical, evidence-based strategies. Simon-Kucher & Partners is regarded as the world’s leading pricing advisor and thought leader. The firm has over 1,400 employees in 39 offices worldwide.
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