- Economic shutdowns and stay-at-home orders have been a universal reality during the COVID-19 pandemic, but not all consumers have reacted to the changed conditions in the same way.
- At-home workers, younger generations, and those in the Asia-Pacific have all developed slightly different shopping behaviours compared to the global norms.
- Environmental, social and corporate governance (ESG) is of rising importance to many consumers and likely will be well beyond the pandemic.
The COVID-19 pandemic forced many of us to adapt our behaviours. Whether it be working from the spare bedroom, streaming blockbusters instead of viewing them at the cinema, or ordering groceries online instead of browsing the aisles during the weekly shop.
As individuals, we have made countless little changes to keep ourselves and our loved ones safe. For many, these changes will become permanent. So what do those individual changes add up to from a macro perspective, when not just your neighbour, but your whole neighbourhood works from home? Or the whole city?
Our March 2021 Global Consumer Insights Pulse Survey, which surveyed nearly 9,000 customers across the globe in November of 2020, looks at these big picture changes. In its results we found four fault lines developing that are creating distinct groups of consumers. Retailers and consumer products businesses can prepare for these emerging cohorts by understanding what their behaviours portend.
Customers embrace online shopping
First, some overall trends. Despite the impact of COVID-19, in-store shopping remains consumers’ channel of choice for daily or weekly shopping. Mobile shopping, however, continues to steadily accelerate as in-store and other types of shopping decline.
When asked how often they’d bought products (other than grocery) via specific channels in the last 12 months, globally 33 percent of respondents said that they had shopped via mobile daily/weekly. Australians shopped via mobile at around the same amount, as was the case for nearly all avenues (PC, tablet, TV etc) except for one. While globally, only 41 percent shopped in-store to buy products daily/weekly, in Australia, that figure rose to 55 percent — a nod, perhaps, to the country’s relatively lower rate of COVID-19 infection.
More than half of Australian and global consumers are also shopping more, or exclusively, online across most product categories. Factoring in those shopping the same amount online as before the pandemic, 79 percent of respondents are shopping online for fashion (83 percent in Australia), 71 percent for consumer electronics (76 percent in Australia) and 68 percent for health and beauty (69 percent in Australia). Consumers are embracing online shopping and preferencing brands that provide fast and reliable service, easy website navigation and greater in-stock availability of items.
Four fault lines
Although consumers are globally aligned in the above ways, there are four areas in which bifurcations are emerging that could herald long-term patterns in attitude and behaviour.
1. The Zoom effect —
A new faction of workers has been created who worked from home during the pandemic and will likely continue to do so afterwards. Data suggests that these workers have higher incomes (and higher paying jobs)1 and education than those who have continued to work outside the home.2 These differences are leading to very different shopping habits. In our survey, people primarily working from home were significantly more likely to say they expect to increase their spending across all product categories. While globally, 35 percent of those who work away from the home said they expected to spend more on groceries in the next six months, that number jumps over 10 percentage points to 46 percent for those working from home.
Those primarily working from home are also significantly less likely to have shopped in-store in the last six months. If working from home becomes the new normal for this group then the implications could be enormous for retailers. It’s likely that at-home workers will stick with their pandemic-charged shopping habits. This cohort, therefore, could potentially drive an even faster decline in bricks-and-mortar shopping than we’ve seen so far.*
2. The generation gap —
Younger consumers are more likely to shop online and are more optimistic about future spending habits than older age groups. Globally, younger generations are increasingly adopting mobile shopping. Generation Z and Millennials are more likely to shop daily or weekly using their mobile phones (35 and 42 percent respectively) than their older counterparts. Only 11 percent of baby boomers, for instance, said they shop via smartphone at the same rate, and only 28 percent of Gen Xers.
Indeed overall, the pandemic hasn’t dampened younger consumers’ spending outlook. They are the most likely to expect to spend more in the next six months than the last, across all product categories including nonessentials. For example, while the global and Australian percentages of respondents expecting to spend more on fashion in the next six months are a relatively modest 26 and 23 percent, the percentage of Gen Z (36 percent) and Millennials (37 percent) who expect the same is much higher. Additionally, Millennials are more likely to make less frequent, but bigger-basket shopping trips.**
3. The conscious consumer —
COVID-19 created a cohort of consumers who changed their behaviour due to heightened health and safety concerns. This group prioritised safety above and beyond other concerns compared to shoppers with other priorities. (It’s also worth noting that at-home workers and older generations are also much more likely to consider environmental, social and corporate governance [ESG] issues when purchasing).
When asked which attributes were most important to in-store shopping, 23 percent of these respondents ranked ‘increased health and safety measures’ in their top two choices. They also ranked ‘COVID-19 certification’ higher than others. Perhaps unsurprisingly, these consumers are shopping in-store less across all categories.
But their conscientiousness goes beyond safety. When shopping for groceries, these consumers report being significantly more willing to pay a premium for healthier, more local and more environmentally-friendly products. Compared to other shoppers they are planning to stay ‘at-home’ more, reporting that in the next six months they are less likely to travel domestically or internationally, less likely to stay in self-catering accommodation, go to a sporting or mass event or travel via public transport than the global average.
4. East-West differences —
The survey also found that Asia-Pacific consumers are more sustainably-minded and less likely to be concerned about health and safety in their physical store experience. In the past 12 months, 45 percent of Asia-Pacific consumers reported shopping daily/weekly in store, and 40 percent via mobile. By contrast, only 38 percent of consumers in the Americas have shopped that frequently in-store, and 31 percent via mobile.
These consumers, along with those from Africa and the Middle East, are also more engaged with ESG issues. 60 percent of Asia-Pac respondents say they intentionally buy products that are in eco-friendly packaging, or less packaged compared to 52 percent of Americans and just 48 percent of Europeans. Numbers are similar for those choosing products with a traceable and transparent origin.
And while health and safety is a reason cited for shopping online by a percentage of all global consumers surveyed, Asia-Pacific consumers cite this reason to a lesser extent. Due to the earlier easing of COVID-19 restrictions in the region we believe that these consumers can be seen as bellwethers. It is likely that shoppers worldwide will follow this trend, becoming slightly less vigilant about health and safety as the pandemic recedes and redirecting their attention towards ESG.
As in other industries, consumer markets were already experiencing large-scale disruption well before COVID-19 emerged. The virus accelerated the pace of change for some consumers, while deepening divisions among others. The four fault lines discovered all have implications for companies going forward — as well as opportunities.
Our survey indicates at-home workers may increase their spending and that could lead to a significant uptick in COVID-19–related at-home consumption. Consumer companies and retailers need to be prepared with innovative offerings and enhanced capabilities. And with at-home, Asia-Pacific and older generational cohorts all joining the ‘conscientious consumer’ in prioritising environmentally-friendly, ethical and sustainable products (and younger generations likely to follow as their earning potential increases) investment in ESG should be considered in forward planning.
The last year has proven that the future, even in the short-term, is unpredictable. As circumstances continue to change around the world, there is no better time to accept the disruption and take bold, decisive action.
*Also of note? Those who work from home tend to do other things at home also, from socialising and dining to entertaining and fitness — an insight that consumer-facing companies could use to effectively market products and offerings.
** This doesn’t mean that younger generations are in a position to be frivolous however, in fact the survey results reveal that they are more price-conscious than their elders (who are more likely to be at the height of their earning potential and price less of a factor in purchase decisions).