Following job gains in June, many economists are predicting an economic slowdown as cases of the Coronavirus surge around the country. Daily cases continue to climb. Last week, new cases of the Coronavirus in the U.S. reached 50,000, a single-day record. That is more than four months since the pandemic first appeared in the U.S. in late-February.
USA Today reports that “the biggest stumbling block [to an economic recovery] is that 21 states, largely in the South and West, have paused or reversed their reopening plans amid a spike in cases.”
The article continues to predict that payrolls will decline in July and August, and millions of small businesses that received financial support from the Payroll Protection Program may be laying off workers as the funding runs dry. Micheal Pearce, an economist at Capital Economics, forecasts a bumpy road ahead.
“We expect the recovery from here will be a lot bumpier and job gains to be more muted.”
Just as consumers were starting to feel more comfortable stepping outside of their homes, our forward progress has been reversed by a continued struggle to manage the pandemic. EY, a global leader in tax, transaction and advisory services, published a Future Consumer Index this week.
The Future Consumer Index tracks changing consumer sentiment and behaviors, identifying new consumer segments that are emerging in relationship to the COVID-19 crisis. The monthly survey tracks the sentiment and behavior of more than 14,000 people across 18 countries. The latest edition found a rising trend in consumers craving stability (40%, doubling over last month’s survey), half of consumers expect their lives to change significantly in the long-term, and more than half have reevaluated their values and how they look at life because of the pandemic. The Index continues to identify five new consumer segments (market segmentation, or sub-groups of consumers) that will shape demand post-pandemic.
Affordability first: These consumers want to live within their means, and represent 30% of the cohort. They are the most pessimistic segment in their perception of how long it will take to recover. More than half of them identify price as increasing in importance.
Health first: These consumers (26%) prefer brands and products they trust to be safe and minimize unnecessary risks. Fifty-seven percent say they now pay more attention to how healthy the products they buy are for them.
Planet first: Most likely to change the products they buy, these consumers (17%) would pay a premium for high-quality, ethically sourced and sustainable goods. Fifty-nine percent intend to shop more locally in the long term.
Society first: Consumers in this segment (16%) believe that everyone should work together for the greater good, with 73% of them prepared to change their behavior in order to benefit society. They prefer to buy from organizations that are honest and transparent about what they do.
Experience first: Intent on living for the moment, these consumers (11%) are the least anxious about their health and finances. Two-thirds of them feel comfortable returning to a mall just days or weeks after the pandemic has stabilized in their country.
SIA Take: The change and uncertainty brought on by COVID-19 has created new consumer segments, and caused consumers to reevaluate their values and outlook on life. In that process, consumers are turning to goods and services that are healthier, more sustainable, and locally sourced; and to brands that are honest and transparent. Does your consumer land in any of these segments?
It’s been said that people who came out of America’s Great Depression were forever changed by the experience, and that it affected their attitudes until the end of their days. The experience of living through the novel coronavirus pandemic appears to be having a similarly profound effect on people today.
Entrepreneur has also been tracking consumer trends through the pandemic, and most recently reported on how entrepreneurs are leveraging consumer behavior change in: How the Crisis is Changing Consumer Behavior, and How Entrepreneurs Can Act on It. The author, John Biotnott, identifies three prominent trends resulting from COVID-19:
- Consumers are playing more games on mobile devices
- Consumers became even more concerned about their health
- Consumers have to find a new way to “discover” new products
Entrepreneurs are adapting, and leveraging, opportunities through new consumer behavior trends, all of which are connected to how COVID has moved our lives online. We now work out, connect with our community, and shop online. Biotnott points out that shopping online has a huge impact on how consumers “discover” new products.
He cites the grocery store as a good example. Food and snack brands have relied on product placement in stores to trigger impulse buys of new items. With many customers now utilizing shopping delivery services, they might not be as readily aware of new products.
Biotnott identifies this challenge as an opportunity to move to a direct-to-consumer (DTC) launch model. Manufacturers should be looking at launching new products and services direct-to-consumer through their own – digital – channels, going beyond physical retail spaces.
SIA Take: Launching products direct-to-consumer is not only a great way to engage with, and build your community, but now that so much of our lives are online, it is the best way for you to get NEW products and services in front of your consumer. A good place to start: the shopper decision journey for your brand. How do consumers discover, engage with, join up with, and purchase from your brand? That is going to be the best way to get in front of your online consumer with new products, services, and content.
More to come next week. Please let us know if there’s something specific you’d like for us to include in our weekly Consumer Behavior Pulse – email [email protected] to send your request. Thanks!