by McKinsey & Company
As the world begins its slow pivot from managing the COVID-19 crisis to recovery and the reopening of economies, it’s clear that the lockdown has had a profound impact on how people live. The period of contagion, self-isolation, and economic uncertainty will change the way consumers behave, in some cases for years to come.
These rapid shifts have important implications for any consumer-facing company. Because many of the longer-term changes are still being formed, companies have an opportunity, if they act now, to help shape the next normal. Three takeaways are emerging from our efforts to form a holistic view of the new post-COVID-19 consumer:
COVID-19 is changing how consumers behave across every aspect of their lives. As consumers sheltered at home, adoption of new digital services took place at a blistering pace. In addition to growing health and hygiene concerns, economic recession, and the related decline in consumption, the scope of the change to people’s lives is staggering.
Broad shifts to new behaviors hide significant variations. Consumer behaviors will likely fluctuate until we reach the next normal. How long they stick will depend on a range of factors including satisfaction with new experiences, demographics, infrastructure, and the severity of the recession.
Companies must rethink how and where they connect with consumers. They should expect to encounter structural challenges and upheaval across multiple dimensions. Overall consumption is shrinking, the shopping basket is undergoing a significant change in mix, and consumers are changing the ways they get their information.
COVID-19 is changing how consumers behave across every aspect of their lives. COVID-19 has had a devastating effect on people’s health and well-being on a global scale. One of the most striking features of the pandemic is how broad its impact on consumers’ lives has been. We took a closer look at what that means in eight areas to get a better understanding of how consumer habits and preferences are changing.
During lockdown, the home has become a multiverse. It’s where we work, eat, play, and connect with our families and friends. Even as overall consumption has declined, the portion allocated for at-home categories has climbed. Over the months of social isolation, consumers’ net intent to take part in a variety of activities in the home has shifted, with an increase of 54 percentage points for cooking, 30 to 40 percentage points for at-home entertainment, and 22 percentage points for home improvement. Similar shifts were seen across the globe.
Overall, consumption will continue to decline—a 12 percent drop in private consumption is anticipated in the United States over the next two years, with recovery to pre-crisis levels only by 2023–24. What we buy has changed across categories. Think fewer cosmetics and more flour. The explosion of small brands, underway before the pandemic, has given way to a strong preference for global A-brands. After years of growth, out-of-home consumption has almost disappeared; many of us have stopped going to stores entirely. In many markets the surge in e-commerce has compressed the equivalent of several years of growth into just a few months.
For many workers, the office is now in the living room. For the cohort still able to work during the pandemic, work is largely remote and digital, with a sharp uptick in the use of digital collaboration tools. Zoom’s daily user base grew from ten million people to 200 million in three months, and Slack’s paying customers have doubled. At the same time, there has been an enormous rise in unemployment, which is expected to reach approximately 15 percent when 2020’s third-quarter results for the United States are complete.
Health and well-being
Public health and uncertainty about the length of the pandemic became the primary consumer concerns during the lockdown, with 68 percent saying they were very or extremely concerned. Self-care has climbed up the priority list for most consumers. Here, too, digital is playing a larger role as the use of e-pharmacy and e-medicine accelerates. Of consumers who had to cancel medical appointments during the lockdown, 44 percent accessed telehealth options, and online searches for telemedicine increased more than ninefold.
By necessity, learning and studying went virtual, driving adoption of new tools. The user base for remote learning services grew by 120 percent. The shift of learning from outside the home to inside has blurred the lines between learning and leisure.
Consumers stuck at home are spending more time but likely less money on their entertainment, as the trend toward digital options accelerates. Downloads of gaming apps increased more than 30 percent, year over year, while 45 percent of consumers report using more online streaming services at home. Netflix added 16 million subscribers in five months while Disney+ nearly doubled its subscriber base to about 50 million—a feat that took Netflix seven years. Popular out-of-home activities are trying to adjust to this new reality, with Nascar and the NBA launching online product offerings, the J. Paul Getty Museum creating virtual tours, and the Metropolitan Opera streaming performances.
Travel and mobility
Consumers are staying home in droves. Tourism has been almost entirely grounded, with airline travel declining 90 percent overall. At the same time, there is an emerging preference for avoiding public transport and high-density transit hubs, which has decreased demand for on-the-go consumption. While it might take years for international travel to recover to pre-crisis levels of demand and supply, domestic travel could rise much sooner as consumers start summer vacations.
Overall, media consumption has increased in almost all channels (see sidebar, “The Digital Shift”). Forty-three percent of consumers are watching more television, 40 percent are using more social media, and 28 percent are listening to more radio. Readership of online news has risen 39 percent. What’s not gaining? Print media, where the ongoing decline has worsened with a 33 percent drop in readership.
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