COVID-19 has forced potentially dramatic new directions in consumption, altering behaviours in ways that few would have imagined just nine months ago. What is clear is that the impact of COVID-19 on consumer behaviour will outlast the crisis.
“Our research points to enduring changes in the way that people think, act and purchase consumer goods,” said François Faelli, global head of Bain & Company’s Consumer Products practice and lead author of the report. “While these changes happened almost overnight, their impact will be lasting and consumer products companies will need to adapt to serve this new customer.”
The research found that consumer shifts fit into two categories: 1) behaviours that permanently deepened and solidified amid the crisis; and 2) trends where consumer attitudes have shifted but the outcome is still unclear.
New laws of gravity
Steep change in digital: The most significant and irreversible pandemic outcome for consumers has been the huge uptick in online grocery shopping and other virtual activities. Locked-down consumers spent more time than ever in front of their screens, watching television, participating in social media, playing online games and shopping. The majority of surveyed consumers say they will continue to replace non-digital experiences with the virtual substitute.
Relentless focus on health: The arrival of the novel coronavirus left people hyper-exposed to news about health, hastening the shift toward health and wellness that had already been gaining ground over the past decade. This has had a direct impact on how consumers think about the foods they eat, increasing demand for fresh and unprocessed food as well as prompting a jump in the amount of food cooked at home.
Redefinition of value: The COVID-19 crisis accelerated a distinct shift that began emerging pre-pandemic—namely, the simultaneous flight to low-cost products and more premium offerings. The financial impact and resulting anxiety led many to focus their spending on value-for-money products.
As spending has declined in areas such as out-of-home entertainment, travel and automobiles, however, consumers with sufficient spending power are turning to premium products to meet their heightened needs around health, convenience and safety.
Slow return of out-of-home spending: Before COVID-19, out-of-home food and beverage spending in the US grew twice as fast as grocery spending for at-home consumption, capturing two-thirds of the overall growth in food spending. The pandemic radically changed that trajectory.
With the closure or near-closure of bars, restaurants, cafés, stadiums, gyms, nail and hair salons, and other on-trade sites, the COVID-19 crisis will push back gains made by out-of-home foodservice by three to five years, depending on the length of the pandemic as well as government and social responses, according to Bain analysis. It could be up to seven years in a worst-case scenario.
Four trends have yet to resolve
Small and local? Or big brands? In the wake of the pandemic, consumers in Europe and the US undeniably say they want to support local businesses and brands. The tide shifted during the early months of the pandemic, however, when insurgents’ share of growth fell from 35% to 5% in the categories in which they exist. Much of that lower growth resulted from supply constraints, but consumers were also seeking the safety and trust offered by larger brands.
Departure from science? Or return to science? Consumer awareness of health and wellness has increased over the past five years, and consumer goods companies have responded by doubling down on the better-for-you segments, with smaller insurgent brands paving the way with health claims or homeopathic roots.
The increased visibility of medical experts during the Covid-19 crisis, however, has translated into a reliance on the clinical expertise of doctors and scientists. This confidence in science plays out in purchasing decisions. Looking to reduce both risk and anxiety, 35% of consumers in Europe increasingly are seeking out products with health claims that are rooted in science.
They are specifically looking for science-backed endorsements in over-the-counter drugs, baby care and pet care categories.
Sustainability or safety? Many business leaders had hoped that COVID-19 would serve as an inflection point for sustainability. But the course is muddled. In May, 35% of European survey respondents said they cared more about sustainability in food and beverage purchases than they did before the pandemic.
That opinion was validated in July, when an equal percentage said buying socially responsible brands is more important to them. Despite these findings, only 8% cite sustainability as a key purchase criterion across categories. Across countries, consumers are expressing a heightened preference of safety over sustainability.
Urbanization vs. de-urbanization? For years, people have been flocking to the major urban areas of Europe, the US and other developed economies—to the point at which it felt like a law of nature. Then, COVID-19 arrived, convincing some who could afford it to move, if only temporarily, to quieter and more spacious places—a relocation made possible by remote working.
As a result, home prices are rising in suburban and exurban locations. Will this quest for a calmer, slower life reverse years of urbanization? The answer is unclear. Yet it has potential implications for brands as they consider how the consumer base is shifting and what their needs are.
“Planning ahead right now may seem impossible given how quickly things are changing and the unpredictability that continues to surprise us all,” said Sam Rovit, partner and a co-author of the report. “In the consumer products sector, the companies that will win are the ones who recognized what has changed for good but still manage to take into account uncertainties and shape possible outcomes.”