KANTAR Study Results - COVID-19 Barometer: Three New Consumer Trends Defining the "New Normal".

The level of anxiety in the economy remains high, but we have all settled into the "new normal" forced upon us by isolation, even though we miss our previous lives. As restrictions in daily life begin to be gradually eased, we are already starting to wonder what will come next.

These are the conclusions from the fourth wave of the COVID-19 Barometer study conducted by Kantar across more than 50 markets. This world-leading study allows us to track human attitudes, behaviors, and expectations. Kantar has identified three main trends that will shape consumer behavior after the pandemic. These are: a new wave of e-commerce buyers, the growing role of price sensitivity, and a shift toward local consumption.

The level of anxiety, which peaked worldwide in mid-March, is beginning to decline. Although the proportion of people showing high levels of anxiety remains at 70% or higher, the number of respondents showing high levels of concern has fallen for the second consecutive time. Currently, 73% of respondents are very concerned, compared to 79% in March. As the period of lockdown has lasted two, and in some cases even three months, people around the world are developing new habits and routines and are partly regaining their life balance. More than 40% of respondents say they exercise more, read more, or sleep more - these are their strategies for coping with the current situation.

E-commerce Accelerates — D2C Gains Importance

More than 50% of respondents say they are eating more healthily and trying new recipes. This figure reaches nearly two-thirds (64%) in households with children. "Izoabstinence," or avoiding alcohol during isolation, is a principle consistently followed by about one-fifth of respondents.

Time will tell whether these coping strategies become permanently rooted and turn into habits even after current restrictions are lifted, when people begin to readjust to the situation. However, Kantar has identified in its study three significant behavioral changes that, in its assessment, will persist after the pandemic, and consumer products and brands will have to adapt to them.

  • A new wave of e-commerce buyers. We are already seeing faster growth in this retail channel compared to other segments of the retail market. According to Kantar analysts, e-commerce will outpace traditional retail even more in the coming year. Previous waves of the COVID-19 Barometer study showed that during the pandemic, many people bought something online for the first time that they had not previously purchased through this channel. We are also seeing a significant increase in the use of this sales channel among people who have been shopping online for a long time. Nearly one in three households (32% overall and 40% of households with children) increased or significantly increased their online shopping spending during the pandemic. Members of one in three households (33%) believe they will shop this way more in the future. This response rate rose to 40% among those sensitive to environmental issues and to nearly half (45%) among households with children. The accelerating e-commerce boom will contribute to the popularization of previously lesser-known brands. 38% of respondents said they will continue shopping at online stores they visited for the first time during the current crisis, while 31% of buyers will continue to purchase new products and services they tried for the first time during this period. Any brand wishing to scale its e-commerce presence will need to ensure good consumer brand experiences in the online environment, without forgetting environmental aspects. Our research shows that 25% of online buyers find this method of shopping less satisfying compared to visiting a physical store.
  • Price sensitivity will persist for a longer time. Anxiety about the economic situation combined with pessimism about the possibility of the virus "resurging," as well as the potential long-term effects of the pandemic, lead Kantar analysts to conclude that pricing and promotional strategies and offering added value will become key factors in brand competitiveness. 45% of households have already experienced income declines during the pandemic (up from 38% in Wave 2 of the study), and another quarter (26%) expect their incomes to decrease in the future. Pessimism about the near future is also very widespread. Two-thirds of people expect that getting the economy back on its feet will take a long time, and that the pandemic will have long-term effects such as job losses and business difficulties (up from 55% in Wave 1). Nearly three-quarters of consumers (72%) are very or somewhat concerned about a potential second wave of the pandemic, which could result in the reintroduction of social isolation and the closure of various institutions. In households that have already felt the financial effects of the current situation, the proportion of those concerned rises to 76%. Meanwhile, the share of people saying they "pay more attention to prices" rose from 59% in Wave 2 to 68% in Wave 4. Currently, 45% of people (40% in Wave 2) believe that companies should help consumers by offering discounts and promotions. Offering discounts and promotions is currently the most strongly expressed expectation toward brands, followed by implementing hygiene measures to protect employees and securing supplies.
  • Localism enters the mainstream. Sourcing and production strategies used by brands, which are already important to environmentally minded consumers, will also gain greater importance for mainstream market buyers. Consumers around the world are now more favorably disposed toward products made locally. 65% of people prefer goods and services from their own country. This proportion increases among those who believe they actively seek environmentally friendly solutions (79%) or who say they are committed to environmental protection (72%). The country with the most supporters of buying local products has become China - 87% of respondents from that country expressed this view. Next are Italy (81%), South Korea (76%), and Spain (73%). 42% of consumers say they now pay more attention to the origin of products. In households with children, this proportion rises to 52%. One in four consumers believes that the owners of the brands they use should bring production back to their own country, while one-third worry whether products shipped from abroad pose a threat to their safety. Products from China and the United States are perceived as particularly risky: 60% and 47% of respondents from other countries, respectively, indicate that they are somewhat or significantly less favorably disposed toward buying goods and services from these two countries.

Commenting on the study results, Rosie Hawkins, Director of Innovation at Kantar, noted: "We know that periods of disruption accelerate change, and it takes one to two months for new habits to become established. We believe these three trends will gain importance as the world's largest brands plan their return to a path of healthy growth in the post-pandemic period."

Three Consumer Trends That Will Survive the Pandemic

E-commerce must become the pillar of every consumer brand's activities, and in particular, ensuring customers have great shopping experiences. Established e-commerce players will need to pay close attention to new competitors selling directly to consumers (D2C - direct-to-consumer), as these players demonstrated greater "agility" and creativity during the isolation period. New value-added strategies will need to be developed in response to lingering concerns about the economic situation. As part of strategic actions, brands will need to take a closer look at their sourcing strategies and explore opportunities arising from their reputation and market position."

More information about the COVID-19 Barometer study is available at: www.kantar.com/Campaigns/Covid-19-Barometer

About Kantar:

Kantar is the world's leading data-driven advisory and consulting firm. We offer comprehensive, unique, and wide-ranging insights into how people think, feel, and act - globally and locally - across more than 90 markets. By combining the deep knowledge and experience of our people, our data resources and established benchmarks, as well as innovative analytics and analytical technologies, we help our clients understand people and drive growth.

COVID-19 Barometer Study: The COVID-19 Barometer conducted by Kantar is the world's most comprehensive study on the impact of the COVID-19 pandemic on consumer behavior, attitudes, and expectations. The full dataset is available by subscription at www.kantar.com/Campaigns/Covid-19-Barometer

Data collected: The insights presented here are based on data collected during 4 waves of the study. Wave 1 covered more than 25,000 people in over 30 countries. Wave 4, conducted on April 24–27, 2020, included interviews with more than 45,000 consumers across more than 50 markets. In each country, we conducted more than 500 interviews, mainly online, and sometimes by phone. The fifth wave of the study will be conducted at the end of May this year.

Summary

Kantar, analyzing the fourth wave of the COVID-19 Barometer study, identifies three lasting consumer trends. First, e-commerce has entered a boom phase - the number of new online buyers has increased, and D2C brands, thanks to greater "agility," are becoming serious competitors. Second, income declines (which have already affected 45 percent of households) will force brands to adopt pricing and promotional strategies. Third, consumers - especially in China and Europe - are increasingly choosing local products. Interestingly, as many as 25 percent of internet users find online shopping less satisfying than visiting a physical store, which poses a challenge for brands.