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May 31, 2020,
In times like these, we might hope that the other person is spending on goods that we can’t afford to. Our economy can sure use it.
Consumer spending is the green lifeblood flowing through our economic arteries and we hope to keep it off of life support.
So, during this pandemic, how are we doing? We can guess but we won’t. We know a team that can explain to us what is going on without guessing. We’ll turn to them for answers.
The Bureau of Economic Analysis is such a team.
At bea.gov they explain, “The U.S. Bureau of Economic Analysis is your source of accurate and objective data about the nation’s economy.
BEA’s economists produce some of the world’s most closely watched statistics, including U.S. gross domestic product, better known as GDP. We do state and local numbers, too, plus foreign trade and investment stats and industry data.
Governments of all levels, businesses big and small, and Americans everywhere rely on our numbers. BEA’s work underpins decisions about interest rates and trade policy, taxes and spending, hiring and investing, and more.”
Sounds very comprehensive.
The Bureau of Economic Analysis also promotes a better understanding of the U.S. economy by providing the timeliest, relevant, and accurate economic accounts data in an objective and cost-effective manner.
So where are we at now? We sure need to pay for our most basic services.
Let’s take a look.
Four consumer behavior trends emerge during the COVID-19 pandemic, the first EY Future Consumer Index finds
– Survey tracks consumer behavior and sentiment across five markets
– Areas tracked include spending habits, attitudes toward COVID-19, data privacy and consumer trust
– 42% of consumers believe the way they shop will fundamentally change
LONDON, April 23, 2020 /PRNewswire/ — The COVID-19 crisis is being defined by four distinct consumer behavior segments, according to the first edition of the EY Future Consumer Index, a survey of 4,859 people tracking consumer sentiment and behavior across the US, Canada, the UK, France and Germany.1 These are “Cut deep,” “Stay calm, carry on,” “Save and stockpile” and “Hibernate and spend”.
Consumers that fall into the “Cut deep” segment (27.3%) are spending less across all expense categories as the pandemic impacts employment; others representing the “Stay calm, carry on” category are continuing to spend as normal (26.2%). Most consumers (35.1%) represent the “Save and stockpile” segment, indicating that they feel pessimistic about the future, while consumers that fall into the “Hibernate and spend” segment (11.4%) are spending more across the board.
Overall, 42% of respondents believe that the way they shop will fundamentally change as a result of the COVID-19 outbreak. When it comes to brands and products, 34% of consumers indicate that they would pay more for local products, 25% for trusted brands and 23% for ethical products.
Kristina Rogers, EY Global Consumer Leader, says:
“Looking beyond the immediate effects of COVID-19, few consumers expect to revert back to pre-crisis behaviors any time soon. In these uncertain times, no one knows how long the transition will take or whether different consumer trends will emerge. The EY Future Consumer Index, paired with analysis around the EY FutureConsumer.Now, will continue to provide a perspective on the changing consumer and help consumer-facing companies stay relevant and plan for the future.”
The four segments reflect how consumer behavior can relate to age groups, family or employment status:
- Cut deep: These consumers are mainly more than 45 years old and have seen the biggest impact on their employment status. Almost a quarter have seen their jobs suspended, either temporarily or permanently. Seventy-eight percent of them are shopping less frequently, while 64% are only buying essentials. Thirty-three percent feel that brands are far less important to them in the current climate.
- Stay calm, carry on: These consumers do not feel directly impacted by the pandemic and are not changing their spending habits. Just 21% of them are spending more on groceries, compared with 18% that are spending less.
- Save and stockpile: This segment shows particular concern for their families and the long-term outlook. More than a third (36%) are now spending more on groceries, while most are spending less on clothing (72%) and leisure (85%).
- Hibernate and spend: Primarily aged 18-44, these consumers are most concerned about the impact of the pandemic. However, only 40% of this segment say they are shopping less frequently. And while 42% say the products they buy have changed significantly, 46% of them say brands are now more important to them.
Andrew Cosgrove, EY Global Consumer Knowledge Leader and Lead Analyst, says:
“Companies were already struggling to keep up with changing consumer behaviors before the pandemic. Now it’s even more critical for companies to anticipate how consumers will change and respond to specific segment needs.”
Five new segments may emerge as consumers move beyond the pandemic
The four segments identified could morph into five very different ones as the crisis abates. For example, the Index currently suggests that over time, most consumers in the “Save and stockpile” segment will migrate to two new segments: “Remain frugal” and “Cautiously extravagant.” These new consumer segments, detailed in the Index, could emerge post-COVID-19 and be summarized as: “Keep cutting” (13.1%), “Stay frugal” (21.7%), “Get to normal” (31.4%), “Cautiously extravagant” (24.7%) and “Back with a bang” (9.1%).
Consumer attitudes to privacy and purpose are changing
Over the last two years, EY teams have been modeling future scenarios as part of the FutureConsumer.Now program. One of these scenarios was based on the impact of a hypothetical global pandemic and indicated that consumers could adopt more open attitudes to privacy and sharing personal data. Indeed, the EY Future Consumer Index finds that 54% of consumers would make their personal data more available if it helped to monitor and track an infection cluster.
The Index also finds that health care providers are regarded as the most authoritative organization, with 47% of consumers indicating that they trust them completely, compared to governments (28%), brands (17%) and media companies (16%).
Another FutureConsumer.Now scenario model showed that consumers could view time, talent and natural resources as equally precious, with traditional notions of status receding, replaced by purpose and social good. This is supported by the Index, in which 33% consumers strongly agree that they will re-evaluate the things they value most as a result of the pandemic, while more than a quarter say they are already paying more attention to what they consume and what impact it has.
Over the coming months, the EY Future Consumer Index will provide regular longitudinal indicators and perspectives on which changes are likely to be temporary reactions to the COVID-19 crisis, and which point to more fundamental shifts. More countries will be included as the analysis continues. The latest analysis is available at ey.com/futureconsumerindex1.
Notes to editors
About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. For more information about our organization, please visit ey.com.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.
About the EY Future Consumer Index
The EY Future Consumer Index tracks changing consumer sentiment and behaviors across time horizons and global markets, identifying the new consumer segments that are emerging. It provides regular longitudinal indicators and a unique perspective on which changes are temporary reactions to the COVID-19 crisis, which point to more fundamental shifts, and what the consumer post COVID-19 might be like. More countries will be included as the analysis continues.
1 Survey conducted week of 6 April 2020.
Maya Vautier
EY Global Media Relations
+1 212 773 2181
maya.vautier@ey.com
SOURCE EY
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