EY Future Consumer Index: Four consumer behavior trends emerge during the COVID-19 pandemic
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, conducted on the week of 6 April 2020.
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.
“42% of the interviewed expect their shopping behavior to permanently change, a third are willing to pay more for local products, a quarter for trusted brands and a quarter for ethical products. Understanding how your customers will change and what new sub-segments are expected in the coming months is key to having an appropriate response to the new shopping dynamics”, says Cristian Cârstoiu, Partner, Business Advisory Services, EY Romania.
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.
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
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%).
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.