The Low-Down: Survey: Consumer Sentiment Remains Wary Amidst Political Push To Reopen

What if they gave a party and nobody came? That is how many merchants in reopening states are feeling as consumers indicate they are wary of resuming 'normal' activities until trusted medical authorities indicate it is safe to do so.

Only 33% of consumers expect an economic rebound in the next three months. JL

Shruti Bhargava and colleagues report in McKinsey:

US consumers’ optimism has decreased, with 33% of consumers expecting an economic rebound within two to three months (but) more consumers unsure of the future. Discretionary spending is starting to rebound, led by food, alcohol, pet care, entertainment, skin care and makeup. Before resuming in-person and group activities, consumers are waiting for governments to lift restrictions, medical authorities to voice their approval, and a vaccine to be developed. Consumers indicate they will adopt long-term behavioral changes that will last beyond COVID-19

As COVID-19 progresses and some regions begin to reopen, US consumer sentiment is mixed, with many consumers unsure of the future. The next normal is beginning to emerge, and consumers indicate some of their behavioral changes may stick long-term.

US consumers’ optimism has decreased slightly since last week, with 33 percent of consumers expecting an economic rebound within two to three months and more consumers unsure of the future than last week. Americans are feeling the financial impact of COVID-19, with about half of respondents reporting they’re being very careful about how they spend their money. Looking ahead, 32 percent of consumers say they will reduce their spending over the next two weeks. However, discretionary spending is starting to rebound since our first survey, led by food, alcohol, pet care, entertainment, and skin care and makeup. Consumers intend to increase online shopping in core household categories, a shift that has been driven primarily by millennials and higher-income consumers.

Consumers are also adopting and intensifying behaviors, especially digital ones

Consumers are starting to adopt new behaviors, including shopping on new websites for basics, shopping at new grocery stores, trying restaurant and store curbside pickup, getting groceries delivered, and trying videoconferencing for professional or personal reasons. There are several additional categories where consumers are increasing their participation, such as entertainment streaming, quick-service restaurant drive-thru, and restaurant delivery.

The next normal has started to emerge, with consumers indicating they will adopt long-term behavioral changes that will last beyond COVID-19

Consumers who have switched to new brands or retailers largely intend to stick with them, with almost two-thirds of consumers indicating an intent to continue. Consumers also intend to reduce in-person activities such as travel and attending movies, concerts, and events. Consumers exhibit a strong intent to continue digital activity replacements such as telemedicine and remote learning, digital pastimes like online streaming and fitness, and physical activities like spending time outdoors and digitally-enabled exercise machines. In contrast, activities that are specific to the COVID-19 crisis, such as workarounds for largely in-person activities—including professional videoconferencing and curbside pickup—are less likely to stick around once the crisis passes.

Looking toward recovery, consumers are looking for critical milestones to resume in-person activities and return to stores

Before resuming in-person and large-group activities, consumers are waiting for governments to lift restrictions, medical authorities to voice their approval, and a vaccine to be developed. Consumers across regions have not been engaging in many activities outside their homes, with the exception of shopping, working, and seeing their families; in less restricted areas, get-togethers with friends, visiting crowded outdoor public places, and dining at restaurants and bars have been more popular. As consumers contemplate returning to shopping in stores, they are looking for increased cleaning procedures as well as masks or gloves on patrons and employees.