The COVID pandemic is expected to have a transformative effect on the consumer landscape, according to a new report from Euromonitor International, with higher unemployment and deteriorating earnings causing more households to fall into lower-income segments, and “growing anxiety” about future prospects undermining global consumer sentiment.
The Euromonitor International report How Will Consumer Markets Evolve After Coronavirus? predicts that per-capita consumer spending will fall by approximately 5.2% in real terms this year, not returning to 2019 levels until at least 2022.
The massive disruption to everyday life caused by the pandemic is forcing consumers to re-evaluate their life priorities, giving rise to new values and spending criteria, says Euromonitor. Some of the changes in consumer behaviour, including increased focus on family and community, health and digital solutions, are expected to persist even after the crisis recedes, says Euromonitor’s global research director Sarah Boumphrey.
But aside from increased consumer sensitivity to in-store cleanliness and growing demand for e-commerce options, the prospects are generally positive for the grocery sector. Euromonitor anticipates more at-home eating occasions, and positive growth for fresh and packaged food.
The report identifies six new trends arising out of COVID-19:
From Sustainability to Purpose
The report says the COVID-19 crisis has increased the momentum of pre-existing trends like purpose over profit, with brands moving beyond mere “ethical credentials” and environmental concerns like plastic pollution and climate change to a more holistic approach that creates social, environmental and economic value.
Within the food and nutrition category that will mean a realignment of consumers’ priorities, with renewed emphasis on issues such as food waste, animal welfare and food security pushing aside issues such as packaging sustainability and sustainable sourcing.
Hometainment and the New Experiential Consumer
Consumers will build their daily routines around staying at home longer, with meal occasions increasingly moving into the home. The report says consumers could emerge from the crisis with a newfound affection for cooking after 2 to 3 months of home cooking, a trend that is being facilitated by free online cooking classes.
Where and How Consumers Shop
The arrival of COVID-19 has accelerated existing trends such as online shopping, click and collect, frictionless retail and direct to consumer business. This has been acutely felt in Canada, where grocers have been forced to increase their online efforts to meet increased consumer demand.
READ: Could COVID-19 be the spark that ignites online grocery in Canada?
Euromonitor calls COVID-19 a “turning point for e-commerce” within the food and drink category, though it could be tempered by a negative impact on impulse channels. “onsumers are less likely to ‘pop in’ to buy a single chocolate bar from their local convenience store,” the report says.
Euromonitor predicts that healthy eating will become an even more important topic for consumers, particularly as the balance of exercise versus nutrition is disrupted by increasingly “sedentary” lifestyles. This will accelerate the trend towards more holistic wellness and eating, and the focus on calories could become more important.
At store level, retailers of all kinds will be required to bring the impression of “calm, comfort and serenity” to the consumer experience, while cleanliness and hygiene will also need to be top-of-mind for customers.
Innovation and the New ‘Core’
Retailers and consumers alike have become more “risk averse” as a result of the crisis, with one likely outcome being that “value” could become the single most important factor for consumers: “Not just economy products, but well-positioning premium products that can replicate the restaurant experience in the home.”
The New Normal: What’s Here to Stay?
While shopping is increasingly expected to be conducted from home and consumers will cut down on discretionary purchases in sectors like tech, Euromonitor does not expect a new normal to emerge for the food and drink category. “The industry is doing well and expects to return to normal in most cases,” it concludes. “With a residual impact of stockpiling bringing purchases forward in some cases.”