Consumer confidence has – surprise, surprise – taken a pummelling in the wake of the coronavirus pandemic, with nearly three quarters (73%) of Brits saying they are not optimistic about the economy but there are still opportunities for some brands to win new customers.
That is according to latest data collected on April 18 and 19 from global consulting firm McKinsey & Company, with just 17% of British consumers saying they believe the economy will rebound in the next two to three months.
A quarter of consumers surveyed in the UK believe that Covid-19 will cause the economy to fall into a long-lasting recession. As such, over a third (36%) of consumers say they are cutting back on spending, with the same number saying uncertainty is preventing them from making purchases they would normally make.
This contrasts greatly with consumers in China, where over half (56%) expect the economy to rebound within two to three months and in the US where 35% are still optimistic of a rapid recovery.
Generally European consumers are much less optimistic, the exception being Germany where a quarter (24%) expect the economy to bounce back within three months.
Aside from the economy, nearly two thirds of UK consumers are extremely or very concerned about the uncertainty of the duration of the Covid-19 crisis. This is compounded by other top concerns for UK residents such as public health, safety and the health of vulnerable relatives.
Amid the new economic reality, Brits are starting to feel the effect of the crisis on their incomes with 30% noticing a reduction in their income, 50% thinking their finances will be impacted for four months or longer and 44% being very careful how they spend their money as a result.
Consumers are universally pulling back on most discretionary spending. Some of the categories showing the most dramatic drops in UK spending – outside of the obvious areas of restaurants, out of home entertainment and travel – include clothing, footwear, and accessories.
In the categories where consumers expect to spend more (grocery and home-based entertainment), UK customers have switched to online shopping to make these purchases.
However, the report points out that many consumers are switching brands and retailers, especially grocery stores, and – this is the good news for those shops – more than half expect to stay with them after the crisis.
In terms of changes to routine, the vast majority (94%) of UK consumers believe that it will be at least another two months before personal routines can start returning to normal.
Nevertheless, there appear to be long-term issues looming; even after the lockdown is lifted, consumers expect to curb their visits to the high street, as well as travel less and go to fewer events, meaning these sectors need to brace themselves for more pain.
The report states: “Consumers expect to spend more on basics such as groceries, household supplies, and in some countries personal-care items. Consumers are also trying new brands when the ones they are used to are unavailable. Bigger brands with more robust supply chains are growing faster as a result, giving them a unique opportunity to earn consumer trial and loyalty.”
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