Ronn Torossian, CEO, 5WPR
As our country is still grappling with COVID-19, many marketers are in a quandary as to how to strategize to consumers, many of whom have yet to return to work. Add to that the fact that many employers are still allowing employees to work remotely.
A recent McKinsey study discovered other things, like home cooking, having risen 54%. At-home entertainment is up nearly 40%, and home improvement has jumped up 22%. Despite these increases, McKinsey expects overall consumption to drop 12% over the next two years. What’s more alarming is that the research firm predicts a return to pre-pandemic levels will not occur until 2023-2024. McKinsey, too, expects continued consumer reliance on digital but also stated that they expect it to be anything but steady for several reasons.
McKinsey compared situations in three countries as examples of how and whether this increased dependence on digital platforms will end. They cited Italy, where 60% of consumers shopped online during their pandemic. Subsequent surveys found that only 10% found the experience satisfying. McKinsey then pointed to China, where they said consumers not only flocked to digital media to shop but also indicated that they would continue to do so after the pandemic is over. In the U.S., the use of e-pharmacies and e-doctors doubled and tripled, but McKinsey found that only 40 to 60 percent intend to continue after the pandemic is over. Unless these providers can quickly discover why, where, and how they’re falling short of meeting consumer expectations, they’ll lose a lot of the market they momentarily gained.
Although there are some similarities in the impact COVID-19 has made, McKinsey also discovered some differences among countries. The firm expects China to continue its rapid recovery because of its strict hygiene rules and the already high use of digital channels. However, McKinsey predicted that countries like the U.S., the U.K., and most major European countries would take longer due to what it sees as long-term drops in consumer spending. It also noted that countries dependent on tourism revenue, particularly those with high fashion industries, like Paris and Rome, will be hit even harder.
McKinsey found some major generational differences. Although they didn’t foresee much of a change in digital reliance, the firm predicted that Gen Z would likely be hit harder economically because of that generation’s “disproportionate exposure to self-employment” and a sharing economy. McKinsey said the rich would not feel any effects. It added that retirees in the U.S. should not be as affected as those in China.
McKinsey found it more difficult to assess the future consequence of personal values driven by things like sustainability or climate change. It raised several questions about how those consumers would react and respond if and when restrictions like single-use plastic are reversed.
What These Mean
These findings mean that brands will have to be nimbler and more quickly adaptable to consumer preferences and behaviors. Doing so will also mean keeping in closer contact with customers and monitoring them. Stronger feedback loops can be extremely valuable in capturing data and changes in attitudes to react and adjust rapidly.