McKinsey’s Gizem Günday explores the changing face of British consumer shopping behaviour, now and post-COVID-19
Despite some of the big changes and shocks of 2020 continuing to play out, optimism about the economic recovery in the UK has reached its highest recorded level during COVID-19, having almost doubled since November, according to our latest UK Consumer Sentiment Research. Thirty percent of consumers are optimistic that the economy will rebound within 2 to 3 months and grow just as strong as or stronger than before COVID-19 (compared with 17 percent in November 2020).
While the UK has one of the highest shares of vaccinated population globally, UK consumers have said that they will still wait for restrictions to be lifted and wider vaccination coverage before reengaging with activities outside the home. As younger consumers receive the vaccine, greater spend and out-of-home activity will likely continue to increase. Currently, the vaccinated group is comprised largely of baby boomers, who indicate a lower propensity to spend (net intent fell to minus 6 percentage points), while younger consumers have a greater desire to spend more and greater opportunity for activity.
Despite the current negative net intent, the majority of categories are showing an increased intent to spend relative to November 2020. The majority of vaccinated consumers expect routines to return to normal by the end of 2021, and say finances are already back to normal.
The Consumer Sentiment Research, which is based on primary consumer research, provides quantitative analysis of consumer sentiment during the global pandemic. The latest findings also show that, in addition to the rebound in consumer spend, digital transformation, homebody economy, and disruption to brand loyalty remain among key trends for consumers in 2021.
Consumers plan to “splurge”
Discretionary spend has accelerated since summer 2020 in COVID-19 “essentials” categories and more than nearly half (47 percent) of UK consumers expect to make up for lost time and spend more or “splurge,” with 82 percent of higher-income millennials intending to spend the most. The lifting by government of restrictions and the halting of the spread of COVID-19 is the most significant trigger for UK consumer spend across all categories, with out-of-home entertainment (65 percent), travel/lodgings/vacations (62 percent) and beauty and personal care (61 percent) the most likely areas of spending.
The digital shift is here to stay
An almost unanimous 96 percent of UK consumers said that they are currently making purchases online with 92 percent intending to continue purchasing online post-COVID-19. Consumers intend to maintain their level of online purchasing in one of every two categories, with the strongest UK intent reported in vitamins, OTC medicines, published content, and apparel.
As consumers have expanded the role of digital in their lives during COVID-19, they have found several new behaviours that they expect will stick even after COVID-19 subsides. These, for example, include the download and use of restaurant and store apps, which was up 49 percent, with 52 percent intending to continue using this method. The use of digital wellness tools and online streaming is also expected to stay strong with 72 percent and 67 percent respectively involved in these digital activities.
Ongoing “investments” in the homebody economy
Consumers have made structural changes to their homes which will have a lasting effect. Thirty percent of consumers have invested in new uses of their living space at home through remodelling or setting up a specific work-from-home space. Thirty-two percent undertook house moves – including moving into a larger or smaller home, in with family or to an entirely different geography. Nine percent reported getting a new pet at home.
However, consumers are also excited to spend more time and money outside of their homes post-COVID-19: about 56 percent plan to stop or reduce their online purchasing with restaurants, followed by 52 percent reducing their online purchases of alcoholic beverages.
Brand loyalty continues to be disrupted
2020 brought a meaningful weakening to loyalty. Seventy-two percent of UK consumers have changed stores, brands, or the way they shop. And many of these behaviours are likely to stick, with 84 percent of those who tried a new brand stating they intend to remain with them. Millennial consumers are at the forefront, with 85 percent stating they have tried a new shopping behaviour during the pandemic.
Convenience and value have been the main drivers of shopping behaviour change, but they are not the only drivers having an impact on brand loyalty. Purpose-driven reasons, such as the desire to support local businesses, accounted for 28 percent of responses. Interestingly, nearly a quarter of those who stated purpose-driven reasons for their switching are GenZ shoppers, despite only being 12 percent of the overall sample.
What does this mean for retailers and brands?
While vaccinations will likely drive out-of-home activity, it’s clear that shopping online will remain a key focus for UK consumers. So how can retailers maximise their omnichannel opportunities, particularly as loyalty is vulnerable? Data-driven consumer intimacy will be key in identifying new pockets of growth, enabling market- and customer-level insights to inform decision making for activities such as targeting, media spend and operations.
Through this data-driven marketing approach, retailers and brands can communicate with consumers and shoppers with the right content, in the right vehicle, at the right time, and adjust based on consumer signals with a much faster metabolic rate than before – in an omni-channel environment, and be best positioned for success in this “next normal.”
Gizem Günday is a Partner at McKinsey & Company
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