Early take on COVID-19 impact on US shopper behavior
The American consumer woke up in early March with a bad headache: Heart palpating, stock market plunges, looming recessions across the globe, panic pantry loading, accelerating school closings, unpredictable travel restrictions, mayors and governors declaring States of Emergency, local communities quarantined. “What’s next?,” they wondered, “What else is about to hit the fan?”
Historians will look back on the year 2020 and draw a red circle around January through March. “How did it feel to live then?” they will wonder, scouring old Twitter feeds and replaying videos of leaders trying to mitigate fears and articulate government actions to protect the health, finances, and, most importantly, the loved ones of their constituents. “Did trust erode or flourish?” the researchers might wonder. “Did the consumers prepare or did they panic?”
GroupSolver has decided to provide future historians a real time diary of what the American consumer was feeling, thinking, planning, preparing and fearing, as they weathered these unchartered times. We have collected responses from 500+ US consumers on consumer sentiment toward the COVID–19. These were over 500 primary decision makers, who were responsible for their household grocery shopping. The survey was conducted between 5PM PT on March 10th and 5PM PT on March 11th. This is the first in the series of pulse surveys we will be fielding to the American consumer in the coming weeks, and we intend to provide weekly updates.
Pulse check on March 11, 2020: Elevated, irregular.
Broadly, consumers are taking precautions to avoid the disease, but still overwhelmingly fear COVID-19. This has manifested into changing purchasing behavior, with close to a quarter of consumers saying they have changed their purchasing behavior this week. The primary changes include stocking up on basic household items, as consumers fear shortages of supply. Their pantry loading purchases are less reflective of fears regarding going to the store in the coming weeks, and more indicative of a lack of trust in suppliers’ abilities to ensure a steady supply of goods.
One surprising mystery is the sudden desire to stock up on bottled water. There is currently no evidence of water being contaminated by the virus, and yet consumers are buying bottled water at rates similar to pre-hurricane levels. Of those consumers pantry loading, we see 55% are stocking up on bottled water. When we asked why people purchased extra water bottles, the main topics revolved around a need to stock up because of possible quarantine and to build a reserve because of expected shortages. Two statements made by respondents typify these two consumer sentiments: “just in case we couldn’t go out” was mentioned by 87% of respondents and “so I would have extra reserve” was mentioned by 83% of consumers.
In terms of impact on consumer shopping behaviors, the COVID-19 impact is like the unpredictable shocks caused by hurricanes — changing where and how people shop. Of those who diverted from their typical buying habits in the last few weeks, about a third of consumers shopped at multiple different stores to make sure they had the items they needed and some went to a different store than they usually shop. Manyof these people also purchased a new brand. Consumers indicated likelihood of trading brands of disinfecting products and toilet paper was the highest among categories. This may pose a challenge to leaders in staple categories, as usual brand loyalty might not translate in times of heavy pantry loading. Brand switching appears to be primarily a result of retailer out of stock situations. For manufacturers, managing out of stocks is particularly important during times of limited supply and panic pantry loading, as loyal consumers may be more willing to try new brands.
Exogenous events, like the COVID-19, drive channel diversification. Data from this pulse survey is not conclusive, but it suggests that consumers who reported changing channel behavior, most often migrated to Online and Club. Disruptive market and societal events have the capacity to shift channel demand. The question we will explore in future pulse surveys, is “is that shift sustainable?”
On average, on a scale from 1 (not concerned at all) to 10 (extremely concerned) consumers rated their concern over the COVID-19 as modest 6.2 out of 10. Most consumers are concerned about the well-being of their parents, themselves and their children. This is reflective of the paradox of middle-aged parents, strapped between college-bound children and aging parents, and rightfully, “what about me?” Along this idea, our study found that those late 40s-late 50s had the highest level on concern over the virus, alongside those 60+.
As expected, age does make a difference in how consumers worry about the virus. Older people are more likely to worry about the spread of the virus, while younger people tend to worry more about the panic and the public response to the threat. Since older people face graver prognosis in case of contagion, this skew of data is intuitive.
What is driving consumer fear? The three most mentioned fears were about the illness itself. Secondarily, there were worries about people — particularly the elderly — and lastly the general spread of the virus. Interestingly, while worries about economic hardship appeared prominently, less than 50% of consumers agreed that this was a critical fear. Now, while the spread of COVID-19 is on the rise and a lot of information is missing, respondents’ minds are on immediate danger and less so on long-term consequences. We will keep an eye on how that may shift as consumers settle into new situation.
Political polarization is a fundamental character of American society today. We cannot ask a consumer survey question without wanting to know how the respondent’s political leaning might have influenced their response. It seems political bifurcation exists regarding the COVID-19 sentiment as well.
There are clear, diverging levels of concern between those who identify with the Democratic party versus the Republican party. We saw support statements such as “Flu has killed more people than this virus” or “I think it’s terrible how things are being hyped in the media” supported more often by Republicans vs. Democrats. On the other hand, responses citing fear such as “Quick spreading and very contagious”, “Scary”, or “Fear for seniors with multiple deaths” are more likely to be agreed with by Democrats. But all respondents, regardless of political affiliation, age or gender agree that washing hands and needing to use common sense are some of the first things to mind when it comes to COVID-19.
These differences in sentiment may be due, in part, to the level of concern conveyed by primary news outlets. Our study compared news outlet preference with the agreement of excessive coverage of the virus. Fox News viewers were most in agreement with media over-exaggeration of COVID-19 and MSNBC viewers felt the COVID-19 was not over-exaggerated. However, this difference may be due also in part to the media preference by geography, as some are more or less susceptible to the virus due to the difference in the level of congestion in urban versus cities and rural areas.
Overall, we see that American consumers are proactively taking precautions to prevent the spread of the virus, so that the well-being of one’s parents, children and self are not adversely impacted. While anxiety is high due to the unknown repercussions of the virus, consumers believe that awareness, common sense, and conscious hygiene practices will help ameliorate the impact of the virus. But what could be the implications of this ongoing consumer behavior shift for retailers and manufacturers? We asked Carrie Shea, who is the Managing Partner at IRI Growth Consulting. “Though a subset of consumers have begun to shift their purchasing habits, the long term sustainability of these adjustments is unknown. Observed pantry-loading and channel shifting to Club and Online retailers may be exclusively a symptom of the precautionary behavior, rather than an enduring behavioral shift.”
Whether new behaviors will stick is a question for the future. Our subsequent pulse surveys will allow us to understand how these sentiment changes fluctuate as the pandemic continues to evolve. We will keep you posted
Rasto Ivanic, CEO, GroupSolver
Please note: we are a bi-partisan team with no other goal than providing an objective, real-time tracking of consumer sentiment, during a time of unprecedented risk, change, and uncertainty. Because we work with many CPG and retail clients, our results will tend to skew to covering behaviors and attitudes related to purchasing and usage of consumer driven categories.
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