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Consumer sentiment evolves as the next “normal” approaches

While countries around the world begin to reopen and pockets of spending return, consumers continue to feel the financial impact of the crisis.

As the COVID-19 crisis continues, optimism is largely holding steady globally, with some small fluctuations as the weeks progress. Consumers increasingly expect a lengthy impact to their routines and finances, and most report a reduction in income over the past two weeks.

Overall spending intent is down across two-thirds of countries surveyed, but more categories are showing positive trends. While spending on staples and stay-at-home entertainment has always been elevated, spending on other categories such as food takeout and delivery, snacks, personal care, skin care, non-food baby products, fitness and wellness, and gasoline is slowly picking up in regions that are emerging from the crisis.

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Consumers continue to spend significant time on home-based activities. To work around restrictions, consumers have adopted digital and low-touch solutions like videoconferencing, curbside pickup for groceries, and telemedicine. Looking ahead to the next “normal,” around 40 to 60 percent of surveyed consumers who adopted these new products and services intend to continue.

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Our global survey series across 41 countries continues to track consumer sentiment through the crisis (see sidebar). The following exhibits focus on a subset of 12 core countries, selected because of their economic significance and the impact that COVID-19 has had on their populations.

1. Consumer sentiment

Optimism

Optimism is more or less steady across the world as regions begin to reopen.

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European consumers were the least optimistic about the prospects of their country’s economic recovery at the beginning of the crisis, consistent with these countries’ lower consumer sentiment measures before COVID-19. Optimism has remained low in recent weeks. Even Germany’s optimism—while higher than that of its European neighbors—has fallen slightly since late March. Optimism in other European countries, including Spain and Italy, ticked up slightly in the last survey.

Optimism in Asian countries has held steady, with China and India remaining consistently more optimistic than the rest of the world and Korean and Japanese optimism remaining at low levels.

Although US consumers were more optimistic in the middle of March, optimism has continued to drop and is now 6 percentage points below its level in mid-April, despite the reopening of some parts of the country.

Expectations of duration of personal impact

Consumers expect a longer-lasting impact to their routines and finances as the COVID-19 crisis continues.

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More than 90 percent of consumers across countries surveyed expect COVID-19 to impact their personal routines for more than two months. In many hard-hit European countries as well as Japan, more than 70 percent of consumers believe that the impact will last four months or longer. By contrast, in Brazil, India and China, there is a slightly lower expectation for extended impact on personal routines, though these expectations have grown since mid-April.

Some consumers expect their finances to recover more quickly, most notably in Germany, where around 45 percent expect financial recovery will take less than two months.

2. Consumer impact during COVID-19

Consumer income

Consumers globally continue to experience a decrease in income.

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The depth of income loss among countries varies notably. Consumers’ income has been steadier in Japan and Germany, with around 30 percent experiencing a decrease in income, and more depressed in Brazil, South Africa, and India, where around 70 percent have experienced a decrease. Even in China, where consumers are beginning to go back to work, 57 percent of consumers have experienced decreased income in the last two weeks.

Spending intent

Countries with greater optimism tend to have higher spending expectations.

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Several countries with higher levels of optimism, including Indonesia, Nigeria, China, and Saudi Arabia, show a net increase in expected future spending. Many other countries, including several in South and Central America and Europe, have slightly lower optimism but still have more consumers who expect to increase spending. Most remaining countries have low optimism and expect to decrease spending, with Canada and Mexico exhibiting relatively low optimism and substantially negative net spending intent. In contrast, United Arab Emirates, India, and Peru are relatively more optimistic but still have slightly more consumers who intend to decrease spending than increase spending.

Category spending

Intent to spend more on essentials continues across countries, while spending is starting to pick up across select categories as countries loosen restrictions.

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Across countries, intent to spend more on groceries and home entertainment remains high, with consumers across several countries intending to spend more on stay-at-home necessities as well as personal-care items.

Consumers across a few countries also intend to spend more on categories such as snacks, food takeout and delivery, and non-food children’s products. In China, as consumers return to work, more categories are trending up, including spending on gasoline.

Online shopping

Asian and American consumers intend to increase their online shopping across most categories in the near future.

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The United States, Brazil, India, Japan, Korea, and China all show positive intent to increase online shopping frequency across several categories in the next two weeks, including on groceries, food takeout and delivery, household supplies, personal care, non-food child products, and books/magazines/newspapers. With most countries still under stay-at-home orders, consumers expect to shop more online for entertainment; in contrast, as China reopens, Chinese citizens expect to spend less on that category. Intent to shop online for groceries is notably high in India, Korea, and China, especially given more favorable opening conditions in Korea and China.

How time is spent

Consumers in countries still under stay-at-home restrictions plan to spend more time on domestic activities, while Chinese consumers are shifting their time away from leisure activities and toward working.

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Most consumers in restricted geographies around the world expect to spend less time working and more time consuming entertainment, including digital and video content, news, and social media. Consumers expect to spend more time on domestic tasks, including cooking and home improvement. A notable exception is China: consumers there are increasingly spending more time on work, meditation, learning, and exercise and less time consuming media and entertainment.

Activity adoption and growth

Adoption of digital and low-touch activities continues as consumers utilize workarounds while under lockdown.

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Consumers have taken up new ways to learn, work, entertain themselves, procure essentials and non-essentials, connect with others, and increase wellness while at home.

Usage of online streaming and personal video chats has increased rapidly across most countries. Online fitness, including the use of wellness apps, has grown in almost all countries, with online fitness attracting new users across Brazil, Spain, and Italy.

Consumers have also expanded their usage of low-touch options for procuring food and goods. Curbside pickup for both restaurants and stores has continued to attract new users across the US, South Africa, Europe, and Korea. Buying online for pickup in-store has grown in South Africa and Europe.

Consumers globally have replaced some of the in-person aspects of their work and healthcare with digital solutions. Videoconferencing for work has attracted new users in Brazil, Europe, and Asia. Similarly, telemedicine for both physical and mental health has grown across countries, driven by new users adopting the technology.

3. Future outlook

Intent to continue in-person and digital and low-touch activities

Looking ahead to the next “normal,” consumers are hesitant to resume in-person activities, but they expect to continue some of the digital and low-touch solutions they have adopted during COVID-19.

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Consumers remain hesitant to return to some of the in-person activities that were part of their daily lives before the start of the pandemic. Across countries, net intent to visit the mall is negative, and only in Germany and Japan do more consumers expect to increase in-store shopping compared to before the pandemic. Consumers in the US, Germany, Spain, Italy, and Japan intend to do more grocery shopping in person, while those in France, the UK, and India intend to do less. Consumers in all countries except Germany and France plan to reduce their domestic travel once COVID-19 has passed.

However, consumers intend to continue some of the digital and low-touch activities they have adopted during the pandemic. Outdoor and fitness activities, remote learning for oneself, and digital entertainment exhibit relatively strong intent to continue across countries. In contrast, consumers show a lower intent to continue replacements for critical in-person activities like shopping in stores, eating at restaurants, or schooling children. While telemedicine has seen strong growth across countries, intent to continue is lower as well.

We will be tracking consumer sentiment to gauge how people’s expectations, perceptions, and behaviors change throughout the crisis. In addition to the exhibits embedded here, please see our country-level survey data, which will be regularly updated.

Or click directly to see one of these countries in our survey: Argentina, Australia, Belgium, Brazil, Canada, Central America & the Caribbean, Chile, China, Colombia, Denmark, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, the Netherlands, Nigeria, Peru, Poland, Portugal, Saudi Arabia, South Africa, Spain, Sweden, Switzerland, Turkey, United Arab Emirates, the United Kingdom, or the United States.

About the author(s)

Shruti Bhargava is a senior expert in McKinsey’s Philadelphia office; Courtney Buzzell and Christina Sexauer are specialists in the Waltham office; Tamara Charm is a senior expert in the Boston office; Resil Das is a specialist in the Gurugram office; Cayley Heller and Michelle Fradin are consultants in the New York office; Anne Grimmelt is a senior expert in the Stamford office; Janine Mandel is a consultant in the Denver office; Kelsey Robinson is a partner in McKinsey’s San Francisco office, where Abhay Jain, Sebastian Pflumm, and Anvay Tewari are consultants; and Christa Seid is a consultant in the Seattle office.

The authors wish to thank John-Michael Maas for his contributions to this article.