Four consumer behaviour trends emerge during the COVID-19 pandemic, the first EY Future Consumer Index finds
- Survey tracks global consumer behaviour and sentiment as a result of COVID-19
- Areas tracked include spending habits, attitudes toward COVID-19, data privacy and consumer trust
- 42% of consumers believe the way they shop will fundamentally change
Dublin 25th May 2020. The COVID-19 crisis is being defined by four distinct consumer behaviour segments, according to the first edition of the EY Future Consumer Index. These are “Cut deep,” “Stay calm, carry on,” “Save and stockpile” and “Hibernate and spend”.
Consumers that fall into the “Cut deep” segment (27.3%) are spending less across all expense categories as the pandemic impacts employment; others representing the “Stay calm, carry on” category are continuing to spend as normal (26.2%). Most consumers (35.1%) represent the “Save and stockpile” segment, indicating that they feel pessimistic about the future, while consumers that fall into the “Hibernate and spend” segment (11.4%) are spending more across the board.
Overall, 42% of respondents believe that the way they shop will fundamentally change as a result of the COVID-19 outbreak. When it comes to brands and products, 34% of consumers indicate that they would pay more for local products, 25% for trusted brands and 23% for ethical products.
The four segments reflect how consumer behavior can relate to age groups, family or employment status:
- Cut deep: These consumers are mainly more than 45 years old and have seen the biggest impact on their employment status. Almost a quarter have seen their jobs suspended, either temporarily or permanently. Seventy-eight percent of them are shopping less frequently, while 64% are only buying essentials. Thirty-three percent feel that brands are far less important to them in the current climate.
- Stay calm, carry on: These consumers do not feel directly impacted by the pandemic and are not changing their spending habits. Just 21% of them are spending more on groceries, compared with 18% that are spending less.
- Save and stockpile: This segment shows particular concern for their families and the long-term outlook. More than a third (36%) are now spending more on groceries, while most are spending less on clothing (72%) and leisure (85%).
- Hibernate and spend: Primarily aged 18-44, these consumers are most concerned about the impact of the pandemic. However, only 40% of this segment say they are shopping less frequently. And while 42% say the products they buy have changed significantly, 46% of them say brands are now more important to them.
According to Yvonne Kiely, Head of EY-Seren Ireland: “What we’re seeing at the moment in Ireland is really a tale of two groups of Irish consumers; those that can’t or won’t spend as they wait to see how this pandemic unfolds socially and economically, and those that are using any available outlet to spend – using online shopping, local shops, and social media to have their ‘shopping fix’ met.”
“From the point of view of consumer behaviour, we expect a long-term shift of perspective in people who are 45 years or older, who are in the “Cut Deep” segment. These consumers have had maybe 8 years of income improvement since the last recession, but they remember the experience of having no access to funds and being really challenged to cover the basics like paying the bills and putting food on the table for themselves and their families. With that in mind, it’s understandable that this group are being ultra-cautious in their spending and will continue to be so for years to come.
“We are likely to see an increase in people ‘buying local’ and even more interest in transparency around the farm-to-fork and maker-to-model journey of our goods. The whole value ecosystem around packaging efficiency, the validity of brands, and the ease of accessing, assessing and buying goods and services will also be under scrutiny.”
Five new segments may emerge as consumers move beyond the pandemic
The four segments identified could morph into five very different ones as the crisis abates. For example, the Index currently suggests that over time, most consumers in the “Save and stockpile” segment will migrate to two new segments: “Remain frugal” and “Cautiously extravagant.” These new consumer segments, detailed in the Index, could emerge post-COVID-19 and be summarized as: “Keep cutting” (13.1%), “Stay frugal” (21.7%), “Get to normal” (31.4%), “Cautiously extravagant” (24.7%) and “Back with a bang” (9.1%).
Consumer attitudes to privacy and purpose are changing
Over the last two years, EY teams have been modelling future scenarios as part of the FutureConsumer.Now program. One of these scenarios was based on the impact of a hypothetical global pandemic and indicated that consumers could adopt more open attitudes to privacy and sharing personal data. Indeed, the EY Future Consumer Index finds that 54% of consumers would make their personal data more available if it helped to monitor and track an infection cluster.
The Index also finds that health care providers are regarded as the most authoritative organization, with 47% of consumers indicating that they trust them completely, compared to governments (28%), brands (17%) and
Over the coming months, the EY Future Consumer Index will provide regular longitudinal indicators and perspectives on which changes are likely to be temporary reactions to the COVID-19 crisis, and which point to more fundamental shifts. More countries will be included as the analysis continues.
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About the EY Future Consumer Index
The EY Future Consumer Index tracks changing consumer sentiment and behaviours across time horizons and global markets, identifying the new consumer segments that are emerging. It provides regular longitudinal indicators and a unique perspective on which changes are temporary reactions to the COVID-19 crisis, which point to more fundamental shifts, and what the consumer post COVID-19 might be like. More countries will be included as the analysis continues.
Read more at www.ey.com.
