Countless numbers of clothing retailers are attempting to appeal to consumers with a work-from-home focus through email campaigns that offer discounts on t-shirts, sweatpants, slippers, and other types of comfy clothes. Still, consumers for now are hoarding cash, but the findings from one report suggest that could soon change.
On Feb. 8, 2020 I published an article titled “Is The Coronavirus Making Advertising Sick?” after I recognized the impact the virus would have on material supply chains, and in turn, the advertising industry.
Now I’m going to make another prediction and put myself in the category of the 44% of U.S. consumers who are optimistic that the economy will rebound within two to three months following a turnaround from the increase in virus reports. The economy will grow just as strong, or stronger, than before the COVID-19 outbreak.
Findings from the McKinsey & Company study released this past weekend reveal that 42% believe the U.S. will be impacted for between six and 12 months, and will stagnate or show slow growth following the turnaround. It really will depend on the agility of companies to kick production into high gear as demand returns. Only 14% who participated in the study are pessimistic that COVID-19 will have a long-lasting impact.
McKinsey & Company conducted the COVID-19 U.S. Consumer Plus Survey between March 16 and March 17. About 59% of the surveyed 1,042 consumers 18 years and older said that given the current state of the economy and personal finances,they need to be careful how they spend their money, at least within the next few weeks.
Some 48% said they will cut back on spending, while 38% said the uncertain economy is preventing them from making purchases or investments they would otherwise make, 31% said their ability to work has been reduced, 31% also said the ability to make financially ends meet has been negatively impacted, 30% said their income has been negatively impacted, 22% said they are personally affected by COVID-19.
Nearly one-third of U.S. consumers have reported a reduction in household income in the past two weeks, while 60% have remained the same and 8% have seen an increase. In the next two weeks, 39% say they expect to see a reduction, while 52% think they will remain the same and 9% think they will see an increase.
There are some positive trends related to home essentials and entertainment such as cleaning supplies, diapers, groceries, personal hygiene and snacks.
Among U.S. consumers, 14% expect to spend more on groceries in the next two weeks, compared with what they typically spend. Other items that consumers expect to spend more on include non-food child products, at 4%, household supplies, at 1%, and entertainment at home, at 3%.
The most impactful appear to be the 63% who said they will spend less on out-of-home entertainment, 55% who cited accessories; 53%, jewelry; 50%, apparel; 49%, personal care services, and 44%, furnishings and appliances.
The least affected categories to see a decline include snacks at 7%, books, magazines and newspapers at 10%, and personal care products at 11%.
Behavior is changing with 43% more people saying they have increased their consumption of live news, 42% who have increased movies or shows; 40%, reading news online; 38%, TV; texting, chatting, messaging, 34%; video content, 33%; social media, 33%; reading for personal interest, 27%; online groceries, 23%; reading print news, 13%; and working, 11%.
The key is agility. That will be up to your agency, business, and manufacturing capabilities.