After one year into the pandemic, consumers have entered into a new tempo of living that revolves around digital content and experience. From entertainment and social activities to shopping and even – with Peloton – exercise, the Internet has become even more central to the way we live as lockdowns, restrictions and restrictions, which vary state by state, lead people to spend more time at home.
While the pandemic continues to spread, now surpassing 300,000 daily new cases in the US, most states now have businesses remaining mostly open, though mask mandates are widespread and consumers, for the most part, are remaining cautious.
At SCS we’ve outlined several key trends and responses for marketers to be aware of as we navigate into a year which will, through vaccinations, hopefully provide us with some respite.
Stocks Fly High: Positive Economic Signals
The good news is that projections for economic recovery are positive. The stock market has hit record highs. Goldman Sachs projects 3.9% GDP growth for the US in 2021, enough to erase the losses of 2020. Further, BlackRock projects that the cumulative economic losses will “prove to be a fraction of those seen in the wake of the global financial crisis.”
Unemployment, which peaked at 14.7%, is gradually coming down as well, holding steady at just below 7%. Jeff Korzenik, Chief Investment Strategist for Fifth Third Bank, predicts that unemployment will remain higher than pre-pandemic levels for some time, with high rates particularly in the service sectors such as hospitality, food service and retail.
Despite a healthy stock market and improvements in unemployment and vaccine distribution, consumer sentiment remains rocky, with the primary driver of change appearing to be the change in administrations. While the overall average remains relatively stable, if low, Democrats and Republicans have each shifted their level of confidence, with Republicans becoming more pessimistic, and Democrats becoming more optimistic.
Zoom Zoom: Some Changes are Here to Stay
Adapting to consumer demand and competing in the increasingly digital-first economy requires extreme innovation. Internet usage has radically increased during the pandemic, and this shift is paving the way for deeper investments into digital platforms, increasing the level of competition and driving heightened consumer expectations.
Across the board there has been a dramatic spike in ecommerce, video streaming, remote working technologies, gaming usage, and more. In the case of ecommerce, increased demand has plateaued at an increase in sales volume of 63.6% YoY, according to SAP. In a recent Deloitte study, 24% of consumers declared that they would even buy their next vehicle online if available through that channel.
Usage of streaming services has also seen a dramatic increase as consumers spend more time at home, with newer entrants like Disney Plus and discovery plus providing viewers with multiple new options for quality content. News in particular is seeing a dramatic increase, with a 215% rise in digital news consumption in the US, YoY from March 2019 to 2020, according to Nielsen, while overall video content consumption has seen a 60% increase globally.
Many of these changes are here to stay. For example, while Zoom fatigue is very real and people are yearning to get back to face-to-face interaction, Bill Gates predicts that 50% of business travel will disappear, and the CEO of Southwest Airlines believes that it could take a decade for business travel to bounce back.
Two Minds: Athletes vs the COVID-19
“As soon as the lockdowns took effect, the home-fitness business took off like wildfire,” said Matt Powell, vice president and senior industry adviser for the NPD Group, as sales of health and fitness equipment more than doubled in the period from March to October 2020, soaring to $2.3 billion. In particular, sales of treadmills lifted 135% and stationary bike sales nearly tripled. Peloton was the big winner in this shift to home fitness, seeing a 232% lift in sales YoY.
This shift in behavior has caused membership at many gyms to dry up, causing the bankruptcies of Gold’s Gym, 24 Hour Fitness and Town Sports International, amongst others.
But while many have taken the gift of time presented by a lack of commute as an opportunity to hop on the treadmill, many more have taken it as an opportunity to hop on the couch.
There has been an increase in sales of comfort foods as many consumers look to familiar favorites to sooth themselves and provide their families with meals they love. According to research conducted by MU Health, 68% are snacking more, 54% are exercising less, and 54% declare that they’ve gained weight.
Sean Greenwood, a spokesman for the Ben & Jerry’s says, “Fans are leaning on communities, comforts, and something they can control – including going to their favorite brands and foods for a sense of familiarity. That’s where we fit into this ‘new normal.’”
Nesting Well: The Rise of DIY (And some DIFM)
Consumers continue to spend more time and money on arts and crafts, hobbies and more as they look for projects to complete around the home. Home renovation and auto projects are two notable areas where this has seen a lift.
In a Bank of America poll, more than 70% reported deciding to undertake a home improvement project in 2020, with even more planning on it for 2021. The lift in projects isn’t limited to inside the home, with gardens winning over the summer as they consume 40% more Miracle-Gro soils and 30% more plant food.
According to Comscore, 15.8 million planned to buy a new home in the second half of 2020, another driver of home improvement. Further, online sales of home furnishings have reached record levels, reaching $12.1 billion in Q2 of 2020 and tapering off only slightly after the peak. Of the 108 million consumers who purchased home goods online before August 2020 during the pandemic, 1 in 3 purchased an item on sale that they wouldn’t have otherwise bought.
Major renovations go beyond DIY, with projects like transforming garages into workspaces or workout studios also picking up. Home-improvement site Houzz reports a 58% increase in requests for services from summer 2019 to 2020.
The automotive aftermarket has also seen a lift, albeit a gentle one, as consumers spend more time at home on car care, delivering a 14% lift in April through June 2020 YoY.
Check out more from the report here.