Managing Director & Senior Partner
Accelerating change. With analog interactions sharply limited by COVID-19, the world is going digital, accelerating an existing trend. Digital increasingly offers consumers a way to connect with other people, purchase essential items, and distract themselves from the monotony of stay-at-home life under lockdown. Yet despite the growing use of digital to improve life at home, consumer sentiment around the world remains persistently downbeat.
In this special feature, we explore sentiment in several key countries in Asia-Pacific—and the spending changes that this sentiment is influencing—as well as the shifts in digital and brand behavior that we are seeing as a result of COVID-19.
Consumer sentiment in the countries BCG has surveyed in Asia-Pacific and around the world continues to be fairly somber, despite some encouraging signs in China. Most consumers in the countries we’ve been tracking believe that a recession due to COVID-19 is likely. And in the countries we are focusing on in Asia-Pacific this week—Australia, Japan, and India—substantial majorities of consumers say that they have changed their daily life (73% to 85%) and are trying to avoid public spaces (82% to 87%) in response to the disease. (See Exhibit 1.) The exception across all of the markets featured this week involves consumers in China, where recovery from the pandemic has already begun.
Consumers in Australia, Japan, and India remain far more concerned about the virus than consumers in other countries. In our research, 77% of Australians, 88% of Japanese, and 83% of Indians agree that the world is in serious danger as a result of the coronavirus, versus 51% to 62% of consumers in other countries. There are several possible explanations for this disparity in attitude. One is that because the pandemic reached Australia, India, and Japan relatively late, people in those countries had time to witness its impact on other countries, leading to greater alarm about how the disease would affect them. It may also be relevant that these countries’ governments have emphasized the significance and potential length of the disruption to normal daily life that COVID-19 is likely to bring. In India, for example, the government has enforced a very strict lock down, with many activities prohibited, including the use of buses and air travel.
Japan, the last country to enter (soft) lockdown among the countries we researched, is also the only one where a large majority of consumers believe that the worst of the coronavirus is not yet over: 82% of Japanese hold this opinion versus 65% or less in other countries. At the other end of the spectrum, consumers in China account for the lowest percentage of respondents who hold this pessimistic view (26%), seemingly a consequence of the recovery that has already begun there. Even though the Japanese government did not establish penalties for failure to observe coronavirus mitigation guidelines, we see significant changes in consumer behavior in Japan—changes similar to those that have occurred in countries whose governments did impose restrictions and penalties. (See Exhibit 2.) This voluntary modification of social behavior probably reflects Japanese consumers’ heightened concern about the future impact of the virus.
In looking at how COVID-19 has been affecting spending patterns, we see a fairly high level of consistency across developed-market countries as to the categories in which consumers are spending more or spending less. (See Exhibit 3.) Consumers are spending more on in-home entertainment, fresh foods, packaged foods, preventive health care, household care products, utilities, and restaurant pickup and delivery—and they are saving more, too. Consumers are spending less in discretionary categories such as travel, luxury/fashion, home décor, and automotive, as well as in categories constrained by government restrictions, such as out-of-home entertainment and dine-in restaurants. As for the situation in emerging markets, in India we see the majority of consumers changing their spending in similar categories—but many more people making spending changes overall.
Across the Asia-Pacific countries in our survey group, we see an acceleration in digital adoption. In Japan, where the reach of e-commerce is particularly low, consumers are increasing their online purchasing in a number of categories, including clothing, luxury, supplements, cosmetics, and personal care. (See Exhibit 4.)
We also see significant growth in Japan across age groups in online purchases of food delivery. (See Exhibit 5.) Increases in other areas of online shopping are prevalent as well, but those increases tend to be concentrated among members of the younger Gen Z and millennial generations.
In Australia, COVID-19 is accelerating adoption of e-commerce overall and, in particular, among people 52 years old or older—the cohort we identify as “baby boomers+.” (See Exhibit 6.)
We also see consumers buying online in an expanding number of categories, with one in five Australians having bought a product or service online in at least one new (to them) category in the four weeks ending on April 24, 2020. Considerable diversity is evident in the categories that Australians are buying digitally for the first time, with both essential and nonessential categories appearing in the top 12 “first-ever digitally purchased” category list. (See Exhibit 7.)
In India, consumers are significantly increasing their digital adoption across media, product purchases, and digital payments. (See Exhibit 8.)
We anticipate that this digital behavior and the emergence of a preference for digital and noncash payments will continue in India as the country moves out of its COVID-19 lockdown period. (See Exhibit 9.)
In Australia, we have seen the trustworthiness scores of health service providers, supermarkets, and the government improve, probably as a result of their welcome actions in support of consumers during this difficult time—introducing such measures as drive-through testing facilities, telehealth services, and pickup and delivery services for older customers at supermarkets—and their proactive messaging about those actions. (See Exhibit 10.)
We have also seen indications that patriotism is increasing significantly in Australia, as consumers express more interest in purchasing Australian brands despite those products’ often higher prices, perhaps motivated by a stronger inclination to support businesses that may be negatively impacted close to home. (See Exhibit 11.) As we continue to explore the impact of COVID-19 on consumer sentiment, it will be interesting to see whether this form of patriotism prevails in other countries as well.
Like the SARS epidemic, the COVID-19 pandemic has accelerated the use of digital and e-commerce options across the Asia-Pacific set of countries we are tracking, opening up new opportunities for companies to engage with consumers and grow. The situation may also create branding opportunities to build brand trust during the difficult days of COVID-19 through actions perceived as supporting or activating growth in local brands, in light of a potential surge in patriotism. Although COVID-19 continues to exert a significant drag on many businesses’ bottom lines, the prospect of opportunity out of adversity is very real. The challenge is to activate it.
Our next regular weekly Snapshot will look at the many leading data indicators (including but not limited to consumer sentiment) that companies need to track in order to assess the shape, size, and velocity of the recovery—a go-forward Demand Lighthouse.
BCG’s COVID-19 Consumer Sentiment Snapshot series is based on data drawn from an online survey of consumers that is conducted every one to two weeks across multiple countries worldwide. Each Snapshot highlights a selection of insights from a comprehensive ongoing study that BCG provides to clients. The survey is produced by the authors, who are members of BCG’s Center for Customer Insight (CCI), in partnership with coding and sampling provider Dynata, the world’s largest first-party data and insights platform. The goal of the research is to provide our clients and businesses around the world with periodic barometer readings of COVID-19-related consumer sentiment and actual and anticipated consumer behavior and spending to inform critical crisis triage activities, as well as rebound planning and decision making. The research does not prompt consumers about the virus when asking many of the key questions, including questions about spending changes in the next six months, in order to avoid biasing the results. A team composed of BCG consultants and experts from CCI completes the survey analytics.
We would like to thank our key contributors for this article:
We appreciate the generous support that the following people have provided in producing COVID-19 research and the associated article series:
We also thank BCG’s Center for Customer Insight (CCI) team globally, Scott Wallace, and Dynata.
Boston Consulting Group’s Center for Customer Insight (CCI) applies a unique, integrated approach that combines quantitative and qualitative consumer research with a deep understanding of business strategy and competitive dynamics. The center works closely with BCG’s various practices to translate its insights into actionable strategies that lead to tangible economic impact for our clients. In the course of its work, the center has amassed a rich set of proprietary data on consumers from around the world, in both emerging and developed markets. The CCI is sponsored by BCG’s Marketing, Sales & Pricing practice and Global Advantage practice. For more information, please visit Center for Customer Insight.
Dynata is the world’s largest first-party data and insights platform. With a reach that encompasses 62 million consumers and business professionals globally, and an extensive library of individual profile attributes collected through surveys, Dynata is the cornerstone for precise, trustworthy quality data. The company has built innovative data services and solutions around its robust first-party data offering to bring the voice of the customer to the entire marketing continuum—from strategy, innovation, and branding to advertising, measurement, and optimization. Dynata serves nearly 6,000 market research, media and advertising agencies, publishers, consulting and investment firms and corporate customers in North America, South America, Europe, and Asia-Pacific. Learn more at www.dynata.com.