Managing Director & Senior Partner
At home—yesterday, today, tomorrow, next week. All of us face a similar monotony of stay-at-home life, but how we experience it as consumers differs. Our different personal, regional, and financial contexts impact our sentiment and spending behavior. For members of Generation X, sheltering in place may entail living in a household chaotically disrupted by restless young children. For millennials, it may unfold as a time of isolation from favorite group activities and interactions that help make them whole. And for Gen Z, it may be a time of apprehension about future prospects and financial security. As we explore consumer sentiment and category spending in relation to COVID-19, we see many differences across age groups, but also many similarities and opportunities for companies to engage with consumers in key categories.
Across markets, younger generations—including Generation Z and millennials—express less optimism and more worry than more mature generations. The younger generations are also far more social overall, with a stronger interest in spending time in groups, so the current limitations on interpersonal interactions and group gatherings in most countries may be contributing to their darker views during this period of the COVID-19 crisis. We do see some exceptions to this pattern in emerging markets such as China and Brazil, where older generations (Gen X and 56+) have a strong affinity for spending time in groups, and in China, where people in the 56+ age group express a relatively high level of worry. (See Exhibit 1.)
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In thinking about the virus, cohorts below 56 years of age generally worry more about the impact of the virus on their personal finances, as many are still building wealth. (See Exhibit 2.) One exception is Generation Z in Germany, France, and Italy, whose members remain worried about their finances but are more confident that they have sufficient savings to weather the COVID-19 crisis. This may well be related to the fact that young people in these countries take on limited or no financial debt for a college education.
In developed markets, these differences in sentiment between younger and older generations seem to be creating a divide in planned spending, with older generations more likely to say that they plan to maintain their current level of spending and younger generations more prone to anticipate making changes in their spending. (See Exhibit 3.) This phenomenon does not appear in emerging markets such as Indonesia, China, and Brazil.
In developed markets, the younger generations—Gen Z and millennials—are planning to make a much greater number of spending tradeoffs across many more categories than the older generations are. Meanwhile, older generations are more likely to maintain their spending, given that they have accumulated more wealth on average to use in weathering a crisis and already tend to spend more on average in some essential categories than younger generations do. (See Exhibit 4.)
When we look at where Gen Z and millennials plan to shift their spending, the winners tend to fall into essential, entertainment, and discretionary categories. Those younger generations appear to be focused on increasing their buying of necessities that they might not normally stock up on, as well as on finding new ways to pass the time at home, with incremental spending in areas ranging from leisure activities (entertainment, games, and mobile electronics) to more indulgent purchases (home décor, alcohol, and clothing). (See Exhibit 5.) Although Gen X and older generations are shifting their spending far less, we see them increasing their investment in certain types of essentials and entertainment as well.
Once the virus is under control, most people in the developed markets, regardless of age, expect their spending to be the same as or higher than it was before the pandemic struck. However, mature generations (Gen X and 56+) are more likely to plan on reverting to their previous spending levels—or moving to higher spending levels—right away. Among those who expect to spend less in the immediate post-virus period, younger generations anticipate reaching that lower level of “new normal” spending more quickly than do older generations, who may be concerned about the impact of a recession on their finances and passive income, if they are living in retirement. (See Exhibit 6.)
The mature generations’ anticipation of a faster spending recovery plays out in China’s initial rebound as well. In China, older consumers (56+) are planning more net spending increases across more categories than younger generations are. (See Exhibit 7.)
When we look at category spending in developed economies and compare data on online social listening sentiment with data on planned future spending, we see that negative net social sentiment prevails in almost half of all categories—including several categories in which consumers plan to increase their spending (a combination that yields “implicit winners”). (See Exhibit 8.) Relatively few categories— mostly ones related to health and financial responsibilities—have drawn both increased spending and neutral to positive chatter (a combination that produces “explicit winners”). For both implicit winners and explicit winners, we see the current stage of the pandemic crisis as a time for companies to develop plans to capitalize on the incremental spending and engagement they are garnering with consumers in order to retain some of the favorable spending and consumer behavior in the post-COVID-19 that they are winning now. In the case of implicit winners, achieving this goal will call for some extra effort aimed at shifting the conversation to a more neutral or (better yet) positive tone.
Many of the categories marked by neutral or positive conversations but lower planned spending may be building pent-up demand during this period. Consequently, developing plans to engage consumers now and to activate that demand as soon as possible could pay dividends later. The categories with lower planned spending and negative conversations (which we characterize as “vulnerable”) are the ones that will require the most comprehensive and thoughtful plan to endure this potentially protracted period of demand softness and eventually rebuild consumer engagement and trust. Among the categories that qualify as vulnerable are travel, public transportation, and out-of-home entertainment and eating.
Looking at net social sentiment in Italy—a country that is several weeks ahead of many others in the pandemic’s progression and in the timing of stay-at-home orders related to COVID-19, we see positive net social sentiment building. In fact, the number of positively discussed categories has nearly doubled from the week of February 20 to the week of March 21, indicating that consumer confidence can improve fairly quickly as countries move into later stages of the epidemic curve. (See Exhibit 9.)
Although near-term sentiment remains bleak in many other parts of the world, consumers’ longer-term outlook is not universally gloomy—at least not yet. For example, in emerging markets, many consumers say that they believe the economy will improve within the next 12 months, despite widespread fear of COVID-19 and despite the need to adjust to sometimes-severe limitations on daily life during the crisis period. (See Exhibit 10.)
Our next Snapshot will dive more deeply into the latest differences in consumer sentiment and spending behaviors in key categories across developed markets, exploring possible changes that might signal to consumers that the COVID-19 tide is turning—and give them the reassurance they need to spend again.
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 country contributors for this article:
We appreciate the generous support provided by the following people in producing this research and 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.
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