Managing Director & Senior Partner
The other side. Despite serious social unrest in some parts of the world and uneasiness almost everywhere, we are as a global community beginning to slowly cross over to the other side of the pandemic. And the question is not only what the crossing will look like—how many bumps in the road or double-backs we might have to endure and how long the journey will last—but also what it will all look like when we reach the other side. Even in China, where new reported cases have been near zero since mid-March and recovery has been underway, 62% of consumers say that their daily lives remain very different than they were before COVID-19, and 37% expect to spend less in the next month than they did before the pandemic struck. (See Exhibit 1.)
We see the changes in our own daily lives. During lockdowns, consumers replaced restricted activities with increased digital engagement, at-home activities, and health and sanitation practices. (See Exhibit 2.)
But what about next week, next month, next year, or three years from now? Determining which behaviors will fade once the pandemic abates and which will persist even after the crisis has faded into memory is a critical task for many companies trying to assess how to best win demand—and to assess the trajectory, shape, and texture of that demand.
As we detailed in Snapshot #8, consumers are notoriously bad at predicting what they will do in the future. It isn’t that they are being intentionally untruthful; it’s that they have a hard time putting themselves in a future situation, fully imagining the new context and how they will feel in it, and then evaluating the tradeoffs they may be forced to make in determining their actual behavior.
For this reason, we find it valuable to assess consumer intentions through a series of perspectives that we call the New Normal Predictors (NNPs), in order to determine what consumers are likely to actually do going forward. (See Exhibit 3.)
The BCG NNPs consider five critical parameters: past behavior in analogous situations; quality of intent; psychology of habits; context; and sentiment. (See “What Are the BCG New Normal Predictors (NNPs)?”)
The five criteria that the New Normal Predictors use to assess probable future consumer behavior are past behavior, quality of intent, passive habits, context, and sentiment.
Past Behavior. The best predictor of future behavior is past behavior, so it is important to look at what consumers have done in prior crises. In particular, we need to examine which behaviors and sentiments adopted by consumers during those crises later reverted to the norm, which changes have been longer lasting, and how closely those changes parallel the ones we have seen in the current COVID-19 crisis.
Consumer psychology and evidence from past crises establish that consumers are resilient; and once the most acute crisis events have subsided, the majority of consumers tend to let go of some of their “emergency” practices and revert to certain precrisis behaviors. Typically, only some portion of “hard rejectors”—consumers who say that they would never consider going back to an activity—are unlikely to return to the norm over time. We call consumers’ tendency to revert to certain normative behaviors BCG’s Crisis Reversion Principle.
Quality of Intent. Another crucial variable is the quality of consumers’ intent to return to an activity they have forgone during lockdown or to continue an activity that they may have pursued more or for the first time during lockdown. It is important to assess this intent in two relevant contexts: how much enjoyment consumers felt from doing the activity, and how much ability (in terms of time and resources) they have to pursue the activity in the future. Consider the common New Year’s resolution to go to the gym. Many consumers start the new year with a firm plan to go to the gym regularly, but we find that two factors differentiate those who maintain the activity over the long term from those who do not: the level of enjoyment they have when exercising, and the time and resources they feel that they have available to continue exercising relative to other priorities and obligations.
Passive Habits. Many books focus on psychological inertia—the tendency to maintain the status quo—and the psychology of habits, some of which are formed intentionally and others less consciously. A key insight in these analyses is that, once formed, habits are difficult to break. In light of that reality, it is important to determine whether an activity that many consumers have adopted during a crisis has become a true habit or merely a temporary expedient.
Context. Context may involve macro-level factors, such as government restrictions, or micro-level factors, such as a person’s community or social circle. Both types of context can influence consumer behavior.
Sentiment. Like context, consumer confidence operates at both a macro level (for example, worry over the likelihood of recession, or fears about public health and safety) and a micro level (for example, concern about personal financial security or job loss). Sentiment at both of these levels can have major impacts on consumer behavior and spending—and on the quality of intent.
Most consumers intend or desire to return to the way things used to be—to their “old normal”— whether they are doing less or more of a particular activity today. (See Exhibit 4.)
For those seeking a new normal, it’s not always easy. In fact, when we look at consumers’ desire to engage in different activities versus their ability to do so, we see that the quality of intent across activities is quite different from the intent itself. Net desire (the percentage of consumers who wish to increase that activity minus the percentage of consumers who wish to decrease that activity) is high for activities that consumers miss (such as leisure travel), as well as for activities that many are already doing more and want to continue doing (such as exercising, cooking, and working from home). (See Exhibit 5.)
But many consumers believe constraints will limit their ability to reach those desired or intended activity levels, or “new normal.” (See Exhibit 6.) For example, while 31% of consumers want to increase their leisure travel after the outbreak, only 21% think they will actually be able to do so.
When we explore the constraints that could limit consumers’ ability to pursue various activities, “worry” (in connection with health concerns) appears as the top constraint across a number of activities. We anticipate that this constraint will dissipate as the crisis subsides and that activities such as leisure travel and out-of-home entertainment will rebound—but the speed of that recovery will depend to a great extent on the evolution of the coronavirus and the speed at which countries bring it fully under control. (See Exhibit 7.)
Not surprisingly, consumers who express more strongly negative sentiments as a result of the virus are less interested in returning to certain activities such as traveling and eating out. (See Exhibit 8.) For example, consumers who worry about their finances are more likely to travel less, and those who worry that another outbreak could occur are more likely to eat out less than they used to.
Evidently, it’s hard to teach an old consumer new tricks. Our research finds that younger consumers are more likely than older ones to have developed new habits during the outbreak and to expect to maintain the changes they have made once the crisis passes. (See Exhibit 9.) This insight suggests that companies’ best opportunity to drive shifts in long-term behavior and to set a new normal that incorporates regular use of their products and services rests more with Gen Z and millennial consumers.
When we look beyond what consumers are telling us and evaluate, through the full set of NNPs, the activities that consumers are doing more and less of during the crisis, we get an emerging glimpse of what the new normal might look like. (See Exhibit 10.)
We see an acceleration in preexisting consumer trends toward digital adoption and greater convenience and flexibility, although some softening will likely occur in the immediate post-lockdown period. For example, digital penetration has grown during the pandemic, particularly with younger generations, as many consumers have made online purchases in some categories for the first time. (See Exhibit 11.) As we saw after the SARs outbreak, this increased digital penetration is likely to continue in the aftermath of the COVID-19 crisis, with persistent increases in contrast to pre-pandemic activity in video chatting, social media, virtual classes, in-home entertainment (for example, subscription streaming and video on demand), and online shopping. The shift to digital shopping will likely slightly dampen activity in physical retail over the long term, although we anticipate a rebound in physical retail as the crisis wanes, since many consumers shop in stores to enjoy benefits that digital does not afford, including being able to immediately access the purchase; see, touch, or try the actual physical merchandise; or take pleasure in the experience itself.
We also anticipate that new employee work models that support the continued consumer trend of increased convenience and flexibility will persist in the post-COVID-19 world. Employers and employees appear to have recognized the benefits of increasing the extent of work from home, remote work, and video- or phone-based meetings, after seeing the success of these policies and practices over the past few months. In a recent BCG survey of more than 300 companies across 21 industries, with operations based in 27 countries, 93% of respondents said that they believe their companies’ remote working and meeting policies will permanently change.
Several recently formed consumer habits may continue at higher levels than before the crisis but at lower levels than today. These include more frequent hand washing and more cooking at home—which may coincide with family rituals such as family night developed during the crisis. Consumers note, however, that the biggest constraint on cooking is having enough time, which may dampen the size of prolonged increases in the practice.
On the other hand, some changes today are likely to be temporary. As we noted in our pre–Memorial Day article, leisure travel is the most missed activity (for example, 61% of US consumers say that they “can’t wait to start traveling again”), and we believe that consumers will resume traveling once the virus has passed. We also expect out-of-home entertainment—whether in the form of going to a sporting event or attending a show— to bounce back long term, although some erosion of movie going may occur as consumers become accustomed to engaging from home and realize the benefits of doing so. Exercising is the age-old aspirational behavior that everyone plans to do more of but few succeed in doing over the long haul, simply because, when work and life demands revert to the norm, they make devoting time to exercise increasingly difficult. (And in terms of strength of intent, it is often an activity that consumers believe they should do, not one they desire to do.) In the US, cultural context or local norms will likely ensure that wearing masks does not endure at scale, though increased mask usage may persist in other regions—such as Asia—where the practice is already widely accepted.
One key question involves where consumers will choose to put their dining dollars—in takeout and delivery or in dine-in restaurants. Consumers say that they want to return to their pre-pandemic behavior, which would translate into a slight decline in takeout and delivery when compared with pre-COVID-19 levels, due to recessionary impact (and the concerns consumers now have over the perceived high cost of delivery in light of financial pressures). On the other hand, off-premises dining (restaurant takeout and delivery) was on a growth trend prior to COVID-19—and in our experience, once these (digital) behaviors are adopted, they often stick at a higher level than before, even as consumers shift away from the COVID-19 takeout and delivery peak. While the overall restaurant revenue pie is likely to shrink as a result of the likely recession and reduced overall spending in the category, we believe that COVID-19 has accelerated penetration of the market by takeout and delivery, enabling this category to win more of the restaurant revenue pie.
Of course, no one can be certain which behaviors will stick and which will dissipate once the coronavirus is under control. However, looking at the New Normal Predictors (NNPs) gives companies a way to evaluate and hypothesize where consumer behavior might go and to begin to anticipate that behavior—adapting to it and influencing it before competitors do, as we slowly cross over from pandemic present to post-COVID-19 future.
Our next Snapshot will look at China, which is farther along in its evolution and management of the coronavirus than most of the rest of the world, and assess how the recovery is evolving there. The experience there may foreshadow what other countries will encounter during their recovery periods.
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.
The situation surrounding COVID-19 is dynamic and rapidly evolving, on a daily basis. This COVID-19 research is not intended to: (i) constitute medical or safety advice, nor be a substitute for the same; nor (ii) be seen as a formal endorsement or recommendation of a particular response. As such you are advised to make your own assessment as to the appropriate course of action to take.
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, Lauren Taylor, Greg McRoskey, Carmen Bona, Tom Lutz, Dylan Bolden, Scott Wallace, and Dynata for their support and input into this article.
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.