With COVID-19 bringing cities and states to a standstill, shuttering businesses and schools, and causing over 248 million Americans to shelter inside, it’s safe to say society has been profoundly disrupted. As a result, the stock market has plummeted, suffering the worst drop in history. And with entire industries facing months of disruption, over 3 million Americans have filed for unemployment, shattering previous records. With this startling backdrop, many are wondering how consumer behavior will be impacted.
To get an insight into how consumers are responding to and grappling with the pandemic, RTi Research, a leading market research company, conducted a consumer survey last week. The results reveal that consumers are following the virus closely and expect the crisis to last for months. The survey also reveals that while some industries will face a negative impact due to changes in consumer behavior, there are many avenues for opportunity.
Consumers are keeping up with the news and bracing for extended disruptions to daily life
One interesting finding from RTi’s research is that consumers are taking COVID-19 very seriously. This is evidenced in how avidly many consumers are following news of the pandemic. The survey found that 72% of respondents were following Coronavirus-related news “extremely/very closely,” with nearly half of all respondents (42%) falling into the “extremely closely” category.
With so many consumers following the pandemic closely, only a small percentage of consumers report to be not very knowledgeable about COVID-19 (9%). In contrast, 52% of consumers report feeling very or extremely knowledgeable about the crisis.
Since many consumers are staying informed about the pandemic, there is a widespread understanding that COVID-19 could afflict the country for months. Nearly half of respondents (45%) believe the coronavirus outbreak will last until anywhere between May and July, and about 41% believe it will last even longer. This shows that consumers understand that disruptions due to COVID-19 aren’t going away anytime soon.
One potentially surprising finding is that 64% of respondents strongly or somewhat agree that the U.S. government should mandate a quarantine of the country. Such a high level of support for a strong government response—and one that is profoundly disruptive to daily life—indicates that American consumers are worried about COVID-19 and thus taking it seriously.
This concern largely stems from COVID-19’s potential to make people severely sick or, in the worst case scenario, cause widespread deaths. Over half of respondents (53%) reported that they are extremely/very worried about their family’s health, and a little under half (44%) expressed similar concern for their personal health. Since being alive is a necessary condition for any type of human flourishing, it makes sense that the majority of consumers are willing to live through a quarantine, rather than risk the outcome of the alternative.
Certain industries are threatened…
Profound changes to consumer behavior inevitably have a negative impact on some industries, especially if these changes are sustained for months. Only 11% of business owners reported that COVID-19 was having no impact on their business. For everyone else, the crisis is causing a variety of changes to typical business operations. Many businesses are temporary closing (34%), reducing services (25%), or reducing staff (18%). All these disruptions are understandably causing the majority of business owners to stress about their company’s future. In fact, the survey found that 51% of business owners are at least very worried about their business’ future.
Specific industries are particularly hard hit. The restaurant industry, for example, is under duress, as restaurants across the nation are either being shut down entirely, or required to provide only take-out or delivery options. The lack of dine-in options, in part, is causing consumers to frequent restaurants less. According to the survey, 63% of people are physically eating at restaurants less than before, and half are spending less, meaning that even with take-out options, business at restaurants is going down.
Likewise, the tourism industry, from hotel chains to airlines, has witnessed a sharp reduction in business. This will not abate until the pandemic is brought under control, and even then, there may be a lag before consumers feel comfortable traveling again, especially internationally. The survey found that consumers would wait 2.5 months “once things return to normal before traveling outside [their] country.”
Even for domestic travel, consumers expressed a desire to wait 1.8 months before resuming this behavior. Since consumers won’t feel comfortable traveling again until at least a month after things return to normal, the tourism industry will face hardship for the foreseeable future.
…But certain industries are not
Even during a quarantine, people need to eat, clean, occupy their time, and stay connected with each other. As a result, many industries have either maintained normal levels of business or have actually witnessed an increase.
Cleaning supplies and personal hygiene products are in hot demand at the moment. Over 4 in 10 people (43%) have spent more on cleaning supplies than they had previously, and exactly 40% of people spent more on healthcare/personal hygiene supplies. And since everyone still needs to eat, grocery stores have seen an uptick in business; 40% of consumers have spent more on food and beverages than they had before.
Social media platforms have also seen a surge in use. Now that people are not meeting as frequently in person, cyber communication is skyrocketing. From video-chatting to digital messaging, people are finding ways to stay in touch with their friends, families, and colleagues.
Online shopping is on the rise
With physical stores either closed or witnessing sharp reductions in business, a lot of consumer activity has migrated online. For example, while 33% of consumers have made more in-store food purchases than they had before, 36% have made more food purchases online. And even though nearly 1 in 3 people have shopped more in a physical store for food, 38% of people have reported shopping there less.
Online shopping has not seen a similar drop, as only 12% of people have shopped less for food online. This pattern holds true across other items, ranging from beauty products to hygiene supplies. All this underscores a key trend: Shopping in brick-and-mortar stores is dropping, while shopping online is going up.
The takeaway: Changes hurt some industries but create many opportunities
While the tourism and restaurant industries face considerable challenges in the coming months, the survey reveals that COVID-19 has created some opportunities for companies. Grocery stores have seen a surge in business and a lot of consumer activity has simply migrated to the digital space.
With consumers adapting to unprecedented disruptions to daily habits, they have embraced new ways of doing things. Companies should take note of these changes, as many are likely to persist after the crisis subsides. For example, 33% of consumers reported ordering groceries online for the first time. When asked if they would continue this behavior even after COVID-19 goes away, 54% of these first-time online grocery customers said that they would. Likewise, of the 31% of consumers who had food delivered to their homes for the first time, 66% said they would keep doing so after the virus goes away.
Contactless technology is another area of opportunity. With many people viewing money as unclean and potentially infected with COVID-19, there has been an increase in contactless payment usage. The survey found that 30% of consumers used contactless payment methods for the first time, and of these people, 70% indicated they would keep using this technology.
Finally, there are many opportunities for companies and brands to make a positive impact on their customers. For instance, 48% of consumers said they would view a company more favorably if that company “advertised how their products/services could help during the outbreak.”
Companies that do not offer products and services which can directly help people during the crisis can still make a positive impact. For example, 53% of people said they would view a company more positively if that company “helped customers navigate the outbreak.” This could include sharing helpful advice on social media platforms or in other customer-facing communication.
With the country and the entire world facing the worst pandemic in generations, companies and consumers alike are being forced to adjust. Surveys like RTi’s help companies grasp how consumers are responding, and what actions can be taken to help during a time of crisis. RTi’s survey can be accessed here.