The global economy completely depends on consumer behavior. Numerous factors contribute to how and how much a consumer spends. We can consider whether they are employed or unemployed, their lifestyle, their confidence while spending, and so on. With the COVID-19 becoming a global pandemic, consumers are choosing to spend more wisely than ever.
The Psychology of Spending
In these turbulent times, consumers have either stopped or are spending lesser on unnecessary, luxurious products and services. However as time goes by, we can see another trend in the works. Some consumers are linking their optimistic psyche to higher purchasing.
In India, consumers are planning to spend more. This optimistic behavior is similar to consumers in Nigeria, Indonesia, and China.
In the western world, we can compare and contrast Europe and America. American consumers are displaying more optimistic behavior, as almost 40% of Americans are choosing to believe that their country will recover within 3 months. This optimism is privilege-based and has been expressed highly by people who earn over $100K.
Strategic Consumer Spending
Consumers across the globe are contemplating spending lesser in luxurious categories. Due to the panic created by the media, many consumers have spent more than before, on necessities. This is linked to the human will to survive, to act, and prepare for the uncertain future.
The COVID-19 has also altered the way people utilize media for entertainment purposes. Consumers from countries included in the survey have expressed their desire to spend on at-home entertainment. It makes all the more sense since cinemas, arcades, and other recreational and entertainment centers are closed. On top of this list, with its huge gaming culture, stands Korea.
On the other hand, China has been opening its markets and services one by one. This is is a ray of hope for countries who are on the same track of gradual recovery.
Highly Impacted Industries
The industries and categories that have suffered at the hands of the virus are out-of-home entertainment such as recreational centers, cinemas, and restaurants.
Especially, globally there are two industries that have suffered the most:
Clothing and Accessories
Be it online or offline sales, businesses worldwide have been affected. Clothing and accessories are another such industry. A fairly good example is that of China, whose consumption rate in this sector has fallen by 40-50%, as compared to pre-corona times.
Lesser purchases have made brands think twice about the scale at which they produce. With no other choice, most of them have opted to scale down.
Travel and Transport
It comes as no surprise that global social isolation has resulted in the travel and transport industry going downhill.
Just in the U.S. alone, April and May have resulted in an average decline of 81% revenue.
Globally, jobs of over 50 million people are at risk, 30 million of these belonging only to Asia. The global GDP comprises of 10.4% of the travel and tourism industry, a serious figure.
So What's Next?
Rebuilding consumer experience is the trend these days. With almost every industry being affected, revival is necessary by changing the way things work. For example, many films have taken to release digitally for the 'theatre at home' experience. Then there are some industries that have no choice but to wait. The big truth is - there is and will be a lot of change in experiences.
This graphical data by McKinsey & Company goes on to show the relationship between consumer behavior and its impact on various industries.
Infographic by: Visualcapitalist.com