As the COVID-19 Pandemic tightens its grip on America, consumer attitudes regarding financial security and social activities continue to change. Here’s the latest information brands need to strategically prepare for both short-term needs and long-term expectations.
Last week’s news headlines were filled with quite a few anxiety-inducing story lines. We have President Trump remarking that things will get worse before they get better, America crossing the 4 million mark on COVID 19 cases, an uptick in unemployment, the use of unmarked federal agents to suppress protests in Portland, spawning solidarity protests around the country, and uncertainty about the contents of the next coronavirus relief bill. The resurgence of COVID-19, protests for social justice, and a political season of unprecedented polarization has gripped American culture, and it’s anyone’s guess as to how the next four months will evolve, let alone our longer-term future.
Given all the uncertainty and stress, it’s more important than ever for marketers to keep a finger on the pulse of important consumer attitudes and behaviors. To support this need, we at Collage have been conducting an intermittent tracking survey of how 18 to 39-year-old Americans, a group we call the New Wave, are responding to this extraordinary time. We focus on the New Wave not only because this generation’s preferences will determine the fate of growth for countless brands, but also because the New Wave represents the first generation to grow up in a highly diverse environment. Our tracking survey observes how this group of consumers perceives their financial situation to be changing, and what activities they currently feel comfortable doing. Keep reading to see what we learned from our most recent pulse check taken of more than 1,800 New Wave consumers between July 20-23 as compared to a prior survey taken in mid-June.
New Wave Consumers See Harder Times on the Horizon
The clearest finding from our most recent survey is that New Wave consumers, across race and ethnicity, are more likely to expect their financial situation to get worse over the next month, compared to how they felt just a month ago. Similarly, they’re also much less likely to see their finances improving.
The change in expectation that finances will be worse is largest for Black and Hispanic consumers (9 and 7 percentage point shift, respectively). These responses likely reflect an increase in job insecurity given the re-emergence of social distancing and pausing of re-openings around the country, two actions which disproportionately impact the service industry jobs these segments are more likely to have. We expect these segments to be more price-sensitive in the coming months, especially if Congress fails to extend unemployment support in the next Coronavirus bill.
Consumers Remain Hesitant to Engage in Social Activities that Drive the Economy
Another key indicator in likely economic activity is how comfortable people feel engaging in the social activities which drive personal consumption and job creation. The story here is that of little meaningful change: consumer hesitancy to participate in these activities remains low across the board. We’re four months into a worsening pandemic and unsurprisingly we see that most consumers just aren’t comfortable getting back to life “as it was.” The only substantial difference across multicultural segments is that non-Hispanic white consumers tend to be more comfortable engaging in these social activities, while unacculturated Hispanics tend to be less comfortable overall.
Purchase of Consumer Staples Appears to Be on the Rise, at Least in the Short Term
Despite the greater concern with finances and slightly reduced comfort with public places overall, New Wave consumers report they plan to spend more in a few areas, notably food, personal care, and home care. We see some movement in other categories as well, but the real story is lingering overall hesitancy to increase spending on non-essentials. These two findings could represent a tendency towards “stocking up and hunkering down” in anticipation of renewed social-distancing guidelines or catch-up spending on essential goods that may have been deferred during the first few months of the pandemic. Regardless of the cause, the sustainability of the increase in essentials purchasing depends on what happens with the pandemic and the Coronavirus bill over the next few weeks. Learn more in the download above.
Downturn Will Be Deeper than Previously Forecast, But Return to Growth After 2021 Looks Steep
Economic projections of the COVID-19 Recession have become more pessimistic across the last several months. Indeed, the most likely outcomes envisage no return to the long-term growth rate in consumer expenditure before 2025. That said, forecasts suggest that the depth of the downturn will be matched by a very rapid rate of growth for a few years. If history is any guide, that updraft will coincide with increasing employment and consumer confidence even if absolute levels of expenditure are below those preceding the COVID-19 Recession
Lean In to Multiculturals Now to Ensure Mid-term and Long-term Growth
While much of the current pandemic response is out of our hands, it’s imperative for brands to begin the process of preparing for the eventual recovery and future-proofing their long-term strategy. When growth returns, which it will, marketers must recognize that this traumatic year has only heightened the importance of multicultural consumers. Between household formation, immigration,and a declining white population, the dominance of multicultural expenditure growth and cultural influence in the medium and long term is a foregone conclusion.
There is simply no way that companies can expect to grow over the next decades without capturing these important consumer segments. The first step to doing that is showing up for them when they need you most. We suggest brands take advantage of the opportunity to show up for these segments in this time of crisis. People will remember who lent a helping hand and advocated for their needs, and who did not. People will remember efforts to improve the representation of multicultural consumers and their stories in advertising. When the pandemic ends and Americans again feel comfortable spending and taking advantage of your categories, this may make all the difference in the brands and products they choose.
In the download, you will find a sampling of the latest COVID-19 economic projections and implications for multicultural consumers, incorporating a comparison with forecasts released one quarter ago, and the most recent pulse survey on consumer expectations for financial security and social behaviors.