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Evendo inside.events presents:

COVID19 & Consumers spending

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Hibernation The first phase following lockdown in many countries. Schools are closed. Shops are closed. Restaurants are closed. People are asked to remain indoor. Put short: Social life has been put to an instant stop. During this phase, consumers are likely to focus on ”survival” - on the basics in their lifes.

Exploration People get accustomed to and adapt to the ”new normal”. Following the first weeks, people will start to get bored, and start longing to go back towards ”normalized society”. They will start to look ahead. They will start to dream about what to do, once things ”re-open”. Governments will start to talk about re-opening.

Focus of this publication Page 2


COVID19 CYCLUS When assessing the impacts of COVID19, Evendo utilizes a 4-phase model. This allows identification of milestones - and thus timing initiatives towards a ”moving target”. The below provides a simplified description of these steps.

Preparation Schools reopen. Shops reopen. Things are starting to move towards ”normalization”. There is ”light at the end of the tunnel”. Consumers are likely to start planning ahead - to dream - but are unlikely to enter into firm commitments, as timings are uncertain. People start to go out. Socializing on a small scale. They also start to plan ahead.

Execution Society has reopened, making consumers ”content” and comfortable that things will now not move backwards. Companies will look to boost productivity and bring teams back together. Consumers will increase their spending, as the level of comfortability increases. Ultimately, things are as normal as they can be.

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COVID19 IMPACT Consumer behavior following ”Hibernation” phase

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Please note: This publication focuses specifically on the ”Exploration” phase - including the transition towards ”Preparation”. Hibernation

Exploration

Preparation

Execution

Daily life for people around the world has changed in ways that would have been unthinkable a few weeks ago. But as consumer-facing organizations try to find their way through the COVID19 pandemic, it’s important to keep in mind that the global consumer was already evolving at great speed. That process is now playing out faster than anyone imagined. Consumer-facing companies urgently need to anti-

cipate what kind of consumer is emerging, so they can make it through the current crisis and build the capabilities to meet these new requirements. In the early stages of the pandemic, consumers were concerned about the health of their families, whether they could buy for their basic needs, and the loss of freedoms we all took for granted. Those common concerns are manifesting themselves in different ways, as consumers adopt new behaviors. Across the markets, some consumers are already making deep cuts. Others are continuing to spend as normal but are changing how they live in other ways. For now, many are remarkably optimistic. Looking across all the Index data, we’ve identified four segments of behavior.

Stay calm, carry on Save and stockpile 38% of consumers Not so concerned about the pandemic, but worried about their families. Pessimistic about the long-term effects.

Cut deep 27% of consumers

26% of consumers Not changing their spending habits. Not directly impacted by the pandemic. Worried that others are stockpiling.

Hardest hit by the pandemic. Most pessimistic about the future. Spending less across all categories.

Hibernate and spend

10% of consumers Most concerned about the pandemic. But best positioned to deal with it. Optimistic for the future. Spending more across the board. Page 6


COVID19 lockdown

With the arrival of COVID19, a massive outside impact entered the arena - and consumer behavior Before the pandemic hit the world, consumers were thus has to be redefined in ways, comparing the largely defined in ways describing their approach to consumer types management of these outside parathe product, rather that the world surrounding them. meters. At least during the pandemic. We will revert This simplification was feasible, as there were few to what may happen ”on the other side”. To study outside parameters impacting the decision process the behavioral change of consumers moving from a of the consumer. ”Pre-COVID19 consumer types” ”COVID19” to a ”post-COVID19” scenario, we largely could be: divide the ”COVID19 consumer” into 4 consumer-types (see left). IMPULSIVE SPENDER: ”I love finding bargains.” Regardless of previous behavior, these 4 consumer CONSERVATIVE HOMEBODY: types tackle the COVID19 situation in entirely dif”Family matters most to me.” ferent ways. When asked what impact the current MINIMALIST SEEKER: situation has on how consumers spend money, we ”I choose to focus on the simpler things.” see significant differences between the 4 types. SECURE TRADITIONALIST: ”I am content with where I am in life.” etc.

How is COVID19 affecting the way consumers spend money? Cut deep

Save and stockpile

Stay calm, carry on

Hibernate and spend

Groceries

Groceries

Groceries

Groceries

33%

33%

33%

23%

Clothing & Footwear 90%

36%

Clothing & Footwear 9%

Leisure activities 92%

41%

72%

85%

21%

61%

Clothing & Footwear

25%

Leisure activities 6

18%

34%

64%

64%

53%

21%

Clothing & Footwear 52%

Leisure activities 11%

26%

28%

20%

Leisure activities 34%

55%

21%

24%

Spending more No change Spending less Page 7


Consumers in the “Hibernate and spend” segment – who are mostly aged 18-44 – are those most concerned about the impact of the pandemic. But only 40% of them say they are shopping less frequently. And while 42% say the products they buy have changed significantly, 46% of them say brands are now more important to them.

46% of ”Hibernate and spend” say brands are now more important to them.

33% of ”Cut deep” say brands are now far less important to them.

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The Index shows much bigger changes in the “Cut deep” segment. These consumers – who are mainly over 45 – have seen the most impact on their employment. Almost a quarter have had their jobs suspended, either temporarily or permanently. 78% of them are shopping less frequently, and 64% are only buying the essentials. In contrast to the Hibernate and spend segment, 33% of consumers here feel brands are now far less important to them.

COVID19 impact

Looking beyond the immediate effects of the pandemic, few consumers expect to go back to their old behaviors any time soon. As with many of the shocks we encounter in life, people are in a mood to pause and reflect. When asked what they believe they will do once they feel the crisis is over, we see consumers could morph into five very different segments


as the crisis abates. For example, surveys currently suggests that over time most consumers in the “Save and stockpile” segment will migrate to two new segments that we call “Remain frugal” and “Cautiously extravagant.” In these uncertain times, how long this transition will take – or whether different transitions will emerge –

remains to be seen. But tracking change as it occurs will help companies stay relevant and plan for the future. Below is an illustration of where the COVID19 consumer types are likely to transition to. The thicker the ”line” the larger a percentage.

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Five consumer segments will emerge after COVID19

Cautiously extravagant consumers have a strong belief that we will be in a global recession after the pandemic. However, while they are financially conservative, they expect to increase spending across non-essentials once the crisis is over. But 45% believe that how they shop will have changed permanently, and 38% say the same about what they will buy.

They respond strongly to purposeful brands, with 62% saying they would be more likely to purchase from companies that they feel are doing good for society. And 29% would pay a premium for brands that contribute to the community and 42% for domestically produced goods. By contrast, “Get to normal� consumers are determined that after the pandemic things for them will be the same as before. A third of them (33%) do not expect the crisis to have changed their lives on any dimension. Only 29% say it will have changed the

Stay frugal Get to normal 31% of consumers Spending largely unchanged. Daily lives were never really affected. Least concerned about the pandemic overall.

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Cautiously extravagant 25% of consumers Middle to high income. Very focused on health but relatively optimistic despite a strong belief that a global recession is coming. Will spend more in areas important to them.

22% of consumers Spending slightly less, but some deep cuts. Trying to get back on their feet. Among the most pessimistic about the future.

Keep cutting

13% of consumers Least educated. Least likely to be working. Making deep spending cuts. Changing what they buy and how. The pandemic was always a huge worry. Younger and in work. Spending much more in all categories. Their daily lives were most disrupted. Now they’re the most optimistic.

Back with a bang 9% of consumers


way they shop, and only 21% what they buy. Most of them don’t expect to spend any more money than they used to.

45%

of ”Cautiously extravagant” say how they shop will have changed permanently - with a shift towards online.

Understanding these changes in consumer behavior and preferences may well prove essential to companies in the ”post COVID19” marketspace. There will be no such thing as ”business as usual”. The impact on consumers will be long-lasting - and failure to adapt to these new preferences may result in a significant drop in customer satisfaction, loyalty - and thus revenue.

everybody will be careful giving too strong commitments. Despite the appetite on socializing, this applies to ”Back with a bang” as well. Unlikely to commit to bookings, they may well toy with the dreams of the social life - and be receptive to less-committing reservations with option to cancel. Building on top of this, the ”Cautiously extravagant” are likely to generate larger ticket-sizes once they enter the market. They want things to be ”right”. They control their appetite for socializing and are looking to make it a unique experience. Timing is less important to them, although they may also be receptive for a certain level of flexibility moving them closer to booking earlier. Impressing the ”Cautiously extravagant” is likely to be ”cross-supplier options” - allowing them to assemble their event. Focusing efforts on these two emerging consumer types, will allow for a faster pick-up and an accellerated growth.

When prioritizing efforts in a ”post-COVID19” environment, expect ”Back with a bang” to be standing first in line at the re-opening, with an appetite making it possible to sell almost everything to them - with the right marketing. ”Back with a bang” may start shopping and booking as the first ones already during the ”exploration” phase - provided they are offered the required flexibility. During these times, Page 11


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SPENDING MONEY Likely behavior once moving towards ”Preparation” phase

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Just as behavior has changed with the impact of COVID19, so have the spending patterns. The behavior and expectations of ”Back with a bang” are largely unpredictable, as we will see a significant level of ”impulsive buying” from this group. Surveys on spending patterns performed in this segment leaves us with no explicit conclusion - we see things pointing in all directions, largely based on what is ”top of mind” at the time of the survey. The two consumer types expected to follow the ”Back with a bang”’s are the ”Cautiously extravagant” and the ”Get to normal”. These groups are more considerate in their behavior and spending

expectations - and thus allow a more detailed mapping. Despite some similarities between them, it is obvious that ”Get to normal” will remain cautious for longer than ”Cautiously extravagant” - and that the price-sensitivity for ”Get to normal” is more rigid than that of the other group. These differences become apparent, when mapping the expected increase in spend across product categories. While there are significant differences in their expected spending, the expectation of changes in their own behaviors are more aligned between the two consumer types.

Percentage expecting to spend more once the COVID-19 outbreak is over: 0%

10%

20%

Activities and leisure Vacations and holidays Meals from a restaurant Clothing and footwear Fresh and chilled food Big ticket items Beauty and cosmetics Sporting equipment Meals from a store Personal care items Appliances and electronics Alcoholic beverages Household products Frozen food Canned and dried food Beverages

Cautiously extravagant Page 14

Get to normal

30%

40%

50%

60%

70%

80%


77% of ”Cautiously extravagant” expect to increase their spend on ”Activities and leisure”

Both (and all other consumer types, for that matter) expect changes across the board - most significant in

the way they expect to travel and shop. For events, two expected changes are especially important to notice: ”The way I socialize” - which may indicate a change in demand, and thus in required inventory for suppliers within the events space. A shift towards online, remote/distributed and virtual experiences should be expected. ”The way I shop” - if you are not online, you do not exist. COVID19 and corresponding lockdowns have taught people to find - and buy - what they need online. A poor online experience will lead to a poor conversion and poor customer experience.

Which of the following do you think will change as a result of COVID-19? 0%

10%

20%

30%

40%

50%

60%

70%

80%

The way i travel The way I shop The way I spend family time The way I socialize The products I buy The way I maintain my health The way I access healthcare The way I stay entertained The way I communicate The way I eat The way I consume information The way I work (or study) The way I exercise The way I take care of my home The way I use technology The way I bank My childrens education None of the above

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What about the beyond? The big question is this: as the economy recovers from the aftermath of the pandemic, which behaviors – if any – will return to what they were like before, which will stabilize for a while, and which will have changed for good? A leadership team that understands how the future consumer might evolve can identify their roadmap to success and the actions needed to get there. Companies should consider how increased consumer positivity around sharing data will create opportunities for new business models. It may well accelerate the demand we see already for greater product traceability, creating an environment in which consumers and companies operate with total transparency. In that context, every action and its implications would be visible.

Today, a third of consumers strongly agree with the suggestion that they will reappraise the things they value most and not take certain things for granted. And more than a quarter say they pay more attention to what they consume and what impact it has. Perhaps in our post-crisis world we will see consumers becoming more mindful about the consequences of their choices? Consumers show greater preference for shops, restaurants and brands that feel local. And they are more interested in value for money (rather than price), provenance and product benefit.

Evendo Ltd. 1 Canada Square, 37th floor London, E14 5AA United Kingdom www.evendo.com Page 16

Profile for evendo

Evendo - COVID19 and Consumers Spending  

Where and how do Consumers spend money during COVID19? - and what should you expect "after" COVID19? A comprehensive guide to how and where...

Evendo - COVID19 and Consumers Spending  

Where and how do Consumers spend money during COVID19? - and what should you expect "after" COVID19? A comprehensive guide to how and where...

Profile for evendo