Toby Clark
Toby Clark is Director of EMEA Research, and is responsible for many Mintel report series, tracking consumer sentiment and top-level spending intentions in the UK.

The rapid increase in COVID-19 case numbers and hospitalisations in the UK towards the end of 2020 signaled the inevitable—high-level restrictions well into 2021. Monday’s (4 January) announcement of a full national lockdown simply confirmed what most of us had already expected.

But the emergence of an even more contagious strain of the disease and the subsequent imposition of a total lockdown that could potentially last well into spring is still a major blow.

Most important is the simple human factor: that many people will lose friends, family, and their livelihoods to this disease.

But it is also a major blow for many companies operating in consumer markets.

For some markets, this will have relatively little impact. Indeed, for a fortunate few, it will actually boost sales: e-commerce, household care, and at-home food have all weathered the pandemic well.

For others, it will be catastrophic. Travel companies were already facing huge disruption to the key post-Christmas booking period. The new restrictions will see consumers even less willing to make travel plans. Similarly, this announcement will be the final straw for some hospitality and leisure businesses. Even those companies that make it through the lockdown will find conditions challenging for many, many months thereafter.

New COVID-19 variant poses huge challenges, but there is an exit path

In the UK, we are basing our economic assumptions on the scenarios presented in the Office of Budget Responsibility (OBR) November 2020 Economic and Fiscal Outlook. These scenarios had already factored in the tightening of restrictions across the UK that were announced in October and November of last year.

Our analysis and forecasts have also factored in the assumption that a vaccine would be available early in 2021, but that even with a vaccine, we’d still be facing significant disruption well into the year, and even into 2022. Our COVID-19 Tracker data, as well as our experience of the consumer reaction to the 2008 financial crisis, suggests that many of the shifts in consumer behaviour will endure even after the immediate threat of the virus passes.

The emergence of a new, even more contagious, strain of the virus and the subsequent need to impose a full national lockdown means that in the short term, at least, conditions are consistent with the OBR’s negative scenario. But even with such a major step backwards in our fight against COVID-19, it’s vital to keep an eye on the longer-term.

The vaccine rollout is ahead even of the OBR’s central scenario, and this is being factored into our 5-year market forecasts.

Consumers’ resilience gives some encouragement to brands

Crucially, consumers have already shown huge resilience, and many of the behaviours they adopted during the first peak of infections have been maintained, making it much easier for them to adapt to this second national lockdown. Data from Mintel’s Global COVID-19 Tracker shows that although the rising number of infections in November and December 2020 did lead to an increase in people’s concerns about being exposed to the virus, the levels were still below those seen during the first peak, reflecting both consumers’ greater level of resilience and hope about the vaccine rollout.

Our consumer behaviour data also highlights this resilience: 46% of UK adults cut back on non-essential spending at the height of the first wave (23 April 2020). In the run-up to Christmas, consumers were prepared to find a bit more flex in their budget, but even still, 33% said that they were reducing non-essential spending (16 December 2020).

Some of these cutbacks are a direct response to financial hardship: despite the furlough scheme and other support measures, many people have lost their jobs. For others, the cutbacks in spending have allowed them to build up their savings – whether because they’re being more cautious with their spending, or simply because COVID-19 restrictions mean they’ve not been able to spend on the likes of travel or socialising. As soon as confidence returns and markets start to re-open, our research shows that many will use these savings to treat themselves.

Our next wave of COVID-19 Tracker research is due back on 15 January and this will reveal just how much impact the new lockdown has had on sentiment.

The 2020 and 2021 Mintel Reports UK libraries feature comprehensive and in-depth analysis across industries, including the impact of COVID-19 on consumers, markets, and trends in the short, medium, and long term. Find out more here.

Mintel clients can log in now for the latest insights. Check out the Mintel Store to purchase a report today.