As the scope of the COVID-19 pandemic continues to unfold, many industries are looking at a chain reaction of unprecedented changes. In addition to measuring changes in the way consumers eat, travel, shop, congregate and relate to the world around them (based on new research as of March 2020), we are tracking the challenges industries are encountering in order to identify potential opportunities for others. We are following developments in different categories, providing analysis that looks at what consumers can expect today, tomorrow, and in a post-COVID era.
Learning from history
This is not the first time that we have been faced with a life-altering paradigm shift. We experienced global consumer changes during the months leading up to Y2K, as well as the behavioral changes – and industry shakeups – in the US after 9/11. Mintel has followed consumer reactions to SARS, Zika, bird flu, and other widespread epidemics, as well as the equally habit-changing forces of the last recession, and the recession before that. Through it all, we have followed – and will continue to do so – consumer reaction to the current situation, here and around the world.
Currently, Mintel research shows that a third of US consumers are very worried about the extent to which the virus might affect their lifestyles, a third are moderately worried, and a third are not worried. In China, similar research shows that half of consumers are extremely or moderately worried about exposure to the virus and three in five are worried about the impact on their lifestyles, presaging developments we anticipate in the US as the situation develops over the next few weeks.
Food and drink
Products that are shelf-stable and long-lived are in demand as consumers are stockpiling staples in anticipation of state- or self-imposed quarantines. The interest in fresh and artisanal foods is being tested as consumers turn to preserved, shelf-stable products.
While the US media reports showing empty shelves in retail outlets suggest that the buying frenzy is universal, currently, less than one in five US consumers claim to have increased their purchase of groceries or other supplies. The emerging situation – with the potential for more consumers being asked to self-quarantine for two weeks – is changing, however, and the opportunity for canned, frozen, and dried products will remain strong.
For those who remember the last rounds of panic hoarding, this behavior is not unusual. As Mintel Trend, ‘Prepare for the Worst’ states, “brands that can make protecting or preventing disasters simple and easy will appeal to consumers.” This sentiment is especially true in the COVID era. However, consumers who have shunned canned and overly processed foods during the past few years are more comfortable justifying the purchase of these products as they are seen as “safe to eat.” This opens the door to a major paradigm shift: instead of seeking out fresh, unprocessed products, consumers are reaching for items with a long shelf life.
Does this spell the end of the ‘fresh is best,’ lightly packaged, or ‘no packaging’ products? We don’t see this as a likely outcome, but for the here and now, we are seeing canned, jarred, frozen, and freeze-dried foods making substantial inroads into consumers’ shopping carts. And while the run on these foods may prove unnecessary, this experience can help consumers rediscover the benefits of canned and frozen foods.
Indeed, one thing that is different from earlier cycles of stockpiling is that the large, young, urban Gen Z population tends to live in small surroundings with limited storage. The propensity to hoard food is a challenge to those without a place to store it. This presents an opportunity for condensed, dried goods like bone broth soup and contemporary bouillon cubes to be positioned as more viable alternatives. This could also spell benefits for individually wrapped, single-serve, shelf-stable snacks like tinned fish packets, dried cheese bars, and single-serve nut butters.
Health management and household care
With health professionals suggesting that consumers avoid hospital emergency rooms as the first point of contact for medical attention (freeing up resources for those who are/suspect they are infected), telehealth is poised to shine. With proper messaging and education, more Americans may be willing to try telehealth services during a COVID-19 epidemic to err on the side of caution.
Disinfectants and hand sanitizers have become high-demand items in retail outlets and online, driven, in part, by consumers paying closer attention to personal and household hygiene. Mintel research shows that two in five US consumers are trying to use hand sanitizers more frequently, and a third have increased their use of disinfectants or other household cleaning products. With the emphasis on personal hygiene, manufacturers of cleaning products, both personal and environmental, have great opportunities, as do collateral items such as paper towels and tissues.
The strongest line of defense lies in strong hygiene practices and wearing properly-rated facial masks in high-risk areas, which is where the opportunity for aircare brands lies. Wearing ‘courtesy masks’ to prevent the spread of germs is common practice in many parts of the world, but filtration masks are still niche in the US. However, this market could move from niche to a mainstream accessory given that just over one in 10 US consumers say they are using face masks in public. To presage the growth potential opportunity, one-third of urban Chinese consumers say they currently wear a face mask when they go out.
Travel and transportation
All aspects of the travel industry are being upended by the virus as cancellations dislocate both personal and business travel with each passing day. Even with the here and now disruptions to airlines, trains, and boats, other aspects of the travel industry may present opportunities. Ridesharing could become the preferred method of local or regional travel as consumers perceive it to be a safer option. According to new Mintel research, nearly one in five consumers are avoiding public transportation.
This increase in demand for rideshare services will likely drive an uptick in average ride cost. However, according to Mintel research, consumers are willing to walk away from ridesharing services in the event of a drastic price increase. If consumers perceive public transit to be too dangerous for everyday use, they’ll likely pay more per ride to ensure their safety and potentially cut back spending in other areas of their life. Rideshare operators can capitalize on this opportunity by clearly broadcasting the cleanliness and hygiene of their vehicles.
Retail and apparel
China is a major source of the clothing and accessories production, as well as manufacturing the packaging supplies used to ship them. The fallout from the virus will negatively impact sales and present growth challenges for the apparel and accessories category. Companies that can efficiently manage inventory have an opportunity to win new shoppers and increase sales among existing customers.
This is also an opportunity for retailers to introduce themselves to a new group of shoppers who may be willing to pay more or shop an unfamiliar or new retailer (either online or in-person) in order to find an item out of stock at their usual shopping venue. Sales representatives in China have set up WeChat groups with VIP customers for exclusive online fashion shows. Such strategies can translate to the US marketplace as well.
This can be especially beneficial during the pivotal sales periods of the year, such as the back-to-school and holiday seasons. Consumers will have to rethink their expectations around price and convenience heading into peak seasons, and retailers will have a challenge and an opportunity to serve existing and win new customers. With the summer clothing season just around the corner, retailers will have to begin to deal with this situation in the next few weeks.
eCommerce
The work-from-home trend continues to grow as more companies of all sizes have their employees staying out of the office. Consumers are trying to avoid crowded places, a behavior noted by three in 10 US consumers, and we expect to see a boom in the eCommerce market across a range of directions. For example, online grocery is a market segment that continues to struggle with online sales, but currently provides a host of opportunities. Nearly 10% of US consumers report an increase in their use of online shopping services as the COVID-19 virus takes root in various regions of the United States. This figure is likely to increase as self-quarantine regulations spread around affected regions.
However, as encouraging as it is to see some of these categories growing, the experience may not live up to consumers’ expectations. Supply is dwindling in some areas and there are not enough workers to fulfill orders, meaning shipping is delayed and may even be more expensive due to high demand. However, we are going to see an increase in all eCommerce areas, from shopping to teleconferencing to streaming entertainment and gaming.
Beauty and personal care
As the CDC has made it understood that careful handwashing is one of the first lines of defense against the virus, the demand for hand soap and sanitizers is already clear. However, there is an opportunity for other hand care products, especially those that offer repairing or healing benefits. The drying effects of many hand soaps and sanitizers and the potential for disruptions to the skin barrier suggest the need for products with ingredients such as ceramides and lipids to help with healing and repair.
We also see opportunities for cleanse-moisture combination products as consumers are likely to be focusing on “effective cleansing” while keeping the skin’s barrier healthy. Some products will also promote their ability to remove toxins; positioning that can provide a boost for charcoal and clay masks as consumers may look for a complete “skin detox” as studies show clays can adsorb viruses in general.
