[WATCH] A catalyst for change: The impact of COVID-19 on Chinese consumers

March 13, 2020
5 minutes read

The outbreak of a novel coronavirus (COVID-19), has already spread to an extent that is having a profound impact on China’s economy and consumer markets.

As the world’s leading market intelligence agency, Mintel prides itself on being the expert in what consumers want and why. The outbreak has certainly created many challenges for companies in the short term, but it has also made understanding markets and consumers more relevant and important than ever.

Here you’ll find the first article in a series that we’ll publish about our views on the impact of COVID-19 on consumer markets that primarily focus on – but are not limited to – China. We are also conducting an ongoing consumer sentiment tracker to help our analysts and category experts better understand the short- and long-term impact of the inevitable changes. Watch this space for breaking news and the latest consumer insights.

Thinking about the impact on businesses

It’s important not to go overboard considering the short-term negatives. Yes, we are seeing that some industries such as foodservice and travel are taking an immediate hit due to necessary quarantine measures in order to protect people. Undeniably, it will take time for these sectors to recover, not only so necessary policy changes can be put into place but also so consumers’ can heal and prepare psychologically. But there will also be positive outcomes.

When the SARS outbreak took place in China 17 years ago, it became a catalyst for the development of e-commerce, which totally changed the retail landscape in China forever. We also saw more consciousness of food safety and hygiene as a result of SARS; so much so that Western fast food restaurants enjoyed a period of rapid growth in popularity.
We believe that the current outbreak will work in the same way as a catalyst for change.

For example, in 2019, our research on marketing to over 55s showed that only 12% of Chinese consumers aged 55+ shopped online, and fewer still – just 5% – ordered food delivery). But now, seniors who may have never tried online shopping are pushed to do this, and if the experience is easy and convenient to use, this could well grow into a future habit. The interesting thing about it is that they are doing online shopping in a very different way from the more digital-savvy younger generations. In our analysis, we’re already seeing that many community supermarkets have responded quickly to provide a much more simple online shopping experience by taking orders via WeChat Groups and offering same-day grocery delivery. This has really helped those who were previously frustrated by navigating complicated e-Commerce websites or apps. Certainly, this has created a potential new opportunity for community supermarkets to better compete with e-commerce giants in the future.

The same thing can be said about many of the new experiences that consumers are now faced with, such as online fitness classes, e-learning, online conferencing, and working from home. The more important question to ask is not how many consumers are now trying these new, digital experiences, but how many will continue using once things normalise. The companies and brands that are able to build long term users are the ones that will succeed.

The power of the ‘feel-good’ factor

Another immediate opportunity Mintel sees is that consumers want that ‘feel-good factor’ more during this time of uncertainty and change. This is, in fact, a learning taken from Mintel’s global analysts as a result of the global recession during 2007-8. For example, in the UK, some of the biggest winners of the last recession were absolute luxuries, the likes of premium skincare and sparkling wine. They are products that no one actually needed, but that did a great job of lifting people’s moods in tough times.

To some extent, this is already happening in China. We see people sharing home cooking recipes on WeChat as a way to say life has changed so much in the last month but we are still finding ways to enjoy it and find comfort in the normal, day-to-day activities. And when people are encouraged to stay at home with extended leave due to quarantine measures, this also means a slower life pace – arguably a luxury in the past – now becomes a reality. Therefore, consumers have more time to spend on indulging themselves or looking after their wellbeing by, for example, a pampering skincare routine. In fact, as many as 79% of surveyed Chinese consumers think grooming routines are a good way to reduce stress, according to Mintel research.

What we think

We are busy conducting consumer research and investigating market shifts centered around this topic that will help us shed more light on consumers’ behaviours, purchase decisions, and more. This is really only the beginning. I’ll leave you with a final thought for now; I encourage companies and brands to think about more fundamental, longer-term shifts in consumer attitudes and behaviours, not just focus on the short term changes. There is no doubt that some products (such as sanitisers) will see a quick win, but the really smart brands are the ones who look at how to win consumer favour in the long run.

Ruyi Xu
Ruyi Xu

Ruyi Xu is the Head of Mintel Reports North Asia, leading a team of analysts who are responsible for publishing consumer and market research reports. She specialises in new product innovation across a wide range of FMCG categories.

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