According to the McKinsey & Company survey across 38 countries to understand the impact of COVID-19 on consumer sentiment, more than 75 per cent consumers across the world expect to feel the impact of COVID-19 for more than two months, and about 50 per cent expect this duration to last for more than four months. Around 90 per cent Chinese and the US consumers also expect this impact to last for more than two months before routines go back to normal, while 50 per cent expect their finances to be impacted for more than four months. Around 60 per cent European countries expect this financial impact to last more than two months. In contrast, almost 100 per cent of consumers in Japan and South Korea expect disruptions to their routines to last more than two months.

As governments and organizations across the world step up efforts to contain the COVID-19 pandemic, consumers have already begun to feel its economic effects. With most countries moving through the contagion curve, consumers are pulling back their discretionary spending. Though their expenditure on online shopping has increased, this is not enough to offset their overall reduction in spending.

To track the changing consumer sentiment during these times, McKinsey & Company recently conducted a survey across 38 countries to understand the impact of COVID-19 on consumer sentiment. These surveys conducted online and repeated weekly or bi-weekly depending on the region. Their results are weighted on a country basis for representative balance of age and income/socioeconomic status.

Less optimism in European consumers

The surveys indicated European countries, hard hit by COVID-19, are considerably less optimistic compared to their counterparts in Africa, Asia, and theAmerica. Optimisim amongst Chinese consumers increased 53 per cent over the past week.

Consumer income to decrease

Between 30 and 50 per cent consumers globally expect their household income to decline over the next two weeks, while few expect it to increase. Most optimistic among these are Chinese consumers, 30 per cent of whom expect salaries to increase however, 37 per cent still expect a decrease. Around 49 per cent consumers in most European countries, United States Japan, and India, expect their income to decrease. More than half of consumers in the final tier of countries—Brazil, South Africa, Germany, and Korea expect their incomes to decrease.

Increased spending amongst Asian consumers

The optimism of Chinese consumers’ is likely to result in a net increase in expected future spending, a situation also observed in Indonesia, Nigeria, and India. Other countries, including Brazil, Japan, and Portugal also expect to increase their spending whereas European consumers expect to spend less.

Consumers halt discretionary expenditure

Consumers are universally pulling back their expenditure on discretionary items. Some categories where consumer expenditure has declined considerably include restaurants, apparel, footwear, accessories, travel, and entertainment out of home. Chinese consumers are spending more across categories including pet-care services and fitness and wellness. Their shopping behavior after the COVID-19 peak resulted in more than 30 percent lower traffic but larger basket sizes for food purchases, and depressed traffic and consumption for apparel and department stores. In South Korea and Indonesia, food takeout and delivery is showing positive momentum.

COVID-19 impact to last long

More than 75 per cent consumers across the world expect to feel the impact of COVID-19 for more than two months, and about 50 per cent expect this duration to last for more than four months. Around 90 per cent Chinese and the US consumers also expect this impact to last for more than two months before routines go back to normal, while 50 per cent expect their finances to be impacted for more than four months. Around 60 per cent European countries expect this financial impact to last more than two months. In contrast, almost 100 per cent of consumers in Japan and South Korea expect disruptions to their routines to last more than two months.

During this period, most consumers expect to spend less time working and more time consuming entertainment, including digital and video content, news, and social media. On the contrary, Chinese consumers plan to spend more time back at work.