consumers and covid-19: lessons from china - mintel · 2020. 4. 20. · consumer story in the early...

MARCH 2020 | INSIGHT

CONSUMERS AND COVID-19:LESSONS FROM CHINA

The spread of the novel coronavirus is causing unprecedented disruption toglobal consumer markets. But there is much we can learn from China'sexperience.

Toby Clark, Director ofResearch EMEA

1 © 2020 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel.

Table of ContentsFROM STOCKPILING DRIED GOODS TO A RESURGENCE OF HOME COOKING..........................4

A STEP CHANGE IN DISTRIBUTION PATTERNS ............................................................................... 6

"YOU ONLY REALISE WHAT YOU'VE GOT WHEN IT'S GONE".........................................................9

IT'S HARD TO SEE NOW - BUT THIS CRISIS WILL PASS................................................................12

https://clients.mintel.com/insight/consumers-and-covid-19-lessons-from-china


China's experience can help us find a way through theCOVID-19 crisisMassive market disruptionAlthough the novel coronavirus hit China first, the World Health Organisation now says that Europe isnow the epicentre of the outbreak, and it’s now affecting almost every country in the world. Every hourbrings new developments, and it’s hard to find a market that hasn’t been severely disrupted by theoutbreak.

Drawing on Mintel's global presence...It’s hard to find the time to take a step back, and to try to take stock of the broader implications of thisoutbreak.

But one of the strengths of Mintel is our global reach. This means that we’ve got the ability to reach outto colleagues around the world, and understand how this crisis is playing out in different regions.

...and learning from our counterparts in ChinaIn particular, there is a huge amount that we can learn from our colleagues in China.

This crisis will affect different markets in very different ways – but in a genuinely unprecedentedsituation, there’s value in taking any learnings we can from countries that are even a few weeks furtherdown the road.



FROM STOCKPILING DRIED GOODS TO ARESURGENCE OF HOME COOKING



Empty shelves are spooking shoppersPossibly the biggestconsumer story in the earlydays of the crisis has centredaround stockpiling and emptyshelves.

The supply squeeze startedwith hand sanitiser, movedonto toilet paper, and is nowin full effect across canned,dry and ambient foods. Running low on stock... ...and on staff

10%

of UK consumers saythat they've stocked upon groceries and other

supplies

Stocking up? Or panic buying?One thing that has become very clear is that stockpiling is one of thoseirregular verbs: “we are getting a few extra things in”; “you are panicbuying”; “they are selfishly depriving the vulnerable of essential supplies”.

Even allowing for this, our latest research (out of the field on 13th March)showed that 10% of UK consumers were already making an effort tostock up on groceries and other supplies. In Germany, the proportionwas 11%.

Base: 2,000 UK internet users aged 16+, 2,000 German internet users aged 16+Source: Lightspeed/Mintel

Concerns over grocery availability have faded in ChinaSpeaking to our colleagues in China, they hadseen exactly the same behaviour. Dry goods,ambient goods and store cupboard essentialswere all hard to come in the first weeks of thecrisis. But this initial consumer panic faded fast,and availability is now close to normal.

Instead, we’re seeing a counter trend. It’s too earlyto get hard data, but our analyst team is picking upsigns of an increased emphasis on fresh food.More people working at home means more timefor home cooking, and there’s an inevitabletendency for people to try to eat as well aspossible during a time of elevated fears overhealth and wellbeing.

Rather than stocking up on long-life food, there's

been a shift towards fresh foods. More time at

home means that home cooking is coming back.

— Ruyi Xu - Head of Reports, North Asia

“

”



A STEP CHANGE IN DISTRIBUTION PATTERNS



Love conquers all:COVID-19 couldn't ruin

Valentine's Day in Shanghai

SARS triggered permanent shifts inbehaviour...The SARS epidemic kick-started online retail in China, moving it from aniche channel to a much more mainstream option. COVID-19 haspushed it to a new level, particularly in the grocery sector. Oldergenerations had previously shied away from online grocery, but haveeffectively been forced to change their habits in the face of socialdistancing measures.

There have been changes even among consumers who are alreadyenthusiastic online shoppers. Online grocery is well-established in China,but many people still relied on supermarkets and wet markets for freshproduce. Again, people have had little choice but to change this patternof shopping. As with SARS, it seems inevitable that many of thesechanges will stick, well after the crisis has passed.

3%

of German consumershad increased theamount of online

shopping as a result ofCOVID-19

...and COVID-19 could have just as seismican impact on German grocery shoppingWe’ve already seen an echo of these changes in EMEA markets. Evenbefore the social distancing measures were announced, 7% of UKconsumers said that they’d increased the amount of online shopping theydo as a result of COVID-19. Given the current near-impossibility offinding a supermarket delivery slot since the social distancing measureswere introduced, we're expecting this figure to have risen significantly.

In Germany the proportion was much lower, at 3%, reflecting the fact thatthe online grocery sector is much less well-established than in the UK.But longer-term, the impact on the German market could be dramatic,echoing the way that SARS created a step-change in Chineseconsumers’ shopping habits.

Base: 2,000 UK internet users aged 16+, 2,000 German internet users aged 16+Source: Lightspeed/Mintel



26%

of Chinese consumershave shopped through

WeChat groups

Smaller retailers have had to improviseIn China, there have also been changes on the supply side.

Neighbourhood stores have moved online – but what’s really interestingis the way that they have made the shift. Many of them are simply usingWeChat as a sales channel, letting customers message them directly toplace orders.

This had the added benefit of being far more user-friendly than a fully-fledged online store for people who were new to online shopping. Ourlatest research in China on the impact of COVID-19 shows that 26% ofconsumers have shopped in this way.

Base: 1,200 Chinese internet usersSource: Lightspeed/Mintel

Improvisation and agility will be crucial in the coming monthsIn China, even big retailers were forced to improvise, and this often involved drawing on the resources oflocal businesses.

One of the most popular dining options in China is the hotpot restaurant – a communal dining experiencewhere people cook their own food in a shared pot of gently simmering stock. It’s hard to imagine a diningoption that’s less suited to a period of social distancing, and footfall suffered accordingly. In a spirit ofmutual support, though, the Chinese online behemoth Alibaba has supported local hotpot restaurants byusing their staff to fulfill deliveries.

There’s real potential for a similar shift in the European and North American markets that are only justmoving into the next phase of the fight against COVID-19. It not only plays to the hugely increased demandfor delivery options, but also to people’s desire to find ways to support local businesses, if they can nolonger shop in store.



"YOU ONLY REALISE WHAT YOU'VE GOTWHEN IT'S GONE"



57%

of Chinese consumerssaid they feel closer to

community shopsbecause of the

outbreak

The crisis has built bonds between brandsand their customersA desire to support local businesses was clear in China, and we’ll seeexactly the same thing in other markets. Well over half of the consumerssurveyed by Mintel said that the outbreak had made them feel closer totheir local shops.

Partly it’s simply a reflection of the natural tendency to only reallyappreciate what you have when it looks as if you may lose it.

But it’s also a recognition of the simple fact that times of crisis highlighthow inter-dependent we all are. As shoppers, we are entirely reliant onbusinesses’ ability to supply the goods and services that allow us tosurvive and thrive. And as businesses, we are entirely reliant on ourcustomers’ support.

Base: 1,200 Chinese internet usersSource: Lightspeed/Mintel

54%

of German consumerssay that it's importantfor them to feel part of

a community

A crisis of this scale highlights our mutualdependencyOne of our food and drink clients in China highlighted their belief that thecrisis has led to people being more supportive of each other.

At a time where society is being tested to a degree that we haven’t seenfor decades, people and businesses have realised that we depend oneach other, and that we need to fight for survival side-by-side.

This drive towards community and localism is already something that hasbeen captured as part of Mintel's Trends Driver research. 54% ofGerman consumers, for example, say that it's important for them to feelpart of a community, and 61% that they try to buy from local companieswhere possible.

We see similarly strong responses across most of the markets we cover -and COVID-19 will only reinforce the supportive role that community canplay in a crisis.

Base: 1,000 German internet users aged 16+Source: Lightspeed/Mintel



Serving up reassurancealongside the real ale

Doing the right thing - for the right reasonsThere’s no point pretending that this isn’t an incredibly difficult situation.Many businesses are facing an existential threat to their survival.

But it’s also true that the businesses that support and protect the broadercommunity, and who deal with the crisis sympathetically andtransparently will gather goodwill that will last far longer than this initialphase of the crisis.

And, equally, businesses that are felt to have treated their customerspoorly will destroy that goodwill. People might be prepared to pay vastlyinflated prices for hand sanitiser at the peak of the crisis, but they’ll neverforget that sense that they’ve been exploited in a time of crisis.



IT'S HARD TO SEE NOW - BUT THIS CRISISWILL PASS



COVID-19 will have a huge impact on lives and livelihoods...

Rush hour traffic at Cambridge North station

In the midst of this crisis, it can feel hard to seeany end point.

People are having to adjust to the fact that thesocial distancing measures, office closures andthe threat to health are going to last for months,not weeks.

And the economic fallout will be substantial. It’shard to see a way that this doesn’t lead to aslowdown on the scale of the post-financial crisisrecession.

Even before the social distancing measures wereannounced on the 16th March in the UK, 34% ofconsumers were worried about the risk of beingexposed to COVID-19, and 36% about the impactthe outbreak will have on their lifestyle.

This figure will inevitably rise sharply over thecoming weeks.

Base: 2,000 UK internet users aged 16+Source: Lightspeed/Mintel

...but we will come back from itDespite all this, though, my conversations with some of my counterparts in China have left me feeling moreoptimistic than I have for a while.

Life in China is still hugely disrupted. Our Shanghai team is still working from home, and our clients are stillhaving to deal with incredibly challenging market conditions. But some degree of normality is returning.Public transport is busier. There are people enjoying the spring weather in parks. Footfall in shopping mallsis slowly increasing.

There’s a long way to go before this crisis passes, and there’s a good chance that things will get worsebefore they get better, for businesses as well as for society as a whole. At some point, though, we willemerge from the crisis.

After the financial crisis, Mintel’s key message to our clients was that it’s vital to keep one eye on the longterm. The same is true now. The groundwork that companies do now in terms of supporting theircustomers, understanding their needs, and building that goodwill will play a huge role in determining howstrongly they emerge from this crisis.



Meet the expertToby Clark

Director of Research EMEA

Toby has worked at Mintel for 14 years and leads the large team ofresearchers who produce over 500 business reports per year on UK andEuropean market sectors. He also oversees Mintel's quarterly reportscovering consumer confidence and the state of the economy.

Read more by this expert | Get in touch



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DisclaimerThis is marketing intelligence published by Mintel.The consumer research exclusively commissionedby Mintel was conducted by a Chinese licensedmarket survey agent (see Research MethodologyChina for more information).

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Consumers and COVID-19: Lessons from ChinaTable of ContentsChina's experience can help us find a way through the COVID-19 crisisMassive market disruptionDrawing on Mintel's global presence......and learning from our counterparts in China

From stockpiling dried goods to a resurgence of home cookingEmpty shelves are spooking shoppersStocking up? Or panic buying?Concerns over grocery availability have faded in China

A step change in distribution patternsSARS triggered permanent shifts in behaviour......and COVID-19 could have just as seismic an impact on German grocery shoppingSmaller retailers have had to improviseImprovisation and agility will be crucial in the coming months

"You only realise what you've got when it's gone"The crisis has built bonds between brands and their customersA crisis of this scale highlights our mutual dependencyDoing the right thing - for the right reasons

It's hard to see now - but this crisis will passCOVID-19 will have a huge impact on lives and livelihoods......but we will come back from itMeet the expert

consumers and covid-19: lessons from china - mintel · 2020. 4. 20. · consumer story in the early...

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