\nCustomers are significantly scaling back their spending across nearly all categories, anticipating tougher times ahead. This trend is likely to continue. As the crisis peaked across Western economies, more than one-third of Europeans and Americans said their income has been negatively affected by COVID-19. In fact, one-half reported reducing their spending in the past two weeks, and 40 percent of Americans and 44 percent of Europeans expect to continue spending less in the next two weeks. Overall spending is expected to decrease by 50 percent across all consumer categories, but certain shelter-in-place necessities will rise: groceries (up 14 percent), entertainment (up 13 percent), and household supplies (up 3 percent).<\/p>\n
China, which is several weeks ahead of other countries in the COVID-19 crisis, has yet to see consumer spending return to normal. McKinsey research found discretionary spending has fallen 30 to 60 percent, and retail transactions have dropped by 20 to 50 percent. These movements are accompanied by diminished foot traffic in retail outlets and an increased reliance on convenience-focused digital channels.<\/p>\n
Increased traffic in online channels<\/strong> A greater emphasis on health and safety<\/strong> Behaviors that are here to stay<\/strong> Return to old normal—<\/strong>mature or less-relevant experiences that may not sustain COVID-19 growth spurts <\/p>\n \nA focus on three priorities<\/strong>
\nAround the world, companies have moved quickly to accommodate the massive shift to digital channels. Every possible activity—from meals and groceries, to finance and education, to fitness—now has a digital or online equivalent, many of which have seen soaring usership. Nearly all organizations, whether traditional companies or start-ups, are reorienting their business models to be more digital. It’s highly likely that consumers will prefer to use many of these digital offerings after the crisis. For example, China’s market anticipates that online penetration will see a permanent bump of three to six percentage points due to embedded COVID-19 behaviors.<\/p>\n
\nThe pandemic’s massive health implications and associated public-health policies have normalized physical distancing and the need for constant sanitation. Indeed, McKinsey research shows that most of customers’ main concerns about COVID-19 are related to health and safety, so companies must keep these issues front of mind as they plan their transitions to the next normal.<\/p>\n
\nCompanies must simultaneously monitor consumer trends, adapt their business models, plan for business continuity, and ensure their employees are safe and healthy—all while managing the chaos and ambiguity of the crisis. In this environment, executives must have the skills to prioritize what is most important. To get a better understanding of the next normal’s contours, our analysis evaluated consumer trends along two criteria: user growth since the pandemic hit and the likelihood that these behaviors will continue (exhibit). With these lenses, we segmented activities into four quadrants:<\/p>\n
\nExciting . . . for now—<\/strong>stopgap solutions with the potential for user erosion after the pandemic
\nPotential to stick—<\/strong>new experiences with momentum and the potential to be cemented in the next normal
\nFast accelerators—<\/strong>high-performing replacements for traditional in-person experiences that will likely persist in the next normal <\/p>\n![\"\"](\"http:\/\/www.masterad.com\/backoffice\/upload_editor\/Insight\/2020\/untitled%20folder\/insight.png\")
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\nIn the next normal, winning companies will capitalize on opportunities to adapt to evolving customer behaviors, deliver short-term business success, and strengthen their long-term strategic positions. These efforts require executives to reimagine and reform customer experience through thoughtful, targeted investment, starting with three priorities. <\/p>\n