The impact of this will be profound and more far-reaching than anything we have seen in our lifetimes. The pace of change is also extraordinary.
Scott McKenzie, Global Intelligence leader at measurement and data analytics company Nielsen.
Scenarios beyond covid-19: rebound, reboot, reinvent
Governments around the world are edging toward plans to exit mass population lockdowns, albeit at different speeds and in different ways, but the persistent questions for business are around what the future holds and how it should be navigated.
Nielsen, a global consultancy specialized in groceries, has identified three distinct time horizons for global market regeneration beyond the Corona emergency and attached likely scenarios to each.
With trillions being pumped into economic stimulus packages, yet thousands still dying of COVID-19 and some countries confronted by the prospect of ongoing population lockdowns, the question of how to reconfigure economies is significantly dependent on the behavioural changes taking place among the world’s consumers.
Nielsen’s global intelligence team has undertaken a study that considers global macro conditions such as unemployment, bailout packages, and interest rates and ties them to ongoing FMCG sales and attitudinal inputs from consumers around the world.
From there, the team examines common threads of consumer behaviour that tie to how the disease is being managed and the response of governments to support citizens through health and financial care.
The findings lead to three horizons being established that reveal significant new and adjusted consumer behaviours that will lead to different types of demand in terms of what, where and how consumers make purchases.
“Considerable has been made of comparisons to the 2008 global financial crisis, but this situation doesn’t make for accurate comparisons. The circumstances back then were fundamentally different,” says Scott McKenzie, leader of Nielsen Global Intelligence.
“Thousands were not dying each day, millions were not locked in their homes indefinitely, and businesses were not ordered to close their doors, kids were still in school. The impact of this will be profound and more far-reaching than anything we have seen in our lifetimes. The pace of change is also extraordinary.”
Three main scenarios
Rebound: An early return to normal living conditions (schools, workplaces, stores, restaurants etc. re-open) at some point in the third quarter of 2020.
Reboot: A medium-term scenario that is positioned in the fourth quarter of the year.
Reinvent: A longer-term view that places the world in a general return to normal living conditions at some point in the first half of 2021.
“The world is fundamentally recalibrating right now. Consumer habits are changing at great pace; and understanding those changes will be critical as businesses prioritize how they too recalibrate to meet the changed circumstances driven by COVID-19,” says McKenzie.
- In horizon No. 1, “Rebound,” a series of health indicators, actions by governments and business, and market conditions point to a rebased “normal”
- In horizon No. 2, “Reboot,” the societal response has a different set of focal points and positions the economy for meaningful regeneration toward the end of the year.
- In horizon No. 3, “Reinvent,” as the name suggests, a complete reinvention is required and may not play out until the first half of 2021. The consumer behaviours and characteristics are sharply amplified compared to horizons No. 2 and No. 3:
Polarization of shopping habits
With each of these time scenarios, the shopping baskets will also change. The repertoire, pack sizes, brand choices, product origins and more will be reconfigured as shoppers adjust to changed economic circumstances and a sharper focus on their health and safety.
Two clear sets of consumers will emerge – those with insulated levels of spending, often those who have maintained employment and remain shielded from day-to-day economic impact and those who will be restrained in their spending habits due to unemployment, furloughing or other COVID-19-related challenges.
This polarization of spending is expected to drive new considerations for retailers and brands as they urgently examine the range of products being offered and the pricing dynamics within.