Although certainly not a perfect comparison, I’ve been interested in the first trends in consumer behaviour emerging out of China after 3 months of social distancing and strict quarantine in key areas.
Disclaimer: The report quoted below has limitations but is also one of the very few English sources of market data I could find so far. I still think it might be an interesting exercise to look at the data and try to ask how might the trends be different in the US.
900 respondents, 300 people from three Tier 1 cities: Beijing, Shanghai and Guangzhou
each group was presented with 3 scenarios (Note: it seems that since the survey was conducted the reality has proven it’s partly the base case (we’re seeing lowering cases in China) and pessimistic (global spread).
base ( 40,000+ cases, 1,000+ deaths, stabilization by May/June)
pessimistic (numbers continue to grow, more cities become quarantined, global spread, destabilization continues until end of 2020)
4 main consumer types & overall trend:
Young professionals—resilient in spending, most likely to start spending on travel the fastest, as things stabilize
Retired consumers with lower incomes—spending will drop overall with a predicted exception for packaged goods
Mature consumers with higher incomes—largely unaffected but predicted to lower luxury spending under the pessimistic scenario
White-collar mothers—most likely to reduce spending on clothing and cosmetics
Key highlights:
1. Overall consumers do not expect drastic changes in their demand, with respondents only expecting a 17% change in their budget from 2019.
2. 60% are likely to spend the same or more in the next 3 months vs the same period in 2019.
3. Under all scenarios, reduction in travel and dining out spending is the highest, but also the quickest to recover under the optimistic scenario. Especially for lower-income customers, demand for packaged goods is likely to increase the most, the worse the scenario.
4. In terms of online buying, household goods and luxury items might experience the strongest move to e-commerce, the longer the duration of the coronavirus situation.
5. Especially for high-income mature consumers, demand for electronic devices is predicted to increase under pessimistic scenario.
Some other interesting facts from China I stumbled upon:
1. Quick rebound in air travel demand - a 78% increase in the past 6 weeks
2. Negative social effects of putting 760M people in quarantine:
mental health—DAU for the Tencent’s new mental health program grew from 330k before the outbreak to 36m after
cooking revolution—in February grocery delivery was +60%, food delivery was down 50% while recipe app usage grew +44.
internet use—daily internet usage/person increased from 6.1 hrs before the crisis to 7.3 hrs after
I’d be interested to brainstorm which of these trends are likely to be seen in the US/Europe in the next couple of months and what might be different.
If anyone has other sources of data (or perhaps knows Chinese and could share some local reports), that would be great!
Lessons from China
Although certainly not a perfect comparison, I’ve been interested in the first trends in consumer behaviour emerging out of China after 3 months of social distancing and strict quarantine in key areas.
Disclaimer: The report quoted below has limitations but is also one of the very few English sources of market data I could find so far. I still think it might be an interesting exercise to look at the data and try to ask how might the trends be different in the US.
Link to report
Sample:
900 respondents, 300 people from three Tier 1 cities: Beijing, Shanghai and Guangzhou
each group was presented with 3 scenarios (Note: it seems that since the survey was conducted the reality has proven it’s partly the base case (we’re seeing lowering cases in China) and pessimistic (global spread).
optimistic (COVID mortality rate < 1%, infections dramatically reduce starting Feb)
base ( 40,000+ cases, 1,000+ deaths, stabilization by May/June)
pessimistic (numbers continue to grow, more cities become quarantined, global spread, destabilization continues until end of 2020)
4 main consumer types & overall trend:
Young professionals—resilient in spending, most likely to start spending on travel the fastest, as things stabilize
Retired consumers with lower incomes—spending will drop overall with a predicted exception for packaged goods
Mature consumers with higher incomes—largely unaffected but predicted to lower luxury spending under the pessimistic scenario
White-collar mothers—most likely to reduce spending on clothing and cosmetics
Key highlights:
1. Overall consumers do not expect drastic changes in their demand, with respondents only expecting a 17% change in their budget from 2019.
2. 60% are likely to spend the same or more in the next 3 months vs the same period in 2019.
3. Under all scenarios, reduction in travel and dining out spending is the highest, but also the quickest to recover under the optimistic scenario. Especially for lower-income customers, demand for packaged goods is likely to increase the most, the worse the scenario.
4. In terms of online buying, household goods and luxury items might experience the strongest move to e-commerce, the longer the duration of the coronavirus situation.
5. Especially for high-income mature consumers, demand for electronic devices is predicted to increase under pessimistic scenario.
Some other interesting facts from China I stumbled upon:
1. Quick rebound in air travel demand - a 78% increase in the past 6 weeks
2. Negative social effects of putting 760M people in quarantine:
increase in domestic violence
increase in divorce rates
3. The current drop in pollution levels, if sustained over 2 months, could save 4,000 kids under 5 and 73,000 adults over 70 in China
4. Quick facts from a Twitter thread by Nicole Quinn (Lightspeed Ventures investor):
mental health—DAU for the Tencent’s new mental health program grew from 330k before the outbreak to 36m after
cooking revolution—in February grocery delivery was +60%, food delivery was down 50% while recipe app usage grew +44.
internet use—daily internet usage/person increased from 6.1 hrs before the crisis to 7.3 hrs after
I’d be interested to brainstorm which of these trends are likely to be seen in the US/Europe in the next couple of months and what might be different.
If anyone has other sources of data (or perhaps knows Chinese and could share some local reports), that would be great!