As the novel coronavirus (COVID-19) sweeps the world, consumers are being forced to dramatically change their purchase behaviors. Nielsen is tracking these changes and establishing clear navigation beacons for companies trying to understand the changes and plan for what comes next.
We’ll be updating this page regularly with the latest news and insights. If you have specific questions, reach out to your Nielsen representative or contact us.
Key Consumer Behavior Thresholds
A Nielsen investigation has identified six key consumer behavior threshold levels that tie directly to concerns around the COVID-19 outbreak. The thresholds offer early signals of spending patterns, particularly for emergency pantry items and health supplies, and we are seeing these patterns being mirrored across multiple markets. As the virus’ reach widens, governments are implementing stricter regulations sooner, sending consumer behavior speeding through or even skipping these thresholds.
We’re monitoring these patterns closely, as they are still evolving. However, when reviewed across currently impacted countries, they can help provide a set of leading indicators for packaged goods manufacturers and retailers faced with supply issues as they race to meet record levels of demand and changing purchase habits.
Threshold levels 1-4 are beginning to show predictable signs of spending from consumers. To help markets understand what’s to come as they enter later thresholds, we’ve spotlighted several markets to showcase the key trends that have defined purchasing behaviors in the later thresholds levels as businesses look for guidance on what is likely to happen.
This past week ending April 3, China took a big step and lifted its restrictions on the Hubei province, the epicenter of the pandemic. While people are returning to work, restaurants and some primary and secondary schools have reopened, signs of a life altered are still there. People are keeping their distance, wearing masks and are continuing to work, learn and eat more at home. A recent survey showed that 86% of Chinese mainland consumers would eat at home more post-pandemic.
“Although home quarantine restricts people from going out, it makes staying at home a new way of life, and thus boosts the homebody economy. Online shopping, online education and working from home have developed rapidly. As such, consumers have quickly adapted to the situation in order to meet daily needs such as staying safe or for shopping, as well as for personal leisure.”
JUSTIN SARGENT, PRESIDENT, NIELSEN CHINA
Already one of the most advanced e-commerce markets in the world, China’s online retailers found themselves tested and stretched in new ways. During the quarantine, fresh food channels grew significantly, and 89% of Chinese mainland consumers said they would be more willing to buy daily necessities and fresh products online after the pandemic. It’s no surprise that 67% of retailers said that they will make efforts to expand online channels and accelerate home-based business / retail warehouse layout in a recent study of more than 10,000 retailers.
Staying healthy remains a top priority for consumers who are generally more conscious of hygiene and healthy eating, and are now further adopting technology-enabled smart health. Nielsen found that 90%, 93% and 77% of respondents to a recent survey of Chinese mainland consumers have already purchased or plan to buy air purifiers, water purifiers or smart fitness bracelets, respectively. We expect to see a similar emphasis across markets, especially for those living in extended quarantines.
In Spain’s second week of quarantine, March 22 – 28, the country’s death toll surpassed that of China. As numbers continued to rise in the third week, the country dealt with increasingly stricter quarantine measures and skyrocketing unemployment. The top necessities in consumers’ quarantine baskets continued to be centered around health safety and included liquid soap (+227.7%), thermometers (+169%) and hydrogen peroxide (+143.5%).
Now entering the fourth week of lockdown, we will watch to see if there’s a leveling off in sales as Spanish consumers balance their need for supplies and their availability, with safety and money concerns.
“After this intensified demand of the last three weeks, manufacturers will be required to communicate why their products are trustworthy, and to distributors, the security of their supply chain. In the long term, and depending on the impact of COVID-19 on the markets, the process of reassessment by buyers of the key factors in selecting the products that are part of their shopping basket will be accelerated.”
Pilar Tomey, Sales Director at Nielsen Spain
In the days leading up to the lockdown, Spain leaped from threshold 3 to 5, sending consumers to stores in droves. Hypermarkets saw the biggest boost, with sales growing +95% in the week ended March 15. In prior weeks, the channel averaged just 5% growth. Online sales more than doubled between the first and second weeks of March reaching +59%, in a country whose percent of FMCG online sales typically hovers around 1%.
By the second week of quarantine, hyper- and supermarket stores saw a dramatic drop back to pre-quarantine levels. E-commerce levels dropped off a little, but have remained high.
Retailers that set themselves apart by prioritizing the health of their customers, reducing touchpoints, and expanding their delivery and pick up services, will be able to clearly differentiate themselves during a pivotal moment.
Last week, Americans felt the heaviest toll of the coronavirus so far as the nation continued to lead the world in the number of confirmed cases. Almost 300 million people are now living under quarantine, as statewide shelter-at-home policies grew from 21 states to 36 between March 26 to April 2. As businesses continue to feel the strain across the country, almost 10 million Americans have filed for unemployment.
Following the first CDC announcement of a 15-day pause on activities on March 16, Americans shifted towards a new threshold: #5, Restricted Living. In the two weeks following, CPG sales (in-store and online) grew $8.5 billion compared to a year ago. But in the last week of March, in-store sales were only $3.2 billion above the same time last year, likely driven by a combination of factors including out-of-stocks and increasingly more consumers facing community lockdowns.
Meanwhile, CPG e-commerce saw an increase of +85% from a year ago in the week ended March 21, which represented an unparalleled leap ahead of past measures. This sharp peak in growth has been met with a week-over-week decline (-22%) in online sales between March 21-28. As online fulfillment systems are pushed to extremes, there were clear signs of strain.
“Our industry is operating in truly uncharted territory. E-commerce growth has surpassed any expectation, where health and safety needs are driving completely new behaviors for consumers. But as demand rises beyond control, it will be paramount for companies to harness every ability for e-commerce automation to seamlessly manage the factors that are within control. This will be the best defense against significant delays in delivery and canceled orders due to out of stock items.”
Nicole Collida, SVP Brand Effectiveness, Nielsen
As U.S. consumers continue to hunker down, we see evidence of a homebody economy emerging. About a quarter of consumers said they expected to shop online more frequently or for the first time in order to avoid germs in public places. Three in 10 (28%) Americans are listening to more radio, mostly at home and to stay informed. And sport entertainment is shifting with 903,000 viewers tuning in to the first ever virtual NASCAR race on March 22.
As more Americans stay home, their media habits are also shifting. Staying put in our homes can lead to almost a 60% increase in the amount of content we watch in some cases and potentially more depending on the reasons.
While many consumers are currently under strict movement restrictions with access to limited businesses, Sweden is taking a different approach. The country remains in quarantine prep, as the country has yet to place strict restrictions like in other markets across Europe. Gatherings of 50 or more have been prohibited, and some higher education schools have switched to online learning. However, younger children, mainly those under 16, remain in school. Instead, the country has focused on pushing proper hygiene, social distancing and self-isolation.
That doesn’t mean Swedes aren’t preparing like the rest of the world. On March 11, the WHO declared COVID-19 a global pandemic, and on the same day, Sweden announced its first coronavirus-related death and growing restrictions. This caused a surge in already rising disinfectant sales to climb +1,168.8% in the week ending March 15. In fact, across all categories, sales grew as consumers stocked up on pantry items and health-safety products.
In the week following, sales remained high with household products and frozen food taking the lead. Pantry staples such as milk and cream powder (+159.5%), pasta (+159%), flour (+126.4%) continued to be swept off the shelves.
While various sources have reported that Swedish consumers’ concern is relatively low, they’re still showing signs of investing more time at home and hygiene tools.
“As patterns begin to emerge in response to news events of this nature, it will be imperative for companies to learn from these scenarios so they can sustain growth even in times where COVID-19 has uprooted people’s lives. These patterns will help provide leading and trailing indicators to those trying to understand how people will respond as developments continue to play out at different times in different countries.”
Scott McKenzie, Nielsen’s Global Intelligence leader
Responding to Consumers’ COVID-19 Concerns
While many markets are still in the middle of this global pandemic, there are some early signs that our consumer habits will be forever changed by COVID-19. Three critical accelerators intersect with the six consumer thresholds and will fast track long-term behavioral shifts. We’ve identified a few ways businesses can prepare for shifting consumer demands as markets move through the six thresholds.
Emphasize Quality and Efficacy
Throughout the thresholds, consumers will be seeking greater assurance that the products they buy are free of risk and of the highest quality when it comes to safety standards and efficacy, particularly with respect to cleaning products, antiseptics and food items. In the short term, this intensified demand from consumers will require manufacturers, retailers and other related industry players to clearly communicate why their products and supply chains should be trusted. In the longer term, and dependent on the eventual scale and impact that COVID-19 has on consumer markets, it may speed up a re-think on how shoppers evaluate purchases and the benefits that they see as the key factors to consider.
Be Transparent About Local Origins
More than ever, shoppers want to understand the supply chain, with complete transparency from farm to factory to distribution, and they want details of the measures being taken to assure their safety. Promoting a product’s local origins could help manufacturers and retailers assuage some consumer concerns. A Nielsen survey on disloyalty last year found that global consumers report being heavily swayed by origin: 11% of global consumers said they only bought products manufactured in their country while an additional 54% “mostly” bought local products.
With millions working from home and digital connectivity taking even more of a hold on everyday habits, consumers will have greater motivations and fewer perceived barriers to more actively seek technology-enabled solutions to assist in everyday tasks like shopping. Companies that can leverage technologies—by meeting changing consumer demands online, enabling seamless interactions through direct-to-consumer offerings and enhancing consumer experience with augmented and virtual realities—have the opportunity to earn consumer loyalty well after consumers’ concerns subside.