It was only two weeks ago that the world as we knew it in the U.S. would so dramatically change.
During the week of March 2, 2020, COVID-19 got up close and personal. That week, we saw the disease begin to rout U.S. financial markets and rock nearly every aspect of daily life. The media went into over-drive in tracking and reporting outbreaks, and no one could get enough of seeing and hearing Dr. Anthony Fauci’s take on the progression and severity of the contagion here and around the world.
On Friday of that week, March 6, PYMNTS put a study into the field to a census-balanced panel of roughly 2,128 U.S. consumers. Our goal was to baseline consumer sentiment and behaviors that first week across a number of activities that represent five cornerstones of our connected economy: how people shop, work, spend their leisure time, travel and eat.
Mostly, we wanted to benchmark and then track over the weeks to come how much of that change would shift to become the “new normal” — and how quickly those shifts might happen, and across which activities.
Looking back, it turned out to be an important week to gauge consumer sentiment.
For this first week, any behavioral changes were self-imposed — it was largely business as usual across most of the U.S., despite reports that the contagion was escalating.
Businesses were still open, people were still going to work and having meetings, planes were still flying, gyms and movie theatres were still open, sports teams were still playing in arenas (at least that week), and stores were still operating at normal business hours, as were bars and restaurants.
All that said, consumers had begun to do things differently.
This study, the first of many we will publish over the course of this pandemic, provides an important baseline of the consumer’s psyche, sentiment and behaviors across those connected economy pillars while those decisions were still theirs to make.
Here’s the topline for the week that started it all.
The 411 On Covid-19, Week No. 1
Based on our survey results for that week, we learned that:
- Men and women are equally concerned about their risks of contracting the virus, but women were more likely to change their day-to-day routines in an effort to manage them.
- The 30- to 40-year-old bridge millennials were the most concerned of all demographic groups — in fact, nearly 30 percent more so than their boomer parents and senior grandparents.
- Higher-income individuals shopped more online, while those earning less than $50,000 a year just didn’t do much shopping at all.
- All consumers reported eating out less, particularly at restaurants with table service, and said they used delivery aggregators, bought prepared foods at grocery stores and used mobile order-ahead less than they did before that week.
- Even before March Madness was canceled and sports teams pushed pause (or stop) on live events, consumers had put social distance between themselves and sports arenas, as well as movie theatres.
- Consumers just said no to getting on planes — especially if those trips were to New York or any international destination for work or pleasure. The same held true for booking vacation rentals and B&Bs and using public transportation, and to a lesser degree for getting into Ubers — in part because they didn’t need to and in part because they didn’t want to.
And what would give consumers the confidence to get back on an airplane, check back into a hotel or use public transportation?
That answer may surprise or even stun you.
It’s not hearing that there’s been a reduction in the infection rate, nor the CDC telling consumers that it’s safe to travel, and especially not the media telling us that things are good to go.
In fact, 65.7 percent of consumers surveyed that week said they felt the media was making the virus seem worse than it actually was.
It’s not even offering discounts of 50 percent for airfares or hotel rates (even though discounts of more than that would get 9 percent of consumers to book a trip).
Here’s what consumers said would boost their confidence: knowing that a vaccine is available in the U.S. to protect them from contracting the virus in the first place.
Something that is 12 to 18 months away, according to most medical experts.
Who’s The Most Worried?
Hint: It’s not boomers or seniors.
By the end of that first week, we learned that just about everyone reported being concerned about the risk of contracting COVID-19.
Roughly 85 percent of U.S. consumers said they were concerned on some level about contracting the virus, with more than a third of consumers — 37 percent — reporting they were extremely concerned. Nearly half of consumers — 49 percent — said they were somewhat or slightly concerned.
Only 33 percent of boomers and seniors reported being very or extremely concerned, even though they are the demographic groups described by nearly all medical professionals as being high-risk. They are also the group most able to practice social distancing, and very likely had already taken measures to self-quarantine to avoid exposure and risk.
It’s the 44 percent of bridge millennials — those 30- to 40-year-olds who represent the first generation of connected consumers with discretionary income — who report being extremely concerned, making them the largest demographic group to report that level of apprehension. This, of course, is the generation of consumers who came of financial age in the aftermath of the Great Recession, and had begun to accumulate wealth and discretionary income — and to feather their nests and settle down — over the last decade.
Their concern is interesting, given that they appear to be at relatively low risk of having serious health consequences if they were to contract the virus, according to most medical experts. Yet this “black swan” is an unwelcome intruder, with the perceived potential to compromise their financial health and to put themselves and their social network at risk of contagion.
This is also the generation of consumers whose behavioral changes, we posit, could most clearly define “the new normal” of everyday activities on the other side of this global pandemic.
Who’s Changing What — And Why
We also learned that all consumers, even in that first week, had already begun to change how they worked, shopped, ate, played and traveled.
Those changes in behavior were more or less aligned with the consumer’s level of concern over their perceived risk of contracting the virus, and those changes were more or less done of their own volition.
More consumers did more of their shopping online. We observed a dearth of shopping of any kind among those with incomes of less than $50,000, particularly in physical stores. Seventy percent of these lower-income individuals also expressed the highest levels of concern over contracting the virus, so not spending money seemed to be key. More affluent consumers seem focused on avoiding public spaces, while going online to buy what they needed and wanted.
Not surprisingly, we observed that consumers had already made their own decisions to travel less by plane anywhere, but particularly to New York, the Pacific Northwest and most international ports of call. For those who continued to travel that week, it’s interesting to note that more consumers (14.3 percent) felt more comfortable staying in someone’s home — aka home-sharing properties — than in large or small places with other people, specifically large name-brand hotels (9.7 percent) and B&Bs (11.4 percent).
Consumers also reported eating at home more than they did before reports of the outbreak in the U.S., and were using meal delivery services, aggregators and mobile order-ahead services less often.
Consumers voluntarily put themselves under partial quarantine by working from home and by commuting via car rather than using public transit if they were going to work. They also made decisions to cancel work-related gatherings and leisurely plans of all sorts, from attending sports events and concerts to watching films in theaters — even before the sports franchisees decided to take unprecedented measures and do that for them.
The Nearly Half Of The Country Who Were Still On The Fence
We wanted to dig deeper into how the fear of contracting the virus that week had begun to impact the behaviors of consumers in how they work, shop, eat, and travel for business and leisure. This window, we suspect, will be important in helping us better understand the degree to which consumers shift to a “new normal” once the COVID-19 crisis dissipates.
Our week-one respondents gave us that baseline insight.
Not surprisingly, we observed big pullbacks in corporate travel, with 31 percent of consumers reporting that they had curtailed their business trips.
For the 48 percent of consumers who say they are slightly or somewhat concerned about their COVID-19 risk, that pullback is even more stark.
For this group, 55 percent reported cutting back on domestic travel for business, 47 percent on using public transportation, 44 percent on using Ubers and 53 percent on traveling internationally for personal reasons, which we suspect involved changing spring break plans. This behavior proved to be much more restrictive than what we observed in the sample at large — motivated in part by businesses advising employees to limit their travel to essential business trips, and in part by people deciding to use a call or video chat instead.
During the week of March 2, more consumers reported going to the office to work than not, particularly among those who were slightly or somewhat concerned. Only 6 percent of the somewhat concerned reported that they were going to the office less, versus the 12 percent of the overall sample who said they had taken steps to work from home.
That week, consumers were already giving up on movie theaters, live sporting events and concerts, with 37 percent, 33 percent and 3 percent of consumers, respectively, reporting a reduction in those activities.
Consumers across the board had also begun to change how they shopped.
Thirty percent of consumers reported going to physical stores less, and 19 percent reported that they shopped online and via mobile devices much more. There was an interesting paradox with respect to their grocery store behaviors: More consumers reported a decline in curbside pickup (19 percent) than those who reported an increase (16 percent). Only 5 percent of all consumers reported going to the grocery store more often that week — a decision that many likely lived to regret when they found themselves standing in five-hour lines at those stores the following week.
Perhaps most fascinating are the reported changes in how and where consumers got and ate their food.
Consistently and across the board, consumers ate out less. More than a third (35 percent) reported eating less at quick-service restaurants (QSRs), and about a quarter reported using order-ahead less often. This is interesting, particularly since this same group reported that they were still largely going to their offices to work and, presumably, still using order-ahead during their commutes and during the day to order food.
More dramatically, more than a third (36 percent) said they were eating less often at restaurants with table service. A quarter reported a decline in buying prepared foods at grocery stores to eat at home. Twenty-nine percent of those consumers reported using aggregators less often as well. Fear of the contagion was one factor at play. The other perhaps? Wanting a better understanding of the health and risk factors of those preparing, and in the case of restaurants, serving their food.
Fear is a powerful motivator of human behavior, and the human brain is hard-wired to avoid loss. Social scientists who study human decision-making have consistently observed that people typically place a higher value on the things they have and could lose, than on the things they don’t have but could get.
We’re seeing this phenomenon — which scientists and behavioral economists call loss aversion — play out in real time as the COVID-19 contagion accelerates globally, and is now front and center in every single state in the U.S. for each of the 331 million people living here.
Consumers will go to extraordinary measures to avoid losing what they have. And they must be absolutely convinced that there’s no downside to doing anything that could put them or their families at risk.
With the exception of going to work, the behaviors of the nearly half of all consumers (48 percent) who reported being slightly or somewhat concerned about their risks of contracting the virus more or less tracked with those across the entire sample of consumers that first week.
But that was week one, and any decisions to modify their behaviors were theirs to make in an environment that tried quite hard to remain business as usual.
Last week did, and this week already will usher in more changes as federal, state and local governments and businesses themselves made decisions about how they — and all consumers, by default — will go about their daily lives. Already this morning (March 16) we have seen LA, NY OH and MA close bars and restaurants to takeout only, restrict gatherings of more than 25 (in Massachusetts) and 50 or more (across the U.S.) and shutter schools and gyms. Airlines are reducing capacity and stores are restricting the hours they are open. These closures vary in terms of duration — some for the next few weeks, others for a month and even longer.
How and why that impacts the short- and long-term behaviors of U.S. consumers across these five pillars of the connected economy remains to be seen.
A lot will depend upon the duration, how quickly we in the U.S. have been able to flatten the curve and how confident the U.S. consumer is that their risk factors are diminished.
What’s clear is that every change in behavior requires a catalyst to drive lasting change. The fear of loss in the form of COVID-19 and its unprecedented impact on the global economy and every person living in it could be the catalyst that will shape our connected economy’s future. Check back with us in a week to get the latest on how consumers and businesses are navigating these very uncertain times.
Until then, stay well.