Consumer confidence in the recovery of the UK economy after COVID-19 is at its lowest level since March 2020.
According to the Consumer Pulse Survey, conducted by consultancy firm McKinsey & Company between May 21 and May 24, just 15% of those surveyed are optimistic about a recovery in two to three months – a decrease of 2% since the company’s previous survey at the end of April.
Of the 1,002 adult respondents, 35% agreed with the statement: ‘COVID-19 will have lasting impact on the economy and show regression/fall into lengthy recession’. This is up from 24% since the last survey.
As many as 62% of UK consumers were extremely concerned about the UK economy. 56% were concerned about not knowing how long the situation will last, and more than 50% were worried about their own health or that of their family or the general public.
More than a quarter (28%) of respondents were also concerned about not being able to make ends meet, while 69% said they believed their finances will be impacted for more than two months – up 5% from the previous survey. 22% believed the financial impact would last more than a year.
42% of households reported a drop in household income, compared to the 38% in the previous survey. 36% stated their savings had declined in the past two weeks.
Net spending on groceries and in-home entertainment are the only categories set to see an increase in spending. More than 70% of respondents expected to cut back on restaurants, out-of-home entertainment, and international travel and holiday-related costs.
17% of consumers shopped in a new grocery store since the start of quarantine, with 53% intending to continue shopping there after lockdown eases. 14% of respondents changed to a discount store for basics and 78% intend to continue.
While only 1% said they were less likely to shop in physical grocery stores after COVID-19, 20% of respondents said they were less likely to go to movies, concerts or other events. 21% said they were less likely to go to the mall or travel internationally post-coronavirus.
About a third (30%) of respondents are using online streaming, video chat, outdoor time and grocery deliveries more than before COVID.
There was significant growth in remote learning for children, and online fitness and wellness apps have also grown in popularity, with many users planning to continue usage post-COVID. There was a user growth of 67% on Tik Tok, with 49% of users planning to continue using the app.
34% intend to continue to cook more at home, 30% intend to continue spending more time texting, chatting and messaging. People plan to continue watching more TV, movies and shows and 19% plan on spending more time on home repair and gardening.
Kelsey Robinson, partner at McKinsey & Company, said: “The generation-shaping event has delivered the fastest effect on consumer behaviour – from a shock to loyalty to an unprecedented digital surge – opening up entirely new fronts in the competition for customers. With more than 20% of customers up for grabs, this is a true moment for marketing leaders to redefine the customer experience to recapture customers and re-secure their loyalty.
“This means prioritising direct customer relationships and personalisation to putting analytics at the heart of your digital strategy to understand the fast-changing demand signals and inform your decision making across targeting, media planning, and operations. This can help companies emerge stronger by rapidly capturing revenue during the recovery and beyond.”