7 Great Changes in Overseas Consumer Behavior: Interpretation of McKinsey's Latest Report
Has the change in consumer behavior due to the COVID-19 outbreak stopped? the answer is negative.
Although the onlineization of consumer behavior is an irreversible trend, in a recent McKinsey survey of 2,100 Americans, respondents representing various types of consumers came to different conclusions. (Reply to the keyword [McKinsey Consumer] in the background of the official account to download the full investigation report)
Based on McKinsey's latest survey data, we have summarized seven major changes in overseas consumer behavior:
- Increased willingness to consume, spending increased by 18% year-on-year
The current US market is experiencing severe inflation, and in March 2022, its inflation rate has increased to 8.5% so far. But the willingness of consumers to spend has not been deterred. According to a McKinsey survey, US consumers will spend 18% more in March 2022 compared with two years ago.
Among them, millennials and high-income consumers saw the highest year-over-year growth in spending, at 17% and 16%, respectively. Much of this is consumption-driven, not inflation-driven.
If you want to understand the pain points and ways of reaching millennial consumers, you can click here.
- More consumption of certain categories of products: sportswear, pet supplies, cosmetics and software and electronic products
The epidemic has spawned the rise of the stay-at-home economy, and the lifestyle changes of overseas consumers are no exception. According to McKinsey, items that were high in consumption during the pandemic are still popular now that the pandemic has eased: sportswear, pet supplies, cosmetics, and software and electronics.
On the other hand, consumption of services and experience-oriented goods such as gasoline, restaurants and travel is still 2% lower than before the epidemic.
- Consumer Loyalty Changes Continue: Price Tops
Data shows that more U.S. consumers are turning to different brands and retailers in 2022 than at any time since the pandemic began. As inflation increases, more and more people are starting to care about price - which is the number one motivation for consumers to switch brands.
In addition, the influence of "brand purpose" on consumer loyalty has decreased compared to 2020; the influence of innovation has steadily increased. Consumers are keen to try different things, so innovation is imperative for brands. If the innovation ability can be combined with the price advantage, it will greatly enhance the attractiveness to consumers.
- Consumer spending both online and offline has increased: consumers flock to more channels
The overseas e-commerce trend has grown with the spread of the epidemic, whether it is platform e-commerce, DTC e-commerce or social e-commerce, it is Ruichang. The data can also see the dark side. In March 2022, e-commerce increased by 27% year-on-year; from the beginning of the COVID-19 epidemic to 2022, the total penetration rate of e-commerce reached 33%.
But on the other hand, many in the industry predict that the rise of e-commerce will squeeze the space for brick-and-mortar shopping. But with the COVID-19 outbreak under control, people still haven't given up on offline shopping, and in-store spending has recovered at a healthy pace, up 8% year-on-year in March this year.
For brands, this undoubtedly increases the way for brands to reach consumers. Therefore, brands are also required to actively provide consumers with a seamless online and offline consumption experience.
For example, we once wrote that in March this year, SHEIN opened an offline pop-up store to enter the Brazilian market. By creating topics offline and providing discounts online, the online and offline shopping experience has been opened up. And with this marketing campaign, it successfully attracted attention on social media.
- Omni-channel shopping becomes the new normal: Social e-commerce channels are the most popular
45% of consumers say social media is influencing their buying behavior. This has become the most prominent feature of the omni-channel marketing trend both online and offline.
The impact of social media on young people is particularly pronounced, with cosmetics and sportswear being the most affected of all products, including appearance-related products. Social e-commerce in overseas markets is still in its infancy, which is a good entry stage for brands. However, it should be noted that at present, social e-commerce is still more suitable for "good-looking products" and consumer goods, and there are not yet more opportunities for categories that require high-net-worth individuals.
- Home improvement and maintenance spending is growing despite greater liquidity
More than half of U.S. consumers have resumed their normal outdoor activities; another 20% have resumed their pre-pandemic routines (such as travel, exercise, etc.) outside the home. People are spending less time at home, and on average, consumers only work from home about two days a week. But about a third of consumers say they are not yet willing to participate in public indoor events.
It's worth noting for brands that while consumers have resumed most of their outdoor activities, they haven't stopped investing in their own homes. Spending on home improvement and maintenance is still growing: 11% higher than pre-COVID-19 forecasts.
This is an opportunity for home decoration brands. In the post-epidemic era, there is still a lot of room for growth to accelerate reaching overseas consumers.
- Consumers are more and more concerned about ESG, and different consumers pay attention to different directions
ESG refers to Environmental, Social, and Governance, and more than two-thirds of young respondents said they focus on at least one of the three ESG categories, they want brands to be more transparent, and Will care about the people the brand involves (employees, customers, community groups and other groups).
Young consumers are more concerned about brand authenticity and social responsibility, while older consumers are more concerned about health and environmental issues. Brands can refer to Huawei's practice when reaching overseas consumers - promoting the brand's active care for the ecological environment and children's growth on various public concerns on its Facebook page.
Conclusion:
Consumers are always changing, and so are the factors that influence their willingness to spend. Through the interpretation of the latest consumer data, it is hoped that providing global social media data marketing management and services for all overseas brands can help brands better understand overseas consumers, seize more changes and opportunities, and improve performance.
We will also provide more data, cases and forward-looking marketing content to all overseas brands. Welcome to continue to pay attention to us.