By guest authors Marco Catena is a partner in McKinsey’s Milan office, Eric Hazan is a senior partner in the Paris office, Mianne Ortega is director of strategy and operations in the Madrid office, Julia Katharina Schmidt is a practice manager in the Düsseldorf office, and Dennis Spillecke is a senior partner in the Cologne office.
The authors would like to thank Reinhold Barchet, Peter Saffert, Yvonne Staack, and Martino Zizioli for their contributions to this article.
European consumers are emerging from lockdown at their own pace—and with new priorities that include personal safety and social values.
European consumers have been swift in responding to COVID-19. The effects of forced isolation and economic uncertainty are evident in all areas of life, from how Europeans work and shop to how they spend their free time. Viewed together, these changes form five trends that have emerged across the Continent:
- shift to value
- flight to digital
- caring commerce
- shock to loyalty
- homebody economy
While these trends can be observed across the Continent, there is also significant variance in how different countries and age groups react to the crisis. In the following charts, we will look both at the big picture and at the most striking outliers. 1
Shift to value
1. Europeans are less optimistic about economic recovery
There is a conundrum at the heart of the European response to the COVID-19 pandemic. While many governments have found strategies to mitigate the effects of the crisis on their countries, consumers remain pessimistic. Thirty-one percent of Europeans believe that COVID-19 will have a lasting impact on the economy, compared with only 4 percent in China and 17 percent in the United States. Even though some of the more severe restrictions have been lifted in many European countries, consumer confidence is slow to recover. In September, it was at the same level as it had been in March.
2. ‘Trading down’ to save money varies across countries
Shopping is the area that is most severely affected by the ongoing lack of consumer confidence. More than one-third of European consumers are looking for ways to save money, and 27 percent are specifically seeking more-affordable alternatives to the products and brands they usually buy. Shoppers in Portugal and Spain are most inclined to trade down, while respondents in Germany and France are significantly less likely to do so. On average, the European inclination to trade down is similar to the rates observed elsewhere in the world.
Flight to digital
3. Digital adoption is rising quickly across Europe, but with surprising variations
In response to retail closures and other restrictions, Europeans are taking increasing advantage of digital offerings, from entertainment and communication to shopping and restaurant delivery. On average, Europe is lagging behind the United States in terms of expected online growth. The average growth across categories is 10 to 25 percent for Europe, compared with 20 to 40 percent for the United States.
When it comes to shopping, Spain and the United Kingdom lead the shift to online across categories, including groceries. In contrast, German consumers are reluctant to do more online shopping. In Southern Europe, it’s a question of categories. Consumers in Italy, for example, are happy to order snacks and personal-care products online, while they are more hesitant about over-the-counter medicines than Spanish consumers. It seems that being able to see the merchandise is crucial in certain categories for certain shoppers. Also, some shoppers are not satisfied with their online shopping experience. Common complaints include long delivery times and missed delivery slots.
4. Some digital and omnichannel services see intensified usage by existing customers, while others attract more first-time users
While some digital offerings, such as online streaming and restaurant delivery, have seen increased usage by existing customers, others, such as grocery delivery and restaurant curbside pickup, have experienced a surge of first-time users. Providers of services in the second category should take action now to retain new customers acquired during the lockdown by tracking and optimizing shoppers’ satisfaction with new services. Consumers’ intention to keep using services they started using during the crisis varies by country. In Spain, for example, 59 percent of respondents intend to keep using restaurant delivery, compared with only 41 percent in Germany.
5. The concerns that drive shoppers’ behaviors are changing
In times of trouble, trust often becomes more important as a differentiating attribute and as a factor in buying. This effect is also apparent in how Europeans have reacted to the COVID-19 pandemic. On average, more than a third say a brand’s purpose is now more important to them than it was before the crisis. This trend is particularly pronounced in Southern Europe, where every second consumer is focusing more on a brand’s purpose. Across all countries, women and younger consumers are responding more strongly to value-driven brands. Key concerns of value-conscious consumers include sustainability, cruelty-free products, and fair treatment of company employees.
6. Consumers’ tendency toward smaller brands is growing
Where do Europeans turn in their quest for value-driven companies? Even before the crisis hit, they had a tendency to assume that smaller companies are more trustworthy than big companies, a bias sometimes referred to as the Goliath effect. 2 In France, for example, the trust gap between small and large companies is 22 percent, compared with a global average of only 8 percent (2019). 3
During the crisis, this attitude has become manifest in the intention of consumers to buy less from large brands. In many European countries, such as France and Spain, shoppers are shying away from large brands in favor of smaller brands. In part, this tendency may be related to a desire to “support local businesses,” one of the top-ten reasons for trying new shopping behaviors. In any case, large European companies should double their efforts to emphasize their purpose in earning or regaining the trust of consumers.
Shock to loyalty
7. Almost two in three Europeans are switching brands, retailers, or ways of shopping
As economic pressure increases, consumers are looking for new ways to make ends meet. At the same time, shoppers are seeking to minimize the risk of infection. Two-thirds of shoppers say they have recently tried a new brand, retailer, or shopping method. The reasons they cite include price, convenience, and safety. Many shoppers currently prefer stores that are less crowded or have shorter lines than others. Of those who have started using self-checkout technology during the crisis, 82 percent say they intend to keep using it. For retailers, this means that investments in new checkout technology could pay off quickly. Generally, Europeans are somewhat less inclined to try new shopping behaviors than consumers in the United States and China. Germans are especially conservative about where and how they shop.
8. Trying new shopping behaviors is more prevalent among younger consumers
Members of Generation Z (aged 18–24) and millennials (aged 25–39) say they have tried new shopping behaviors much more often than older respondents. Generation Z shoppers, in particular, wholeheartedly embrace digital shopping for its double benefits of convenience and safety.
9. Home-based activities continue to proliferate
As it becomes evident that the pandemic isn’t receding as quickly as many had hoped, Europeans expect to keep spending a lot of time at home. Top activities include cooking and online streaming. This focus on home-based activities is likely to continue. Sixty-three percent of consumers say they have not returned to regular out-of-home activities, and half of consumers are very concerned about resuming activities that require proximity to others, such as large events or traveling by plane. US consumers are even more concerned about the risks associated with out-of-home activities than are Europeans.
10. Consumers are willing to shop in stores if they feel safe
Taking and maintaining measures to keep employees and consumers safe during the pandemic is critical to reassuring consumers. According to our survey, more than 80 percent of European consumers are concerned about the risk of infection, and they overwhelmingly want to see continued use of masks, barriers, sanitizing efforts, and physical distancing in stores.
While nothing short of an end to the pandemic can fully restore the trust and confidence of European consumers, implementing such visible safety measures can go a long way to helping protect and reassure them as the crisis continues.