COVID-19 Crisis: How Consumers Are Adjusting to Life at Home
Happy Wednesday, everyone. As if we haven’t already had enough bread over the past few weeks, including the delicious banana recipe we shared a few weeks ago, why not try the sourdough variety? According to Brandwatch, mentions of sourdough on social media have grown 2.5x since March 12th. Did someone say quarantine or carb-o-tine? Now, onto the briefing.
Over the past few days, states across the country have begun loosening stay-at-home restrictions; however, the majority of U.S. consumers continue to adapt to a quarantine equilibrium. Americans are acclimating to their new reality — with a lower percentage of consumers reporting negative impacts on their mental health, emotional well-being, and ability to do their jobs than earlier this month. This week, 28% of consumers reported worsening mental health, a 6% drop from earlier in April, and 34% report worsening emotional-well being, a 7% drop.
As consumers adjust to the new norm, many maintain a “home for now, not forever” mentality. However, while they remain at home, consumers continue to invest in making their homes more comfortable for working and living. 67% of respondents are now seriously considering purchasing home fitness equipment, large electronics, home furnishings, or getting a pet. 46% have created a home office in their living space, 48% are streaming workouts, 84% are cooking more, and 52% are cleaning more.
Although most view the current situation as temporary, two-thirds of respondents in a Coresight Research study conducted April 15th indicate that they plan to continue avoiding public places or change travel arrangements, even after lockdowns end. Shopping centers and malls are the number one place that respondents expect to avoid, with almost half of consumers likely to steer clear of these locations.
In relation to spending, almost one-quarter of consumers who have changed their spending levels expect it to be more than six months before their spending patterns return to normal. Gen Z, specifically, plans to spend less money online, focusing instead on personal development and cultivating fiscal responsibility. In fact, Gen Z is more willing to spend if it’ll help their futures. 37% of Gen Z men and 19% of Gen Z women reported spending most of their shopping budget on online courses or digital learning tools the past month.
When it comes to the perception of brands and marketing, 91% of respondents to a Bustle Digital Group reader poll reported that they do not expect brands to stop advertising. Instead, 90% expect brands to change ad messaging to be sensitive to the situation, and 68% expect brands to make donations and contributions to local organizations. Along with this trend, TikTok has launched Donation Stickers, a new interactive feature that allows creators to fundraise for coronavirus relief efforts directly within the platform.
The stickers can be added to videos and livestreams, guiding users to a pop-up window, powered by Tiltify, in which they can donate to charity. Etsy, the leading online marketplace for homemade goods, shared a blog post encouraging its community to help supply masks and since then has seen a 1.5x increase in the number of masks sold on the platform. Instagram also launched a donation feature, allowing users to fundraise for non-profits while livestreaming. But unlike TikTok, which currently supports only a handful of charitable causes, Facebook’s Live Donations feature can create fundraisers for over a million non-profits.
As the majority of retailers remain closed for now, retail industry experts have made a few key predictions for how the global pandemic will affect the future of retail. This includes faster, larger-scale adoption of delivery and offline pickup services as well as a spike in contactless transactions, ranging from mobile payment methods to new retail models, such as Trunk Club, which offer contactless shopping.
They also expect big brands to pivot to direct-to-consumer offerings in order to become less reliant on third-party retails and for the current influx of livestreaming and social commerce to remain for the foreseeable future.
Currently, private-label apparel is becoming a weak spot for many retailers, such as Target and Walmart, which are seeing the majority of consumer spend on essential goods. For example, Target saw comparable sales for food and beverage increase by 20% in the last quarter; however, sales for apparel and accessories slipped 30% in the month of March.
Even though most retailers are seeing private-label apparel struggle right now, experts maintain that these investments will likely pay off in the long run, since these brands provide a high-margin component for most large retailers.
In other retail news, creatives across the country have begun designing and selling merchandise to raise money for COVID-19 relief. Some examples include the COVID-19 Merch initiative, founded by the CEO of a digital agency, Dylan Hattem, which has raised almost $90,000 for local restaurants across 20 U.S. states by selling custom merchandise and donating 100% of the proceeds. Another example is Merch Aid, created by two creatives from R/GA, which has brought in more than $45,000, distributed among 12 small businesses.
Beauty brands are continuing to feel the impact on sales as new reports from the NPD show a double-digit percentage decline YoY since mid-March in the U.S. As a result, beauty brands are increasingly shifting content marketing strategies to focus on certain products and messaging as it has become more evident that we are in this for the long haul. Most consumers are going for the fuss-free look, so make-up marketing is focused on simple looks while also highlighting products best suited for virtual FaceTimes, conference calls, and Zoom happy hours.
During this time, brands must stay in tune with consumer interests and the products shoppers are seeking, especially when customers are very selective with their discretionary spending.
In response to shifting strategies, multiple beauty brands have shown renewed interest in Snapchat, a platform that has experienced ups and downs but reported substantial strides in its Q1 2020 earnings report. On Tuesday, the platform announced a gain of 11M new daily active users during the quarter, bringing the total to 229M and marking a 20% year-over-year increase. Now that its Stories feature has lost steam to Instagram’s own version of Stories, the company is emphasizing the growth of private messaging and its curated Discover section.
Beauty content, in particular, has stood out as particularly popular on the platform, with beauty brands such as Refinery29, Insider, and Hearst, receiving between 4.5-20M views in March for their quarantine-related beauty content. In addition to posting content on the platform, brands like Sephora, Covergirl, and Estee Lauder are also advertising on the Discover section platform to capitalize on this audience.
On a slightly more positive note, while the beauty industry as a whole may be facing challenges, luxury and customizable beauty brands are actually seeing an uptick in interest as users continue to adapt to their new life at home. There is a niche group of consumers who are looking for specific, premium products that fit their needs, benefitting brands that primarily rely on the DTC channel. Some of these brands, for instance, have been seeing as much as a 40% increase in traffic to site.
As the COVID-19 crisis continues, the impact on the travel industry is expected to be nine times worse than 9/11. Nearly 8 in 10 hotel rooms across the country remain empty, and on average, full-services hotels are operating with 14 employees, down from 50 before the crisis. Nearly 2.9M hotel-supported jobs have been lost since the coronavirus crisis began. Delta’s airline passenger traffic is currently down by 95%, and the travel sector unemployment figure is around 22M.
Furthermore, credit card brands have reported massive plummets in travel-related spending. For example, spending on travel this month fell 99% annually for Discover credit card holders, and American Express reported that its travel/leisure consumer spend is down 95%.
Despite these shocking statistics, travel-related brands are hopeful that launching new cleaning initiatives will help them survive in the post-coronavirus world. For example, Hilton, Marriott, and Airbnb are launching new health and safety initiatives to reassure consumers. Hilton announced its partnership with Reckitt Benckiser, the manufacturer of Lysol, for a new initiative called Hilton CleanStay with Lysol Protection. Marriott announced that it would be launching the Global Cleanliness Council, a panel of professors who study food microbiology, tourism, and hospitality as well as experts in hygiene and infection prevention.
Finally, Airbnb announced it was bringing on former U.S. Surgeon General Dr. Vivek Murthy to help develop new cleaning protocols for its hosts, including a learning certification program. Another travel-related innovation announced this week came from an Italian company, Avio Interiors, which released two new airplane seat concepts, designed to reduce the spread of germs. The firm maintains it would be able to deliver the new seat design in as little as six months.
The virtual NFL draft, which aired last Thursday, went on record as the most-watched draft ever, drawing 15.6M viewers across ABC, ESPN, and the NFL Network — a 37% increase in viewership from last year. The NFL draft usually goes up against MLB, NHL, and NBA regular-season games, but because of the coronavirus-spurred shutdown, it was the only major sports telecast of the night this year. The event also drew increased attention from sponsors with over 100 companies signed up to be a part of the broadcast, including 60 that were advertising during their first NFL draft.
Overall ad spending was up by a double-digit percentage versus last year. This pent-up demand for new sports content was also reflected during the previous week as the first two episodes of ESPN’s Michael Jordan documentary drew record numbers for the network.
Sports publishers are now turning to user-generated content on Instagram, TikTok, and Twitter in the absence of live sporting events. House of Highlights’ Instagram content is now almost 70% user-generated clips of amateur athletes, a stark departure from its pre-coronavirus content that focused primarily on NBA game highlights. This past week, ESPN announced a partnership with Facebook in which amateur videos will be featured on SportsCenter, and new ESPN hire Omar Raja will host a show featuring similar clips on Facebook Watch.
In other entertainment news, Prime Video’s SXSW 2020 Film Festival Collection launches today. The film festival collection is composed of 39 films, including narrative and documentary features, short films, and episodic titles, which will play exclusively on Prime Video in the U.S. from April 27th to May 6th. The one-time event will be available in front of the Prime Video paywall, free to all U.S. audiences with or without an Amazon Prime membership.
Wave, a company that specializes in interactive virtual entertainment experiences, launched One Wave, a series of virtual concerts in which artists, such as John Legend and Tinashe, will transform into aviators and perform live in a virtual world. Wave will be partnering with Warner Music Group and Roc Nation to launch the series, which kicks off tomorrow, and proceeds will go directly to non-profit organizations that are in need of support during the current global COVID-19 pandemic.
Health concerns currently outweigh financial concerns in the U.S., with Deloitte reporting that roughly half of the consumers are concerned about their health compared to a quarter of consumers who are worried about their finances.
Even still, consumers are anxious to receive their stimulus check, but only half of consumers have received the money thus far. And for those who have received funds, it appears that they may not be directly injecting the stimulus back into the local economies. According to IPSOS:
38% report putting it into savings.
26% report using the money to pay off debts.
25% report using the money to pay for food and household needs.
14% are using the money to pay rent or mortgage, and 18% have yet to spend it but plan to.
Overall (and as expected), U.S. shoppers are continuing to spend more of their money in essential categories while spending less in discretionary categories, according to Deloitte. Over the next four weeks, consumers’ may be looking to cut their discretionary spending by even more. It will be interesting to see how these next few weeks unfold as companies look to reopen stores and get the economy back up and running.
More than $2B from the first round of funding for “small” businesses has been declined or returned to the program after backlash over funds that were going to large corporations. The canceled loans went back into the program’s second round, which opened Monday with $310B in new funding from Congress but crashed shortly after opening and remained inaccessible for most of the day.
In the tech realm, Facebook is now challenging Zoom with its own video conferencing platform, Rooms. The company is enhancing Facebook Messenger with this new feature, which will allow 50 people to “hang out” at a time. Messenger Rooms will also integrate with Facebook’s other properties down the road, including Instagram Direct, WhatsApp, and home video device Portal, and users won’t have to have a Facebook account to participate in a meeting.
While we’re talking about Zoom, the platform has improved its privacy and security issues, releasing its 5.0 update. Some of the updates include default passwords, a waiting room, and a security icon that can be used to lock meetings, remove participants, and restrict screen sharing and chatting. Lastly, while some companies, such as Amazon, Adobe, Slack, and Salesforce, have managed to stabilize or even ramp up hiring efforts, job openings nationwide in the tech industry are overall declining.
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According to analysts at Glassdoor, job postings in this industry dropped more than 20% between mid-March and mid-April. Supply chain logistics and delivery companies are slowing efforts the fastest, seeing a 72% decline in job postings, according to LinkedIn. However, there is still a light at the end of the tunnel, as tech is still showing more resilience than other industries due to its offerings of essential, or at least near-essential, tech services.
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