Early signs show an upturn in UK spend and an increase in optimism around economic recovery, according to new research.
While some of the big changes and shocks of 2020 continue to play out, there are clear indicators and signals pointing to a rebound in consumer spend and optimism. These insights come as part of the latest McKinsey & Company UK Consumer Sentiment Research, which provides quantitative analysis of consumer sentiment during the global pandemic, based on primary consumer research and third-party market data.
Whilst the UK has one of the highest shares of vaccinated population globally, UK consumers have reported that they will still wait for restrictions to be lifted and wider vaccination coverage before reengaging with activities outside the home. Ninety-one percent of people are not currently engaging in ‘normal’ out-of-home activities. While 75 percent shopped in person for groceries and necessities, just 34 percent did work outside the home, and only 9 percent shopped in person for non-necessities.
The research shows that optimism regarding the UK’s economic recovery is at the highest recorded level during the COVID-19 crisis. Thirty percent of consumers are optimistic that the economy will rebound within 2 to 3 months and grow just as strong as or stronger than before COVID-19 (compared with 17 percent in November 2020). Consumer spending is expected to be highest in the travel (55 percent) and dining (53 percent) categories once restrictions are lifted or the spread of COVID-19 halts. Beauty and personal care was the next highest category at 38 percent.
Additional Key Findings of the UK Consumer Sentiment Research Include:
• Signs of spend recovery. Despite decreased household income and increased savings, optimism has also led to an increase in spending. Forty-seven percent of consumers intend to splurge in 2021 to reward themselves. Younger consumers, especially Gen Z, indicate a higher intent to spend or treat themselves.
• Lag of positive impact of vaccination. Net spend intent fell to -6 percentage points for vaccinated consumers compared with those not yet vaccinated. This drop is likely due to the overrepresentation of baby boomers in the vaccinated group. The majority of vaccinated consumers expect routines to return to normal by the end of 2021, and say finances are already back to normal.
• Digital shift is here to stay. Up to 92 percent intend to continue purchasing online post COVID-19 (from those who currently do). The strongest intent was in the online purchasing of vitamins, OTC medicines, published content, and apparel.
• Ongoing “investments” in homebody economy. Consumers have made structural changes to their homes which will create lasting change. Thirty percent of consumers have invested in new uses of their living space at home through remodelling or setting up a specific work-from-home space. Thirty-two percent undertook house moves – including moving into a larger or smaller home, in with family or to an entirely different geography. Nine percent reported getting a new pet at home.
• Brand loyalty continues to be disrupted. Seventy-two percent of consumers have changed stores, brands, or the way they shop. And many of these behaviours appear set to stay with 84 percent of those who tried a new brand stating their intent to remain with them. Millennial consumers are at the forefront of this revolution, with 85 percent stating they have tried new a new shopping behaviour during the pandemic.
New research reports will be available regularly as we continue to come out of the crisis. Global data can be found here: Consumer sentiment is diverging across countries