Back in March, I published a post describing the increasingly optimistic outlook for the U.S. economy in 2021. Then last month, I wrote about the equally optimistic outlook for marketing and advertising spending this year.
The optimism embodied in the economic and spending forecasts is largely due to a widespread belief that the COVID-19 pandemic in the U.S. will be brought under control in the near future and that this will unleash pent-up consumer demand that will drive rapid economic growth, increased consumer spending, and falling unemployment.
Three recent surveys have provided several important insights regarding the sentiment of U.S. consumers. These surveys explored how consumers are thinking about the overall state and direction of the U.S. economy, their spending plans, and their attitudes about returning to prepandemic behaviors and routines.
Consumer sentiment is obviously important for B2C marketers, but it also matters to B2B marketers. Consumers are at the end of many B2B value chains, and therefore consumer demand influences the revenue growth potential of many B2B companies. Boeing doesn't sell commercial airplanes to consumers, but the willingness of consumers to travel influences how many planes Boeing can sell.
The McKinsey Survey
Over the course of the pandemic, McKinsey & Company has produced an impressive library of resources addressing the public health aspects of COVID-19 and the pandemic's economic and social impacts. McKinsey's research has included periodic surveys of consumers and business executives.
The most recent consumer survey was conducted February 18-22, 2021. In this survey, 41% of the respondents said they were optimistic about the recovery of the U.S. economy, while only 14% said they were pessimistic. The survey defined optimistic as: "The economy will rebound within 2-3 months and grow just as strong as or stronger than before COVID-19." The remaining 45% of the respondents had a mixed view, believing that the economy will be impacted for 6-12 months or longer and will stagnate or grow slowly thereafter.
Thirty-three percent of the respondents said they were already engaging in "normal" out-of-home activities (returning to stores, restaurants, etc.), and 75% of vaccinated respondents said they expected their routines will return to normal by the end of this year.
Fifty-one percent of the respondents said they expected to spend extra by splurging or treating themselves, and about half of these respondents plan to spend more in the near future.
The Gartner Survey
A January 2021 survey by Gartner paints a similar picture of consumer sentiment, although the overall tone of the survey report is more cautious. The report states: "CMOs should plan for the possibility that consumers may take longer to resume prepandemic behaviors, even after they have received the full two doses of the vaccine." (Note: At the time of the survey, the single-dose J&J vaccine had not been authorized by the FDA.)
Gartner asked survey participants how soon they feel their life could return to normal after being fully vaccinated. Forty-five percent of the respondents said in six months or less, 36% said they were unsure, and 15% said in a year.
Gartner also asked survey participants about their willingness to engage in several specific activities after being fully vaccinated. The following table shows the four activities that respondents were most willing to engage in. Note that none of these activities was identified by a majority of the survey respondents. And only 15% of the respondents said they would be willing to stop wearing a mask or go to large public gatherings, even after being vaccinated.
The Pew Research Survey
One of the largest recent surveys addressing the "when will things get back to normal" issue was a survey of a nationally representative panel of 12,055 U.S. adults conducted March 1-7, 2021 by Pew Research Center. In this survey, Pew Research asked participants the following questions:
- "Just your best guess, how long do you think it will be before most businesses, schools, places of worship and other public activities operate about as they did before the COIVD-19 outbreak?"
- "Just your best guess, how long do you think it will be before the job situation in the U.S. recovers to about where it was before the COVID-19 outbreak?"
The following table shows how the survey respondents answered these questions.
As the table shows, 57% of the respondents believe it will take at least a year for most businesses and other public activities to return to normal operations, and more than eight out of ten of the respondents (81%) do not believe that unemployment will fall to prepandemic levels for at least a year.
My Take
I wasn't particularly surprised by the caution identified by the Gartner survey, which was conducted in January. At that time, the vaccine rollout was just getting started, and the number of daily new cases of COVID-19 was still high. I suspect if Gartner conducted the same survey today with the same survey panel, the results would be quite different.
I was somewhat surprised that a majority of the respondents in the Pew Research survey believed that most businesses and public activities won't return to normal operations for at least a year. The Pew survey was conducted in early March, by which time the number of daily new cases of COVID-19 in the U.S. had declined significantly, and it had become clear that the vaccine rollout was going well.
Current data from the CDC regarding vaccination progress, current data from the TSA regarding the number of people flying, and the latest quarterly earnings reports from several large U.S. retailers indicate to me that the "return to normal" is progressing even faster than many of us anticipated.
Top image courtesy of Robert Couse-Baker via Flickr (CC).
My parents never got over the depression. All my life they were super conscious of leaving lights on in rooms that were unoccupied, saving packaging that could be reused, being overly frugal, and all manner of behaviors honed during trying times and imbedded in the emotional muscle memory of their lives.
My concern with the research reflected in this post is the phrase “back to normal.” What does that phrase really mean? How will employees react to close supervision “back at the office” after being remotely supervised for 18 months? Will they say, “Well, back to normal–getting micro-managed–no big deal.” Or will they reject the burden of a lack of empowerment? When a manager harps on precision around clocking in on time, will employees feel a since of secure, satisfying familiarity and nostalgia after working “off the clock” so to speak for so long? How about adherence to a dress code? Will they look forward to live meetings requiring their undivided attention and feel relieved they no longer have to do Zoom meetings where they can multi-task out of view of the camera and pet their dog at the same time?
My view is, like my parents reaction to the challenges of the 1930s depression, employees will never be “back to normal” as defined by what work life was like in 2019. Smart leaders will need to learn to adapt to new norms and expectations or risk losing associates in an economy struggling to get and keep an engaged work force.
I do not think that the post Covid normal will be equal to the pre Covid normal. There are several reasons for this, chief are that businesses invested into tech to help them help their employees and customers, which people did get accustomed to – where helpful.
The other thing is that there will be a good number of unvaccinated people, for whatever reasons, many of them flatly refusing it. This, in combination with ongoing mutations, will in all likelihood lead to a continued cautiousness of the rest of the population and probably to some rule systems that distinguish between “immune” people and “dangerous” people.
From my perspective, a majority have already gotten back to normal and I see the fear abating rapidly. Where I live, the restaurants are full and people are out and about conducting transactions on both a personal and professional basis. Many states are close to pre-COVID employment rates and there are more job openings than applicants. Yes, there has been a shift toward virtual vs. face-to-face communications, and some employees have no intention of returning to an office. But I believe this has less to do with fear and more with a choice of lifestyle. In this sense, we will never get back to what was considered normal pre-pandemic.
There is a pent-up demand for many consumer products and services, such as travel and entertainment. As medical authorities communicate more optimism, while still tempering the positives with caution, U.S. consumers, feeling less tethered, are flexing their long-dormant demand muscles.
The new normal may never be the same as pre-2020 normal, but there is something of a rush toward a more relaxed life style among consumers. McKinsey, quoted in the post, has done a nice job of covering the societal trends, as well as the lasting impact of the pandemic: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/the-consumer-demand-recovery-and-lasting-effects-of-covid-19?cid=other-eml-alt-mip-mck&hdpid=45bb4bdc-d653-4bc2-bdb6-65eb67ce9c95&hctky=2947534&hlkid=e14df338e88a48418dff5e34d6220dd6
One factor not specifically addressed here is the preference and pre-disposition by many young employees, covered in recent studies, to continue working remotely, even as companies are beginning to repopulate their offices. The strategic impact of this is unknown, of course; but, it is likely to be a key behavioral factor in the new normal of society
Consumers are eager to get back to a life more like it used to be but are still exercising caution. Living in an area with decreasing restrictions, I still notice many businesses and individuals choosing to take formerly mandated precautions.
However, as the world opens back up to the consumer and the economy is poised for growth, we may all end up getting an econ 101 lesson on supply and demand. Interruptions in supply chains, labor shortages and depleted inventory and stock room supplies threaten to disappoint consumers who are eager to get out and finally make those purchases they have been cautiously postponing.
US consumers still face empty shelves at the grocery store, lengthy delays for furniture, home improvement materials, contractors, and new vehicles, to name a few. So, while we may be feeling more comfortable shopping, the landscape we were used to pre-COVID has changed. Those companies that embrace transparency and consistent communication will be best positioned to build stronger connections with their current and future customers as they replenish their inventory and manage altered customer expectations.