Customer Sentiments during Covid-19
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Customers sentiments after survey done by BCG
- Majorities of consumers say that they have changed their daily life (73% to 85%) and are trying to avoid public spaces (82% to 87%) in response to the disease.Consumers in Australia, Japan, and India remain far more concerned about the virus than consumers in other countries
- Majorities of consumers say that they have changed their daily life (73% to 85%) and are trying to avoid public spaces (82% to 87%) in response to the disease.Consumers in
Australia, Japan, and India remain far more concerned about the virus.
- As far as the research, 77% of Australians, 88% of Japanese, and 83% of Indians agree that the world is in serious danger as a result of the coronavirus.
There are several possible explanations for this disparity in attitude.
- One is that because the pandemic reached Australia, India, and Japan relatively late, people in those countries had time to witness its impact on other countries, leading to greater alarm about how the disease would affect them.It may also be relevant that these countries’ governments have emphasized the significance and potential length of the disruption to normal daily life.
- In India, for example, the government has enforced a very strict lockdown, with many activities prohibited, including the use of buses and air travel.Japan, the last country to enter (soft) lockdown among the countries we researched, is also the only one where a large majority of consumers believe that the worst of the coronavirus is not yet over: 82% of Japanese hold this opinion versus 65% or less in other countries.
- At the other end of the spectrum, consumers in China account for the lowest percentage of respondents who hold this pessimistic view (26%), seemingly a consequence of the recovery.
- Even though the Japanese government did not establish penalties for failure to observe coronavirus mitigation guidelines, we see significant changes in consumer behavior in Japan,changes similar to those that have occurred in countries whose governments did impose restrictions and penalties.
- This voluntary modification of social behavior probably reflects Japanese consumers’ heightened concern about the future impact of the virus.
- Consumers are spending more on in-home entertainment, fresh foods, packaged foods, preventive health care, household care products, utilities, and restaurant pickup and delivery and they are saving more, too.
- Consumers are spending less in discretionary categories such as travel, luxury/fashion, home décor, and automotive, as well as in categories constrained by government restrictions, such as out-of-home entertainment and dine-in restaurants.
- In Japan, where the reach of e-commerce is particularly low, consumers are increasing their online purchasing in a number of categories, including clothing, luxury, supplements, cosmetics, and personal care.
In Australia, COVID-19 is accelerating adoption of e-commerce overall and, in particular, among people 52 years old or older,the cohort we identify as “baby boomers .We also see consumers buying online in an expanding number of categories, with one in five Australians having bought a product or service online in at least one new (to them) category in the four
Considerable diversity is evident in the categories that Australians are buying digitally for the first time, with both essential and nonessential categories appearing in the top 12 “first-ever digitally purchased” category list.
- In India, consumers are remarkably increasing their digital adoption across media, product purchases, and digital payments.
- We anticipate that this digital behavior and the emergence of a preference for digital and non cash payments will continue in India as the country moves out of its COVID-19 lockdown period.
In Australia, we have seen the trustworthiness scores of health service providers, supermarkets, and the government improve because of their welcome actions in support of consumers during this difficult time introducing such measures as drive-through testing facilities, telehealth services, and pickup and delivery services for older customers at supermarkets and their proactive messaging about those actions.
We have also seen indications that patriotism is increasing remarkably in Australia, as consumers express more interest in purchasing Australian brands despite those products often higher prices, perhaps motivated by a stronger inclination to support businesses that may be negatively impacted close to home.As we continue to explore the impact of COVID-19 on consumer sentiment, it will be interesting to see whether this form of patriotism prevails in other countries as well.
The COVID-19 pandemic has accelerated the use of digital and e-commerce options across the Asia-Pacific set of countries we are tracking, opening up new opportunities for companies to engage with.
The situation may also create branding opportunities to build brand trust during the difficult days of COVID-19 through actions perceived as supporting or activating growth in local brands, in light of a potential surge in patriotism.
Although COVID-19 continues to exert a significant drag on many businesses’ bottom lines, the prospect of opportunity out of adversity is very real.
Gulf Cooperation Council(GCC)
- If customers within the Gulf Cooperation Council were feeling uneasy concerning the long run, it might be graspable. The countries are still experiencing the consequences of oil worth volatility, that junction rectifier to associate economic softening in 2017 and 2018. Although GCC economies are once more increasing, overall growth within the region seems possible to stay below third-dimensional this year, in step with World Bank estimates.
- Yet very little negativity is detectable among GCC customers. On the contrary, ninetieth of individuals within the region which consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and also the United Arab Emirates said they are optimistic concerning the long run, in step with a Beantown Consulting cluster survey. This level of optimism is the highest that BCG has found in any recent client survey it’s conducted, as well as studies in the continent, Brazil, and Russia.
- The optimism levels within the GCC appear to be a performance of the monetary security that the residents of those countries feel. solely in Asian nations and also the UAE, that have lower levels of financially secure residents than alternative GCC countries, will the optimism level dip below ninetieth.
- To provide some points of comparison from our previous BCG client surveys, eighty six of Africans are optimistic concerning the long run and seventieth of them feel financially secure. In Brazil, the proportion of optimists and people UN agencies feel financially secure is sixty eight and fifty three, severally.
- As the wealthiest region within the Middle East all six countries fall among the highest grade globally by per capita income,the GCC is progressively on the radiolocation screen of expansion-minded firms. And it isn’t solely the region’s outlay power that has gotten these companies’ attention.
- The GCC additionally incorporates a young, invasive population and net penetration levels that are similar to those of the foremost developed countries within the world. Almost every nation within the GCC, from Saudi Arabia and also the UAE with their expansionary business enterprise policies to Kuwait with its ninety seven net penetration, has one thing that’s appealing from an associate economic perspective. If ever a district had the potential to capture the eye of transnational firms, this is it.
Attitudes towards shopping
- GCC consumers’ feeling of optimism has put them in a spending mood. Of the people participating in our survey, 27% said they expect to increase their spending on products and services in the next 12 months; only 12% anticipate spending less. (About half don’t think they will make any change in their purchasing levels.) Among those planning to spend more, food and beverages, non luxury clothing and shoes, educational services, and out-of-home entertainment are among the most frequently mentioned areas of additional spending.
- The study additionally reveals that searching within the GCC has advantages besides satisfying near-term needs,namely, associate emotional payoff. In our survey, seventy nine of GCC residents said that the power to shop for new things makes them happy. That’s well on top of the fifty six of individuals in developed economies UN agency indicated this and is nearer to the prevalence (86%) of this angle in the continent. Additionally, a quarter mile of GCC residents pay extra cash to treat themselves, even once their monetary state of affairs is unhealthy. Respect for Established Brands.
- The GCC could be a brand-aware region. Three-quarters of GCC nationals believe that brands say one thing concerning their values and UN agency they’re, and also the proportion is even higher (83%) among Saudi Arabians. This is often one in all the areas wherever we have a tendency to find a big attitudinal split between nationals and expatriates: solely fifty six of the region’s expatriate population agrees that brands say one thing concerning the UN agency they are.
- Qataris (at 36%) are the smallest number possible GCC voters to characterize themselves as completely acutely aware. However even Qataris are well on top of developed markets in their identification with brands. solely concerning one in all four individuals in developed markets see their complete choices as speech communication one thing concerning the UN agency they are.
The region additionally demonstrates a robust outcome concerning brands.
- That is, forty sixth of individuals within the GCC have a friend’s disapproval of a complete product, or service would in all probability be enough to prevent them from shopping for it. As some extent of comparison, solely eighteen of individuals in Russia would stop employing a complete if somebody in their social circle censured it.
- GCC customers trust older brands, with seventy nine of them speech communication the brands that are round the longest are the simplest. However, in a very twist, several GCC customers (46%) additionally said that they had preferred to use completely different brands than those utilized by their oldsters. These apparently contradictory attitudes recommend that a chance exists for brands to reinvent themselves and project age and dynamism moving to one thing that feels a lot fashionable while not moving out their legacies.
Factors that influence Buying choices.
As in all parts of the world where the level of digital connectedness is high, the internet, social media, and online influencers (people seen as experts in a given area) have a big impact on GCC consumers’ buying decisions. The internet is one of the top three buying influences in every country except Oman, with people in Kuwait (92%) and Bahrain (88%) especially likely to turn to it in the course of making a purchase. The two other sources of influence that remain important are recommendations from friends and family (the second most frequent source of influence, right behind the internet) as well as in-store displays and promotions.
- One doesn’t want to give the impression that GCC residents are entirely focused on spending. They also do a fair amount of saving, a fact that came through in the survey. The circumstances would seem to be in place for the GCC to be a hotbed of e-commerce.
- The levels of internet and mobile technology use among residents, and the region’s per capita incomes, are comparable to and in some cases higher than they are in places where e-commerce levels are already approaching or above 15% (such because the UK and US).
- Moreover, GCC consumers already make heavy use of online research to tell their offline retail purchases. A high level of digital influence (whether chats with friends, social media postings, search engine inquiries, or something else) is especially common in Kuwait and Bahrain, where it is a factor in half of all the money spent in malls and other offline shopping venues.
- The internet’s role in the GCC shopping scene doesn’t stop at influence. More than 70% of GCC consumers have made a minimum of one online purchase within the past 12 months, and half them decide to increase their online purchases in the next year.
- Yet e-commerce still constitutes a very small fraction of overall sales in the GCC.BCG’s second measure of digital maturity. Even in the most active e-commerce country, the UAE, online sales account for only 4% of all retail sales. In Kuwait and Oman, e-commerce hardly exists at all: it accounts for just 0.1% of all retail expenditures.
To consider GCC countries’ state of development in these areas is to acknowledge the gap all of them have between potential (digitally influenced) and realized e-commerce.From the attitude of digital influence, four GCC countries fit into the foremost advanced category that BCG uses: digitally evolved. Three of these countries (Bahrain, Saudi Arabia, and the UAE) also have e-commerce levels that qualify them as digitally advancing (BCG’s second-most-advanced category). But even these countries have less e-commerce than Brazil and India.
- Compared with those bigger nations, GCC countries are simply not as well set up for e-commerce development, with only a fraction of the SKUs that larger markets have, more rudimentary last-mile delivery infrastructures, and friction-filled import and customs processes.
Theoretically, product categories with high levels of digital influence should even have high levels of e-commerce. But within the GCC, that tie is clear only within the aviation and clothing categories. An opportunity exists for other categories including holiday bookings, mobile phones, and personal-computing devices to achieve much higher levels of online sales if online retailers offer better presale guarantees and after-sale service.
The survey highlights three impediments to e-commerce in the GCC.
- The first is payments. About two in every five online purchases in the GCC are paid for via cash on delivery (COD) and the proportion is considerably higher (62%) among consumers who don’t work. The fact that people in the GCC, given a choice, would prefer to pay in cash rather than using digital alternatives suggests that there’s a low level of trust in the region in online payment methods. It might also reflect consumers’ desire to retain some flexibility if a product arrives and they decide that they don’t like it.
In contrast, higher-income and more experienced internet users (those who have been online for six years or longer) prefer methods other than COD. This finding suggests that online payments will become more routine as time goes on. Indeed, some online sellers, trying to nudge their GCC customers toward the cashless future, have added a surcharge for COD transactions.
- The second factor that has hampered e-commerce is dissatisfaction with the experience among online shoppers. The number one source of dissatisfaction region wide is the difficulty and expense of returning unwanted products. Product availability is another problem—the number of items available online in the GCC is surprisingly small. A final frustration relates to unreliable deliveries. But even if the reasons vary, the result is the same: the consumers who have had these bad experiences said they won’t be doing as much online shopping in the next 12 months as they did in the previous 12.
- The third impediment to e-commerce is persuading people who have never shopped online to give it a try. The most common objections to online shopping (cited by roughly 40% of respondents who are cutting back on their online purchases) are a preference for seeing or touching a product before buying it and the sheer pleasure of going out shopping. This comes back to the feeling of happiness that people in the GCC get from shopping.
Other Limiting Factors
Online shopping also has some reputational hurdles to overcome. A not insignificant number of people in the GCC (including four of five in Bahrain) see online shopping as unsafe,something that could put their personal information at risk.
One in five GCC residents also said that too many products sold online are fake or of bad quality. No one wants to shop for cosmetics or foodstuff with unknown ingredients or open a package and realize that the phone they thought they were buying is actually a used model that the seller has restored.
The early stage of e-commerce within the GCC is additionally reflected within the absence of a dominant format. Marketplace platforms (such as Amazon and the e-commerce company Noon.com) are the go-to choice for online shoppers in Oman, Saudi Arabia, and the UAE. People in Bahrain and Kuwait prefer social media sites like Facebook and Instagram, where they will buy directly from individuals. In Qatar, brand websites (such as nike.com and apple.com) are the first choice of online shoppers. But in none of these countries does the number one format have an insurmountable lead. All the markets are still waiting for a clear direction waiting, it might be said, for a leader to come along.
GCC TOURISM: PREFERENCES AND HABITS
- Leisure travel is popular within the GCC, with people taking one trip a year on the average . Travel frequency goes up along with income, but even most of the wealthier people in the survey (with household incomes exceeding $8,000 a month) tend to travel once or twice a year, not more.
- In every GCC country, the most common reason for traveling is to relax and disconnect. The second most common reason is to visit friends and family. Among expatriate respondents, the reasons are flipped, with visits to friends and family the leading reason for leisure travel. This is not surprising given that most expatriates are in the GCC for work and may have another place, often far away, that they consider home.
- Other motivations for traveling apply more to nationals than to expatriates. This includes the interest in discovering a new country or city (a reason given by 58% of nationals but only 31% of expatriates) and the desire to shop (a motivation for half of nationals but less than a third of expatriates).
- The Impact of Income on Travel Preferences. The desire to shop and to discover new places went up in our survey along with respondents’ household incomes. Consumers earning more than $8,000 a month were much more likely to cite an interest in shopping as a reason to travel than were those earning less than $2,500 a month. This difference was more pronounced among nationals than expatriates. The survey showed a 20-percentage-point difference between the high-income nationals who said that they travel to shop (56%) and the low-income nationals who indicated that they travel to shop (36%).
- Among expatriates, the difference was only 11 percentage points (31% to 20%). When they travel domestically, people in the GCC are often looking to experience their own country’s natural beauty, resorts, and cultural sites. Those attractions appeal to 60%, 44%, and 41%, respectively, of all GCC consumers.
- Planning and Booking Trips. Travel planning is one area where GCC consumers’ resistance to online purchasing recedes. In the GCC as a whole, 54% of all consumers book their trips online, with bookings made through travel agencies accounting for a much smaller piece of the pie (25%). Only people in Oman buck the trend and do a majority of their travel planning through agencies (the ratio among Omani residents is a lopsided 2.5 bookings with a travel agent for every one that’s done online). Travel agency bookings also are a touch more common among people that don’t work than among people that do, perhaps because nonworkers have longer to go to an agent .
- All-inclusive packages,in which flights, hotels, and rental cars are booked in a single transaction are the default option for trips in the GCC. Two-thirds of respondents said they are likely to opt for such packages when planning a trip, including 25% who went even further and said they are “very likely” to opt for an all-inclusive package. And if the sample is limited to nationals (omitting expatriates), the proportion of those likely to buy an all-inclusive package rises to 75%. Similarly, the proportion jumps to 75% if you restrict the sample to households with monthly incomes above $4,000, suggesting that all-inclusive deals appeal to those who are less price sensitive.
- The findings don’t differ much by country travelers in most GCC countries who are interested in all-inclusive deals to about the same extent. But people in Bahrain and Qatar are outliers at the high and low ends, with 45% and 10%, respectively, of respondents saying they are very likely to opt for all-inclusive packages when booking travel.
- In the current era of travel, airline and hospitality companies often attempt to get consumers to pay extra for premium services.
- Our survey shows that flexible booking is that the add-on that the foremost GCC consumers are likely to shop for , followed by excess baggage and exclusive hotel offers (offers that aren’t available outside of the all-inclusive package).
- These three add-ons are the most popular ones in Kuwait, Saudi Arabia, and the UAE. But not every GCC country follows the same pattern. People in Bahrain are more curious about visa processing than they are in exclusive hotel offers. To people in Qatar, flight upgrades trump exclusive hotel deals.
- Omani residents show the most variation from GCC averages; they put flight upgrades and visa processing on par with excess baggage and far ahead of flexible booking and exclusive hotel offers.
PREPARING FOR BOOM TIMES
Significant changes are happening in the region’s retail and consumer landscape. This is evident in the entertainment and cultural attractions that continue to crop up in countries like Saudi Arabia, Qatar, and the UAE, from movie theaters to museums. Expo 2020 in Dubai and the FIFA World Cup two years later in Doha will draw millions of tourists to the region. It is a possible boom time for the region’s tourist industry.
One of the biggest boosts is coming from Saudi Arabia. For the first time in its history, Saudi Arabia is issuing tourist visas. The country is taking steps to show its rich history, just like the ancient dig Madain Saleh, into tourist attractions. While tons of leisure travel occurs within the GCC and between other countries and therefore the Middle East , the change in Saudi Arabia all by itself promises to sharply increase the competition for tourists and their retail spending.
Even the GCC’s slow-developing e-commerce sector seems poised for a breakout. The challenges in the sector, stemming both from structural impediments and from a lack of consumer trust, won’t be overcome right away. But with players such as Amazon and Noon.com ramping up their investments in the GCC, it’s only a matter of time given the amount of internet and mobile use in the region before e-commerce levels rise significantly.