A Nielsen investigation has identified six key consumer behavior threshold levels that tie directly to concerns around the novel coronavirus (COVID-19) outbreak.
The thresholds offer early signals of spending patterns, particularly for emergency pantry items and health supplies, and we are seeing these patterns being mirrored across multiple markets.
Correlating COVID-19 news events, such as public health announcements and government press conferences with consumer spending on items such as hand sanitizers and shelf-stable foods, reveals a series of recurring patterns.
These patterns (though still evolving), when reviewed across impacted countries, help provide a set of leading indicators for packaged goods manufacturers and retailers faced with supply issues as they race to meet record levels of demand and changing purchase habits.
It has been over eight weeks since China confirmed its first case of COVID-19 and the outbreak began to spread globally. In that time, Nielsen has recorded record-breaking sales of health-safety products, such as medical masks and sanitizers, but we’ve also seen a ripple effect triggering broader consumer purchase behaviors as the number of reported COVID-19 cases increase around the world.
The six threshold levels, based on early indicators across markets (though at different times as the virus outbreak evolves at different rates in different geographies), are detailed below. Each one correlates with different levels of consumption, but there are some common timing elements, which are primarily driven by news cycles.
Threshold levels 1-4 are beginning to show predictable signs of spending from consumers. In other words, depending on what stage any particular country is in, there are signs that spending behaves in a common way that may make it possible to understand what might happen next, country to country.
The world is largely past the first stage of proactive health-minded buying that drove only minor changes to sales patterns. However, at threshold level 2 (reactive health management), consumers in affected markets began stocking up on essential health-safety products, such as hand sanitizers and masks.
But as news reports detailed the continued and quick spread of the virus around the world, consumers in many countries jumped to threshold level 3: pantry preparations.
By this stage, they begin developing stockpiles of food and emergency supplies. These spending spikes lessened in the weeks after the panicked moments but spiked on subsequent news events or developments.
A Nielsen study of the U.S. market highlights how quickly consumers can digest and process new outbreak information and then make spending decisions tied to that news.
These behaviors make it possible to understand early indicators of consumer actions, which can help companies manage their supply chain in response to news cycles. In the case below, we see a “breathing room” period of about two weeks after major news events tied to COVID-19.
In the coming days, Nielsen will gain further visibility into how consumers behave during threshold levels 5 and 6.
Italy’s decision to lock down the country in a bid to stem a rising number of cases, for example, will be a key case study of how consumers react through the “quarantine living preparations” and “restricted living” thresholds.
“Similar to experiences in China, we anticipate difficulties in online order fulfillment and supply chain constraints affecting those both inside and outside Italy, as consumers contend with extended periods of isolation and lack of normal access to shops,” said Nielsen’s Global Intelligence leader Scott McKenzie. “The outbreak has already caused an array of changes in shopping behavior and we’re focused on understanding the ones that will come next, how long they’ll last—and whether any will stay with us after the outbreak is behind us.”
Read the full Nielsen report here.