kpmg consumer pulse survey report | july 2020...almost 80% of our survey participants say they will...

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kpmg

Consumer & Retail

July 2020

COVID-19consumer pulse

July edition

2

Long road to recovery (economic impact to

consumer)

COVID-19’s impact on consumer mobility

In this third edition of our survey, we see that the road to recovery will be long and winding, with the number of people who are returning to work slowing: 18% of consumers said their position had been eliminated as a result of COVID-19 and ~37% of households have experienced a reduction in household income

Both the level of optimism and anticipation of a return to spending are trending “downward.” In each consumer pulse survey, a consecutively higher percentage of respondents think the recovery will take 2+ years

Regional sentiment varies, with increased pessimism existing in the West, where COVID-19 mandated restrictions have had a greater impact in recent months

We are starting to see a more permanent shift in consumer mobility trends that could be on par with the generational shifts seen in the industrial revolution: across the board, consumers are working, learning, and buying things from home

We see that a growing number of consumers are even leaving the city they live in as a result of COVID-19: 11% of our survey respondents moved in the last three months and over half of those surveyed said the move was because of or partially because of COVID-19

More than 60% of respondents continue to work remotely either full time or part of the time because of COVID-19

More than 25% of respondents with children say their children will be using a virtual learning environment in the fall

Preview on holiday spend

Almost 80% of our survey participants say they will make purchases around the winter holiday including Christmas, Hanukah or just to benefit from end of year promotions

While the majority start their holiday shopping in November and December (38% and 12% respectively), a fair number of people start purchases in August or even earlier (11% according to our survey)

This year, as expected, more people plan on doing most of their shopping online

The only category where survey participants expect to see YOY increases in spend is computers and hardware; in most of the traditional retail categories, consumers anticipate spending less (with jewelry and clothing purchases expected to decline the most)

COVID-19 CONSUMER PULSE

Key themes from our July COVID-19 consumer pulse survey

© 2020 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG

1International”), a Swiss entity. All rights reserved. [Printed in theU.S.]


Long road to recovery (economic impact to consumer)

Impact on employment status

Ultimately, approximately one third of our July survey respondents said their employment status had been impacted by COVID-19

In April, the impact was considered temporary as almost 60% of respondents whose position had been impacted said they had been furloughed

By July, a greater portion of employees have lost their position permanently as companies “right size” their organizations for the new reality

Commentary

89%

11%Impacted

Not impacted

April

100%

1 LONG ROAD TO RECOVERY (ECONOMIC IMPACT TO CONSUMER)

As COVID-19 progresses, many seemingly temporary impacts to employment status have become permanent

65%

35%

June

100%

66%

34%

July

100%

41%

13%

33%

13%

June

100%

43%

10%

29%

18%

July

100%

+5

-4

-3

+2

N=1050 N=1057N=1039 N=372 N=358

21%

12%

57%

9%Position eliminated

April

Position furloughed

Self-employed and no work

100%

Other(b)

N=117

Note(s): (a) KPMG conducted three surveys of 1,000 consumers across the United States and in all instances they were asked the questions, “Was your employment impacted by COVID-19” and “Please describe impact to employment” (b) Regarding the type of impact to employment status, “Other” includes those who switched from full time to part time, hours were reduced and a small group of those who started work due to COVID-19Source(s): (1) KPMG Consumer survey, fielded April 27,2020 – April 30, 2020 (2) KPMG Consumer survey, fielded June 4, 2020 – June 8, 2020 (3) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020


4

Severity of the impact to household income has remained fairly constant over our survey period, with almost 40% of respondents claiming a negative impact


Impact to householdincome

N=1050 Reduction in household income -% N=395N=1057 Received unemployment benefits

N=1057

Income negativelyimpacted

Not impacted

100% 100% 100% 100% 100%

44%

56%

April

39%

61%

June

37%

63%

July

75-100 %

50-75 %

25-50 %

0-25 %

19%

19%

21%

41%

July

Yes

No

21%

79%

July

Severity of impact to householdincome


5

Note(s): (a) KPMG conducted three surveys of 1,000 consumers across the United States and in all instances they were asked the questions, “Has your household income been negatively impacted by COVID-19?”, “Please estimate the percentage reduction of your household income caused by COVID-19” and “Are you or someone in your household receiving unemployment benefits?”Source(s): (1) KPMG Consumer survey, fielded April 27,2020 – April 30, 2020 (2) KPMG Consumer survey, fielded June 4, 2020 – June 8, 2020 (3) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020

N=1039

Gradual decline in consumers’ level of optimism demonstrates the toll COVID-19 has had on US consumers – it appears that recovery will be a longer path than many initiallyexpected

Note(s): (a) KPMG conducted three surveys of 1,000 consumers across the United States and in all instances they were asked the question, “When COVID-19 is under control, how long do you think it will take for the overall economy to rebound to pre-COVID-19 levels?” Each bar represents the percent of respondents that chose the timeframe indicated on the x-axisSource(s): (1) KPMG Consumer survey, fielded April 27,2020 – April 30, 2020 (2) KPMG Consumer survey, fielded June 4, 2020 – June 8, 2020 (3) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020


US level of optimism around US economy recovering to pre-COVID-19levels

Compared with expectations in June 2020, slightly fewer consumers believe the economy will rebound in 12 months or less, while slightly more expect it to take 2 ormore years

The proportion of consumersuncertain about the recoverytimeline remains roughly thesame

29%

17%

14%

17% 17%

26%

19%

16%

24% 24%26% 26%

21%

13% 13%

Within 6 months 6-12 months 2+ years1-2 years Unsure

April June July

-1

-2-

+2

Commentary


6

-

+2 -3

+2

-1 -

Consumers are also slightly more pessimistic about length of time it will take for their spending to return to pre-COVID-19 levels

Note(s): (a) KPMG conducted three surveys of 1,000 consumers across the United States and in all instances they were asked the question, “When COVID-19 is under control, how long do you think it will take for your spending to return to pre-COVID levels?” Source(s): (1) KPMG Consumer survey, fielded April 27,2020 – April 30, 2020 (2) KPMG Consumer survey, fielded June 4, 2020 – June 8, 2020 (3) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020


US level of optimism around consumer spending to recover to pre-COVID-19levels

Compared with expectations in April and June 2020, fewer consumers believe that their spending will rebound in 12 months or less, while more expect it will take 1 or more years

The proportion of consumersuncertain about the recoverytimeline remains roughly thesame

Commentary

37%

29%

11%

3%

12%

8%

27%28%

17%

5%

9%

15%

24%26%

18%

7%10%

14%

I do not think it will return to pre-COVID levels

1-2 yearsWithin 6 months Unsure6-12 months 2+ years

April June July


7

-3-2

+1

+2

-1

-10-1

+6

+2

+7

+1-3

14%

29%

22%

12%14%

24%

27%

24%

12%

21%

24%23% 23%

17%

15%

11%

24%

28%

25%

11%

2+ yearsWithin 6 months 1-2 years6-12 months Unsure

Optimism varies regionally: the West is less optimistic than other areas, with a high proportion believing economic recovery will take longer than a year

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the question, “When COVID-19 is under control, how long do you think it will take for the overall economy to rebound to pre-COVID-19 levels?” Each bar represents the percent of respondents that chose the timeframe indicated on the x-axisSource(s): (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020


Regional view of economicoptimism

The West and Midwest show higher pessimism regarding economic recovery, with a higher proportion believing it will take 1-2 or more years to recover to pre-COVID-19 levels

Further, regions are becomingmore pessimistic as COVID-19starts to have a greater impacton those communities

Commentary

Northeast


8

Midwest South West


Consumers express concern on the economic toll the virus has had on their daily lives

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the question, “Please rate the extent to which you agree with the given statements?” Each bar represents the percent of respondents that agreed or disagreed in varying degrees with the statementSource(s): (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020

Economic impact

Roughly 15% of the respondents expressed strong concern around their ability to pay regular monthly bills and the availability of funds to meet unforeseen expenses

Nearly 20% of respondents strongly believe that the virus has caused them to become more cognizant of their spending

Commentary

5%

26%

21%

8%

15%

13%

35%

28%

29%

34%

19%

21%

18%

13%

16%

Concerned with ability to pay regular monthly bills


9

Become more thoughtful in spending habits

Neutral Agree

Worried that will not have funds if there is an unexpected / unforeseen expense

Strongly AgreeStronglyDisagree Disagree

N=1057

The net effect of the economic situation is that consumer spending has not come back topre-COVID-19 levels: spending continues to be down ~10% YOY


Percent change in consumerspending(a) Change in consumer spending(a)

Note(s): (a) Represents change in average consumer credit and debit card spending indexed to January 2020 Source(s): Opportunity Insights Economy Tracker

-35%

-20%

-25%

-30%

-10%

-15%

20th Jan – First 13th March– NationalCOVID-19 case in emergency declared

the US13th April – Stimulus

payments start

27th March – CARES Act enacted

5%

0%1-Jan

-5%

1-Feb 1-May 1-Jul1-Mar 1-Jun1-Apr 1-Aug

July 12th :-12.4%


10

2© 2020 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG

International”), a Swiss entity. All rights reserved. [Printed in the U.S.]


COVID-19’s impact on consumer mobility

2 COVID-19’S IMPACT ON CONSUMER MOBILITY

Transportation: Despite concerns over increased risk of certain modes of transportation, most respondents did not indicate a significant shift in type of transportation use, other than a slight pivot away from public transportation use in favor of personal vehicle use

10%

July

Changed mode for some of travel

Changed mode for 100% of travel 13%

No change 76%

9%

7%

5%

4%

3% 3%

9%

5% 5%

3% 3% 3%

70%

72%

Prior to COVID-19 Next 3 months

Personal Walk Public transportation Public Ride hailing Use of bike Air travelvehicle – car – subway transportation – bus (Uber, Lyft, etc.)

+2

-

-2

-

-1

- -

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the questions, “Have you changed your mode of transportation because of COVID-19?”, “Please estimate how much you traveled via the following modes of transportation prior to COVID?” and “Please estimate how much you plan on traveling following modes of transportation over the next three months?”Source(s): (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020

Changes to mode of transportation Change in modes of travel usage – Prior to COVID-19 vs. plan for the next 3months


12

N=1057

100%


Transportation: Regionally, there seems to be a slightly stronger shift in preference across the Northeast, South and West regions to eschew public transportation in favor of travel by personal vehicle

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the questions, “Please estimate how much you traveled via the following modes of transportation prior to COVID?” and “Please estimate how much you plan on traveling following modes of transportation over the next three months?” (b) Results for air travel not shown (all regions show less than 5% in either time period)Source(s): (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020

17%

13%

4%

13% 14%

4%

62%Prior to COVID-19Next 3 months

8%

11%

3%

8%

12%

3%

75%74%

12% 12%

4%

12% 11%

3%

Personal vehicle (car) Public transportation Walk / Use of bike Ride hailing Personal vehicle (car) Public transportation Walk / Use of bike Ride hailing(subway and bus) (Uber, Lyft, etc.) (subway and bus) (Uber, Lyft, etc.)

10%9%

4%

7%

10%

3%

Personal vehicle (car) Public transportation Walk / Use of bike Ride hailing Personal vehicle (car) Public transportation Walk / Use of bike Ride hailing(subway and bus) (Uber, Lyft, etc.) (subway and bus) (Uber, Lyft, etc.)

74%

78%Midwest West

65% Northeast 70% South69%

Change in modes of travel usage – Prior to COVID-19 vs. plan for the next 3months


13

Residential changes due toCOVID-19


Housing: 21% of the respondents either recently moved or plan to move soon, with the majority of those indicating that COVID influenced that decision

78%

10%

11%Moved

Planning to move

Not planning to move

30%

28%

42% Because of COVID-19

Partially related to COVID-19

Not related to COVID-19

100% 100%

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the questions, “Have you moved in the last three months or are you planning to move?”, “If you moved or are planning to move, please indicate the level to which COVID-19 impacted your decision:”, and “You indicated that you moved or are planning to move as a result of COVID-19, please indicate all that apply:”Source(s): (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020

Consumers moving or planning tomove N=1057

Relation to COVID-19 N=228

26%


14

25%

24%

16%

Moved to a less expensive city

Moved to a less populous city

100%4%5%

Moved to be closer to family

Moved to a city less impacted by COVID-19

OthersSince I was working remotely, felt I didn’t need to be in the city

Move rationale N=227

Remote school


Work and School: More than 60% of respondents are working remotely either all or part of the time due to COVID-19 and 27% will have children attend school classes virtually

Remote work

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the questions, “Please select the best answer for your work location” and “What format will the school follow?" Source(s): (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020

44%

26%

19%

11%Already worked remotely prior to COVID-19

Working remotely100% of the timedue to COVID-19

Working remotely part of the time due to COVID-19

I am not working remotely

100%

Remote working situation N=557

35%

35%

27%

Full return to class

Modified return –combination of in person and virtual classes

3%100%

Other

Virtual return to class

Learning format N=154


15


Leisure: While more than ~35% percent of survey respondents say they plan on taking lesstrips this year than last year, there is still a strong contingent that is eager to get on the road again

Leisure travel

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the questions, “Do you expect to do each of the following activities less frequently, equally frequently, or more frequently over the next 3 months (i.e., summer 2020) compared to last fall (i.e., fall 2019)?” and “Please rate the extent to which you agree with the following statements” (b) Respondents for other answer options not shownSource(s): (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020

“Latent demand” for travel

Opinion on travellingagain N=1057

Planned trips over the next 3 months compared to last fall N=1057

25%

12% Disagree

Strongly Disagree

44%

36%

42%

35%

9%

13%10%

9%

Take an overnight trip –domestic leisure travel

Take a day trip to an indoor location

Take a day trip to an outdoor location

Take an overnight trip –international leisure travel

More frequently


16

Less frequently

100%

17% Strongly Agree

17% Agree

29% Neutral


Daily life: While many consumers are happy to have time with their family, others think that quarantining has taken an emotional toll on their health; many are eager to get out and resume social activities again

Fewer than 15% of Americans say they would classify themselves as “very happy” right now - the lowest percentage recorded since 1972

More than 30% of respondents agreed that they are being negatively impacted by the lack of social activities and that they are tired of home cooking

Lifestyle changes Commentary

14%

4%

18%

18%

9%

18%

32%

33%

32%

23%

36%

20%

12%

18%

11%

Strongly AgreeStrongly Disagree

Avoiding social activities has negatively impacted well-being

Agree

Paying more attention to health and cherishing time with family

Tired of cookingat home

NeutralDisagree

N=1057

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the question, “Please rate the extent to which you agree with the following statements:” Source(s): (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020 (2) The National Opinion Research Center

50% of Americans say they feel isolated either sometimes or often right now


17




Preview on holiday spend

Population making holidaypurchases Timing of holidaypurchases E-commerce penetration

Over two thirds of our survey respondents make holiday purchases with a significantportion starting as early as August; this year, a higher percentage of purchases will beonline

4 PREVIEW ON HOLIDAY SPEND

77%

23%

Purchases made around winter holidays N=1057

11%

15%

25%

38%

12%December

November

October

100%

September

August or earlier

Month when shoppingbegins N=811

45%

55%

Winter purchases made online

20202019Yes


19

No

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the questions, “Do you typically make purchases around the winter holidays (e.g. Christmas, Hanukah, other)?””, “When do you plan on starting your holiday shopping?” and “How much of your winter purchases were online last year (e.g. 2019) compared to your plan this year (e.g. 2020)?”Source(s): (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020

Online winter purchases N=811

Holiday spend

With the exception of computers and hardware, consumers expect to spend less across theboard on key categories like clothing and accessories, electronics and furniture

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the question, “How much do you typically spend on the following categories as part of your winter purchases?”, Source: (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020


162 166

10684

103

37 37

272

137

88 86 8664

31 29

Other FurnitureElectronicsClothing and accessories BooksJewelry GamesComputer and hardware

-27%

372

-15% -47%

-19%+3% -37%

-16% -22%

2019


20

2020

Average spend compared to last year N=811

~30% respondents sought out lower cost, private label items or bought fewer new products asa result of COVID


Product purchasingbehavior

A significant portion of consumers have either “traded down”, bought less, or sought out private label products as a result of COVID-19

Commentary

18%


21

17%

13%

18%

19%

16%

35%

38%

37%

19%

16%

21%

11%

10%

13%

NeutralDisagree Strongly Agree

Switched to lower cost items as a result of COVID-19

Sought out private label items as a result of COVID-19

Fewer new products as a result of COVID-19

AgreeStrongly Disagree

N=1057

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the question, “Please rate the extent to which you agree with the following statements” Source(s): (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020

Product quality

Store location Price matching

Delivery speed

Carries Carries items Covid-19 brands / I typically like precautions

styles I want to purchase

Ease of check out

Delivery cost Shoppingexperience

Can buy Can buy Retailer online, pick online / return reputation upinstore in store

Given the level of price consciousness of the consumer, on average, consumers will be looking to discounts, free shipping and competitive prices as the top three factors in making a decision


Most important attributes while selectingretailer

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the question, “When selecting a retailer, what attributes do you think will be most important, select up to five?” Source(s): (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020

16%

10%

Product quality and store location follow closely in importance, with 10% and 8% of consumer, respectively, ranking them in the top most important factors

8%

5%5% 5%

N=3867

5% 4%

3% 3%3% 3% 2%

2%

14%

11%

Price discounts

/ sales

Free shipping Competitive prices


22

Better quality and more nutritious ingredients will be important in holiday meal planning4 PREVIEW ON HOLIDAY SPEND

Food consumptiontrends

While overall there does not appear to be a significant swing towards eating more or less healthy, there does appear to be an appetite for premium products

On average, consumers are willing to pay ~20% more for attributes like fresh, locally sourced, or sustainable packaging

Commentary

Attributes worth paying a premium for N=1057

50% 17% 21% 12%

43% 22% 23% 12%

44% 21% 22% 12%

45% 19% 22% 14%

33% 21% 27% 19%

33% 21% 28% 18%

45% 19% 22% 13%

Fresh and organic

0% to 25%

Locally sourced

Better quality ingredients

Reduced food waste

Environmentally sustainable packaging

More nutritious ingredients

A product that appears more "in sync" with beliefs

25% to 50% 50% to 75% 75% to 100%

55%


23

15%

14%

9%

7%

Much healthier than it was last year

Somewhat less healthy

Less healthy

About the same

Somewhat healthier than last year

100%

Eating habits compared to last year N=1057

Note(s): (a) KPMG conducted a survey of 1,000 consumers across the United States and they were asked the questions, “To what extent do you think you are eating healthier than last year?” and “Please rate attributes you would be willing to pay a premium for:” Source(s): (1) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020




Taking action

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Increase reach to key consumerdemographicsPricing & promotion

Prepare leading digital platform while improving cost to serve Improve direct-to-consumer penetration and targetingE-commerce platform

integration

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improvement

Proprietary demand forecasting engine that combines variables from variety of paid and public data sources

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5 TAKING ACTION

Where KPMG can help you redefine your consumer approach

KPMG can support you to rapidly re-evaluate your consumer base, identify the signals of lasting change so that you can retool your business model and succeed in the new normal


25

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Daniel ShaughnessyPrincipal

Jonathan SeastromManaging Director

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27




Appendix

In our first survey, we introduced four archetypes based on consumers’ behaviors associatedwith COVID-19; we have compared across three months to see how these groups haveevolved:

6 APPENDIX

Four consumer archetypes emerged from our research Characteristics of archetypes

1

2

3

4

Description

Survey population that has been hardest hit by COVID-19 Less able to deal with circumstances prior to pandemic Spending significantly less across categories Not optimistic about the future

Avg. incomeAvg. age

Survey population also impacted by COVID-19 but not as economically significant and still concerned about future

Moderate income prior to pandemic, spending about the same Most unsure about the future

Not necessarily directly impacted by COVID-19 Most financially able to deal with pandemic Spending less given concern for economic outlook More pessimistic about the future

Not directly impacted by COVID-19 Spending more across categories Most optimistic about the future, eager for social activities, but will

still modify behaviors to maintain social distancing

51 ~45,000

47 ~47,000

53 ~160,000

36 ~70,000

5%

22%

16%

16%

45%

42%

44%

28%

25%

23%

17%

17%

April JulyJune

1 "Hit hard and cutting deep"

2 "Proceed with caution"

3 "Hunker down and save"

4 "Ready to roll"


29

Note(s): (a) KPMG conducted three surveys of 1,000 consumers across the United States and in all instances they were asked the question, “How much do you think your monthly household spend on each of the following categories changed during COVID-19?” Source(s): (1) KPMG Consumer survey, fielded April 27,2020 – April 30, 2020 (2) KPMG Consumer survey, fielded June 4, 2020 – June 8, 2020 (3) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020

6 APPENDIX

Profiles of the four consumer archetypes

Source(s): (1) KPMG Consumer survey, fielded April 27,2020 – April 30, 2020 (2) KPMG Consumer survey, fielded June 4, 2020 – June 8, 2020 (3) KPMG Consumer survey, fielded July 20, 2020 – July 24, 2020

“Hit hard and cuttingdeep”

~16% of our sample

Skews female Skews retirement age 55+

Skews lower household income of $25k to $75k

Smaller households of 1 to 2 people

Skews Families with no kids 70% of consumers’ employment status

was impacted, a high proportion switched from full-time to part-time hours due to COVID-19

“Proceed withcaution”

~44% of our sample

Skews female Skews seniors 65+

Skews lower household income of $0k to $50k


Skews families with no kids 58% of consumers’ employment status


“Hunker down andsave”

~23% of our sample

Skews male Skews middle age and beyond 55+

This consumer likely has a household income between $100k to $200k




“Ready to roll”

~16% of our sample

Skews male Skew young and millennial - 18-44

This consumer likely has a household income of $35k-$100k

Smaller household of 2 to 3 people




30

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