Consumer spending is forecast to fall 12.8% in the UK this year as a consequence of Covid-19, in the US the estimated fall is less pronounced, at 5.5%, but nonetheless it is not good news for brands. There is little sign that the pandemic is abating, and much of Europe is re-entering lockdown, the impact on balance sheets will be felt. With Black Friday upon us, no doubt many businesses will be pegging their hopes on the high holiday of over-consumption to mitigate some of the financial damage of 2020. But is this the right strategy, either ethically or commercially?
In 2019, Barclaycard, which processes nearly £1 in every £3 spent in the UK, reported that sales volumes over the Black Friday weekend increased 7.1% compared to the year before, while the value of those sales was up 16.5%. It’s not unreasonable to expect numbers to be far lower this year, not least because physical ‘non-essential’ retail will be banned in England as a result of the present lockdown.
The long-lasting impact of 2020 on brands and commerce will take time to fully recognise. The physical restrictions imposed on entire nations has accelerated consumer e-commerce adoption and forced a reassessment of consumer relationships with brands. In our 2020 global CMO Survey, 40% of chief marketing officers said understanding what might be a temporary shift in consumer behaviour and what is permanent is a significant challenge, in fact it is the most significant challenge the CMOs we surveyed face.
So let’s look at the data. Consumers have been forced to re-assess their own consumption this year, not least because so many of them have been at home faced with their own waste. Our Pulse Navigator in the US found 72% of people are limiting food waste as a result, while 61% are making more environmentally friendly, sustainable or ethical purchases. 90% of those surveyed expect to maintain this behaviour after the pandemic is behind us. Tellingly, one of the respondents in the survey explained, “it’s been a moment to pause and re-evaluate what’s important… I’m realising that I need a lot, lot less than I thought”.
McKinsey has tracked the shift in consumer sentiment during the pandemic. Consumer loyalty is weakening as consumers have switched to new shopping behaviours because of Covid-19 and intend to continue after the world returns to normal. In the UK, 63% of consumers have tried new shopping behaviours, with up to 88% intending to continue. When choosing a new brand, purpose (including the desire to support local businesses) is the most important consideration.
In the UK, we can see this shift for ourselves, particularly away from big brands. As more people stay at home and are required to shop locally, loyalty is shifting accordingly. Small, independent shops are fairing far better than big brands in avoiding closures. Bookshop.org launched to great attention two years ahead of schedule thanks to consumer demand to buy books from local, independent bookshops, over the likes of Amazon. Supporting small, local businesses has become a priority.
Consumers are more aware of social issues than ever and they care more. 88% of consumers want brands to help them live sustainably. Sustainable products have grown 20% since 2014, while conventional product sales have dropped. In 2018, Unilever's Sustainable Living Brands grew 69% faster than the rest of the business, Clorox has seen brands like Burts Bees grow seven times faster than conventional brands. Tesco recently announced its intention to grow sales of plant-based protein alternatives by 300%, reflecting the fact that vegan product lines are the fastest growing supermarket product lines.
Given these shifts in consumer behaviour –the desire for greater sustainability, in the desire to rationalise “stuff” – the question we should be asking is whether Black Friday and Cyber Monday is the right strategy after this year of change?
In 2019, there were multiple protests in opposition to Black Friday challenging over-production and over-consumption. In France, there was a parliamentary proposal to ban the day, citing its incompatibility “with the fight against global warming”. Greenpeace has advised consumers to think about the long-term impact of purchasing an item.
The UN’s e-waste monitor says a record 53.6 million metric tonnes of electronic waste was generated in 2019, a 21% increase in five years. Only 17.4% of that e-waste was recycled. It says, “this means that gold, silver, copper, platinum and other high-value, recoverable materials conservatively valued at US $57 billion -- a sum greater than the Gross Domestic Product of most countries – were mostly dumped or burned rather than being collected for treatment and reuse”. It is set to reach 74 metric tonnes by 2030. Over consumption at these levels cannot continue if we are to mitigate the worst effects of climate change and prevent ecological collapse.
The shift to purpose-led consumer decision making is one the industry has been aware of for many years. Just as the shift to digital and e-commerce has been accelerated as consumers contend with social distancing and stay-at-home orders, in 2020 we have seen this trend accelerate and it is one that is here to stay.
Brands and CMOs cannot rely on their old strategies.
They will need to knit purpose and social impact into every part of their business strategy. They will need to reconsider strategies that rely on the consumer buying more and more stuff. They will need to consider the impact they have on the environment in production, delivery, during the lifetime of their products, and when that product is disposed of. They will need to reconsider events like Black Friday. Brands can choose to embed sustainable consumption in their strategies now, or they can play catch up with consumers.
 S&P Global, COVID-19 Impact: Key Takeaways From Our Articles, 3 August 2020.