It’s been a crazy year, hasn’t it? And yet, as we work our way further into 2021, there’s a sense of guarded optimism that seems to be spreading across the world that we can see in our Q1 review of the Blis consumer confidence pulse.
The pandemic has dominated the last 365 days, but now – thanks to a combination of lockdowns and vaccination programmes – there is at last a light at the end of the tunnel. After more than a year of panic, occasional despair, false dawns and frightening new variants, we’re seeing that light through the lens of consumer wariness and caution. But the light is there, nonetheless, and we’re all eager to get there.
Our consumer confidence pulse covers six global markets: the United States, the United Kingdom, Singapore, Australia and, newly added: the Netherlands and Italy. Each region was impacted differently by the pandemic. Some were hit much harder and earlier by the coronavirus. Some locked down quickly and securely and others took a less restrictive approach. Vaccine programme rollouts have also been faster and more efficient in some regions than others. At the same time, each entered the pandemic from a vastly different place in terms of its political and economic climate.
All of this means that drawing parallels in terms of customer sentiment across markets may be misleading. But that doesn’t mean similarities don’t exist, or that there are no lessons to be learnt.
In fact, the spread of the virus, once the trajectory is set, is relatively predictable until stalled by restrictions like lockdowns, and more recently, vaccination programmes. And after a year of working with consumer movement data through the pandemic, we can confirm one universal truth: that consumer behaviour is also relatively predictable.
Around the world, consumers have reported more confidence in their household financial situation than in their country’s economy. This is very possibly a reflection of people seeking to control what they can when surrounded by chaos. The income support schemes introduced in many markets have undoubtedly helped.
To this point, we noticed a strong tendency towards fiscal prudence: consumers prioritised savings and debt repayment, particularly early on in the pandemic. That behaviour continues, but we’re also seeing a resilience in consumer spend, punctuated by the nearly instant bump in store visits when restrictions are lifted. This suggests that people are choosing to behave cautiously when it comes to their bank accounts, rather than squirreling away funds out of necessity.
Indeed, the fact that consumers are now eyeing bigger-ticket purchases – like holidays, home improvement and cars – indicates that they’re itching to get back to what they know, even if the experience is slightly altered. We can all relate to that, can’t we?
Ultimately, the most significant influencers of the past 12 months have been governments and scientists. Their statements and actions have had the greatest impact on consumer sentiment and behaviour, diverting and stalling it at various intervals. But consumers and the businesses they patronise have fortunately proven adaptable and resilient. Through it all, they have found ways to keep consuming.
Here are some highlights from the Q1 ‘pulse’ update:
UK: While confidence in household finance is improving, confidence in the economy remains in net negative territory for Q1. This is likely the result of an entire quarter spent in lockdown, but it does represent significant progress compared to the low seen in Q4 2020.
US: Confidence in household finances averaged almost zero – the lowest we’ve seen so far. This seems counter-intuitive given the decline in COVID-19 cases and the success of the country’s vaccination programme. However, with almost equal percentages of respondents answering optimistically, neutrally and pessimistically, the smallest swing in sentiment can generate volatility, which suggests uncertainty ahead. This is hardly surprising given the events of the past year. An increase in the number of respondents funneling discretionary funds into savings supports this theory of trepidation.
Australia: Confidence is waning in Australia, where we saw a slow but steady increase in respondents who are pessimistic about their prospects. In spite of this, when asked about intentions for disposable cash, Australians offered their least fiscally cautious percentages so far with 18% saving and 10% focusing on debt repayment. This suggests that consumers are still reluctant to spend, rather than unable. More than one in three respondents said they are planning to direct funds to holidays (17%) or cars (17%) – nearly as many as those who are prioritising saving.
Italy: The economic situation in Italy was gloomy even before the pandemic struck, and consumer response only confirms as much, with confidence at net -50 points in Q1 2021. Almost two-thirds of respondents feel pessimistic about the country’s economy, compared with just over half saying the same about their own household finances. While caution is pervasive, there are also pockets of opportunity: one in five say they’d look to spend on home improvements or a holiday, and retail therapy reporting its highest score in the past six months. We’ll take the optimism where we can find it!
Netherlands: A bright spot in this quarter’s pulse, confidence in both the Dutch economy and at a household financial level have scored positively in Q1 2021. Respondents are optimistic about prospects for both. With relatively equal proportions of respondents in each camp (optimistic, neutral, pessimistic), the balance is delicate. However, the consistency of these measurements across the six waves of our Consumer Confidence Pulse so far suggests that the current state of stable – if not quite overwhelming – optimism will continue.
Singapore: In Q1 2021, Singaporean respondents offered the most optimistic score regarding the economy in the last 12 months. However, this positivity has been in slow decline since it peaked in February 2021, as an increasing number of respondents lean towards a more neutral sentiment. This caution towards the health of the economy is reflected in the dramatic ups and downs in the sentiment of responses when respondents were asked about their household financial situation. These have recently swung toward optimism, but only after posting two of the lowest net scores since a record drop in July 2020.
To dig in deeper to the data, check out the trackers for the UK, US, Italy, Netherlands Australia and Singapore here.