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Alain Giguère

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Life in a time of COVID-19 - Limited, more prudent consumption and more engaged citizens!

Categories: On my radar this week

Posted on 10-05-20 at 1:45 p.m.

COVID-19 will probably lead to sustainable changes for consumers. As for how it will affect individuals in their role as citizens, we will just have to wait and see!

This blog post marks the start of the publication of the results from our Panorama Program, our annual study of the values of Canadian consumers and citizens. The Panorama survey was conducted in June of this year during the "deconfinement," when the lockdown was lifted.

The 2010 decade saw the explosion of an enthusiastic consumer culture across the country. This trend was fueled in part by the desire to discover what innovation could offer. It was also motivated by pure gratification (the pleasures of shopping). However, the momentum had already started to wane by 2019. COVID-19 appears to have accelerated the reversal of this trend, and perhaps even created a new attitude of prudence for the years ahead.

The satisfaction in consuming simply for the pleasure of buying something, the attraction to innovation for the new experiences it offers, early adoption, the desire to consume stimulated by advertising, and even confidence in advertising as a source of information: these are all phenomena that experienced tremendous growth until 2018.

And then, a certain uneasiness about the future associated in part with a gradual rise in consumer debt levels spelled the end of this trend in 2019. The COVID-19 crisis and its economic impact has accelerated this cautious attitude, which was already beginning to gain a foothold in people's consumption habits.

The most influential phenomenon among these trends is undoubtedly the decline in the attraction to innovation. This attraction was, by far, one of the most important engines stimulating consumption in recent years (the reason you need to change your car is because new models offer unique features that improve the experience, etc.). The fact that this appeal has markedly declined over the past two years does not bode well for the country's domestic market, even as the COVID-19 crisis accelerates this countertrend.

If this trend had only begun this year in the midst of the pandemic, we might have been led to believe that when the current crisis was over, consumers would return to their frenzy of recent years. However, our view that COVID-19 has only accelerated a movement already underway leads us to believe that a new culture of frugality is in the process of taking its place.

This new trend is detrimental to the economy, particularly to retail: the demand for goods and services will continue to decline, amplifying job losses that, in turn, will diminish the shopping zeal of consumers. A self-perpetuating cycle that risks playing out over several years - when prudence will be the watchword in the marketplace.

An overall index for consumption enthusiasm

In order to measure the evolution in consumption enthusiasm in the country and assess the desire of consumers to take advantage of the products and services being marketed to them, we combine the relevant indicators each year to create an overall index. The evolution of this axis provides a wonderful snapshot of all the consumption attitudes that we measure. This index rose very significantly from 2015 to 2018 and has declined markedly since 2019.

Men, women, young, old, regions, etc.

One of the most astonishing characteristics of these new results is the homogeneity in the trends in almost all the sociodemographic and socio-economic subgroups studied. Naturally, none of these groups is positioned in exactly the same way on the measured indicators. But the trends, upwards or downwards as the case may be, are for all practical purposes identical (even for Quebec, which often stands apart from the rest of Canada on several of the indicators we measure. On the consumption trends discussed here, the curves overlap almost perfectly with the rest of Canada).

The citizen

In parallel with the consumer trends, other phenomena shed a revealing light on the impact of the COVID-19 crisis on our society.

For years, the citizens of the country have been divided almost equally, between those who give precedence to their sense of duty towards their family and community and those who prioritize happiness and pleasure above all (on this value, Quebec stands out, in favour of happiness).

However, in 2020, there has been a significant rise in the sense of duty (particularly in Québec, incidentally).

Cynicism towards elites and institutions, as well as fantasies of civil disobedience, which had risen substantially since 2012, have also significantly declined this year.

Faced with a pandemic, people have become more responsible, both personally and socially. They have developed a new sense of civility, a willingness to do their part, while granting renewed legitimacy to institutions and elites so that they can do what is necessary to deal with the current crisis.

A new ethic of responsibility seems to have emerged from our adaptation to the consequences of the pandemic: personal financial responsibility, more prudent and frugal consumption, a more pronounced commitment to one's obligations (both personal and societal), along with a greater respect for social rules and norms.

As for the future ...

Without attempting to predict the future, it is always interesting to imagine scenarios based on the probable evolution of recent trends.

The continuation in 2020 of the waning wave of enthusiasm for consumption that began in 2019 suggests that a new frugality is settling into our purchasing habits, a trend that the COVID-19 crisis could further energize.

On the other hand, the new civility could end up evaporating if the pandemic continues indefinitely and if the restrictions imposed on the population end up eroding everyone's morale!

The next few months should prove interesting in this regard.

How to support consumption in such a context ... and is that even desirable?

On this issue, there is an ongoing debate between those greatly concerned about the need to fight climate change and those who prioritize the economy.

A reduction in consumption and its associated trade flows would reduce our carbon footprint as a society, which is what the most committed environmentalists advocate.

On the other hand, the socioeconomic cost would be very high.

Retailers, manufacturers and service providers must, first and foremost, ensure their survival, even if it means doing whatever they can to optimally reduce their carbon footprint.

The results presented in this blog post deal with the country's global situation, its markets and its fellow citizens.

However, some sectors have been less affected than others; some customers are less frugal than others.

Our consumption enthusiasm index for consumers overall may have displayed a uniform trend (in 2020, compared to the last two years), but the fact remains that it varies considerably depending on the specific customers.

Our consumption enthusiasm index may have dropped by 8 points since 2019, but 51% of Canadians are still enthusiastic about consumption

Therefore, we will need to have an exceedingly good grasp of people's needs, as consumers and as citizens. We need to be tuned in to their expectations, to their predisposition to consume, to their civic engagement, to ensure that these are met with the strictest congruence.

The Jewelry song from Gounod's Faust

Once again, I feel compelled to return to "L'Air des bijoux" (Jewelry song) from Gounod's opera, Faust, which I used to illustrate the joy of consumption in an earlier post, published in March 2017.

A reference that is undoubtedly familiar to anyone who read The Adventures of Tintin when they were young. It is the aria sung by Bianca Castafiore in The Calculus Affair, to the exasperation of Captain Haddock. The lyrics couldn't be more evocative ... "Ah! I laugh to see how beautiful I am in this mirror ... Is it you, Marguerite? ... No, it is no longer you! No ... It is the daughter of a king ..."

For many enthusiastic consumers, the dream of being transformed into "the daughter (or son) of a king" by the products and services they buy is still alive and well.

Faust, Charles Gounod: Jonas Kaufmann, René Pape, Marina Poplavskaya, Orchestra & Chorus of The Metropolitan Opera, Yannick Nézet-Séguin, New York, 2014, Decca.