June 10, 2020

Consumers are the Power Behind Reopening the Economy

by Jharonne Martis.

The recent Refinitiv/Ipsos reading on consumer sentiment around reopening the economy suggests that the bulk of consumers are willing to attend a live concert, theater performance or movie theater — when there is a proven coronavirus vaccine, even if that’s a year or more from now.

This doesn’t bode well for mall retailers that had already been hurting from weak store traffic pre-coronavirus pandemic. Recently, Simon Property sued Gap for not paying rent, and if shoppers are not ready to return to the mall, owners could potentially face more financial trouble. This is reflected in the Refinitiv earnings forecasts.

What’s more, the recent civil unrest and nights of looting have put even more pressure on retailers with store repairs. In addition, store hours have been reduced due to curfews around the U.S. Accordingly, a special consumer confidence report for the first week of June 2020, shows that consumers are once again starting to become less comfortable making major purchases. That’s a reversing trend compared to the preceding two weeks, ahead of the civil unrest.

Many U.S. states are ready to reopen and retailers such as Macy’s and Best Buy are ready to welcome shoppers. However, the reality is that neither the government nor retailers really get to decide when to reopen the economy — consumers do.

The consumer decides when it’s safe to take public transportation again, visit shopping malls, return to the cinemas, go to concerts and to the grocery stores. Thus, the speed of the recovery is dependent on consumer behavior.

The recent reading on Refinitiv/Ipsos Consumer Sentiment around reopening the economy suggests that consumers have been very concerned for the most part, although progressively in favor of restarting the economy going into June 2020. The data below is a summary from the special Ipsos Covid-19 report, conducted from March through May 2020.

Here are the study highlights:

  • 55% of consumers believe live concerts, theater performances and movie theaters should NOT reopen to the public before a vaccine is available.
  • 76% are unlikely to attend a sporting game or event in person right now, if government restrictions were lifted.
  • 41% expect to attend a live concert, theater performance or movie theater when there is a proven coronavirus vaccine, even if that’s a year or more from now.
  • 35% expect to attend/go to a shopping mall when there is a proven coronavirus vaccine, even if that’s a year or more from now.
  • Experiences are still important to consumers. More consumers (30%) miss entertainment including movie theaters, more so than going to shopping malls (27%).
  • 79% of consumers are concerned that they or someone they know will be infected with the coronavirus, and are personally concerned about the spread of the coronavirus/COVID-19.
  • When it comes to COVID-19, consumers are most fearful for their family members’ health and well-being (34%), followed by worries about continued economic disruption leading to a recession (17%).
  • Over 50% of respondents have indicated that the amount of news coverage on COVID-19 has caused them to feel that it is getting worse.

Consumer worries

When it comes to reopening the economy, 72% believe that moving too quickly to loosen stay-at-home orders could potentially make the coronavirus spread faster, with more lives being lost. If the government restrictions were lifted, only 24% are likely to attend a sporting game or event in person right now.

Americans are not only worried about the coronavirus. Over 20 million people have lost their jobs because of the pandemic, and those employed are concerned that their jobs might be at risk too. All these worries are reflected in our earnings data.

The Refinitiv retail/restaurant earnings index is looking at a -39.2% estimated growth rate for Q1 2020. This is expected to deteriorate considerably further to a -71.7% for Q2 2020. It would be the first time that all eleven sectors would see negative results in earnings (Exhibit 1). And, when looking at the constituents in the index, mall stores have the weakest Q2 earnings growth rates.

Exhibit 1: Q2 2020 Earnings Growth: Retail/Restaurant Industries

Source: I/B/E/S data from Refinitiv

This suggests that consumers are less likely to spent money on discretionary items during the May – July quarter. Their health is a top priority; they are awaiting a vaccine and they are waiting to feel better about their job security.

Awareness and concern during COVID-19

Exhibit 2: How concerned are you that you or someone you know will be infected with the coronavirus?

Exhibit 3: How concerned are you personally about the spread of coronavirus/COVID-19?

Exhibit 4: What concerns you most about the coronavirus/COVID-19?

 

Exhibit 5: Are you currently willing or unwilling to do each of the following?

Source: Refinitiv/IPSOS Primary Consumer Sentiment Index (PSCI)

Exhibit 6: Thinking about the services and activities that are more restricted in the current environment, which of the following do you miss most right now?  Below are top selections.

Source: Refinitiv/IPSOS Primary Consumer Sentiment Index (PSCI)

Reopening the economy

Exhibit 7: If you had to choose, which of the following would you say is a bigger danger for the country:

Exhibit 8: How likely would you be to attend a sporting game or event in person right now, if government restrictions were lifted?

Exhibit 9: Thinking about when COVID-19-related closures and restrictions end, how will you proceed in using these services?

Source: Refinitiv/IPSOS Primary Consumer Sentiment Index (PSCI)

Exhibit 10: When, if ever, do you expect to go to a shopping mall?

Source: Refinitiv/IPSOS Primary Consumer Sentiment Index (PSCI)

Exhibit 11: When, if ever, do you expect to attend a live concert, theater performance or movie theater?

Source: Refinitiv/IPSOS Primary Consumer Sentiment Index (PSCI)

 

Exhibit 12: Please indicate how much you agree or disagree with the following statements: Live concerts, theater performances and movie theaters should reopen to the public before a vaccine is available.

Source: Refinitiv/IPSOS Primary Consumer Sentiment Index (PSCI)

This research is a partial compilation of the publicly reported data Ipsos has executed on the Coronavirus/COVID-19 pandemic starting in March. The studies included in this document are:

 Ipsos Consumer Behavior During COVID-19 Poll | IIS | N~1000 Gen Pop from April 10-28S

FiveThirtyEight/IPSOS Sports Poll | KP | N~1000 Gen Pop from May 5 – May 11

ABC News/Ipsos | KP | N~500 Gen Pop from March 12 – May 7

Reuters/IPSOS | IIS | N~1000 Gen Pop from March 2- May 5

Axios/Ipsos Coronavirus Index | KP | N~1,000 Gen Pop from March 13-May 18

Center for Public Integrity/Ipsos| IIS | N~1000 Gen Pop from April 16-17

MetLife/U.S. Chamber of Commerce/Ipsos Small Business Index | IIS | N~500 Small Business Owners / Operators March 25-April 28

Newsy/Ipsos COVID-19 Poll | IIS | N~2000 Gen Pop from March 20 – April 20

USA TODAY/IPSOS | IIS | N~1000 Gen Pop from March 10 – April 10

 

 

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