Coronavirus impact on Consumers and Business

A preliminary report on COVID-19 and its implications

PRELIMINARY REMARKS

This report is based on China Beats, a solution for data-driven insights into the Chinese market, as well as analysis of Google search and social media data for several European countries.

It highlights the current impact of COVID-19 and provides data-driven information about its effects on consumer and business behavior.

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This report is in no way intended to distract from the fact that the outbreak of the novel coronavirus is first and foremost a human tragedy affecting hundreds of thousands of people.

As the situation is evolving rapidly, please note that this page reflects the data collected up until 9 March 2020.

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COVID-19 CHANGES CONSUMER BEHAVIOR

The outbreak of the COVID-19 virus has had a major impact on daily life and consumer behavior in China. When the epidemic peaked in China at the beginning of March, it led to the lockdown of regions and cities with a total population of 500 million people quarantined and a concurrent decline in production.

Despite the negative social and economic impact, the outbreak quickly led to an adjustment in people's behavior – from fear to action, to cope with the unexpected situation – and a shift in daily activities from offline to online.

Currently, the distribution of COVID-19 in China is beginning to stagnate. Consequently, first lessons can now be drawn from its effects and impacts, serving as a forecast for developments in Europe. Reply is able to provide data-based insights into current market developments in relation to Chinese consumer behavior using the China Beats insight tool.

LESSONS FROM CHINA

In Europe, the situation is changing daily, with cases continuing to increase. One of the first and most significant lessons that can be learned from developments in China so far, is that companies with a strong digital footprint are extremely well placed to respond to changing consumer behavior – with some companies managing to very quickly secure a place among their former major competitors.

FOCUS ON CHINA

Daily life in China has been significantly impacted across the country, since 500 million people, mostly located in Hubei Province, have been under lockdown from 23 January.

48 cities and 4 provinces under lockdown

COVID-19 prompts China to lock down its mega cities.

Manufacturing index levels drop to 35.7

For January, which included the extended Lunar New Year holiday, the index lay at 50 (out of 100, with a value below 50 indicating a decline).

Significant decreases in NO2 over China

The reasons for this are considered to be the quarantine, a drop in manufacturing and limited travelling due to the extended lunar new year.

Source: WHO Novel Coronavirus Situation dashboard ; data up to date as of 17.30pm 06/03/2020; https://experience.arcgis.com/experience/685d0ace521648f8a5beeeee1b9125cd

CHINESE CONSUMERS OPT FOR ONLINE

Instead of reducing all expenditures, the buying habits of consumers have changed. Chinese consumers have switched from offline activities to e-commerce. This brings relief for the economy and sets the course for a rapid recovery.

Demand decreased

Demand increased

Decreased due to epidemic

Unchanged

Increased due to epidemic

Source: Kantar Cross industry view on the impact of COVID in China: https://www.kantar.com/Inspiration/Retail/A-cross-industry-view-on-the-impact-of-COVID

IT IS NOT ONLY E-COMMERCE THAT CHANGES…

In addition to the gains in e-commerce, Chinese consumers have also changed their habits in other areas – not all of them are to be found in the digital world.

entertainment

MORE Mobile Gaming

Many Chinese stuck at home have turned to online entertainment, such as video games. Apple has seen an increase in downloads, with 222 million game downloads in the week of 2nd February, including the online game Honor of Kings, which has reached a new high in terms of average users.

Home office

High Demand for online work tools

Chinese digital work tools have experienced a significant increase in demand, putting network capacity to the test. DingTalk has been used to an unprecedented degree in China as many companies have asked their employees to work from home. The application jumped from number 40 to number 3 of the most downloaded free iOS app in China. WeChat Work also saw a 10-fold increase in usage from 10th February.

Mobility

Bike sharing sees resurgence

As public transport is limited in many urban areas, Mobike and Hellobike report an increase in trips to hospitals, supermarkets and markets (5%) and a tripling of trips over 3 km. It is unlikely that this increase will continue after the epidemic, as public transport will resume its normal service.

The importance of a digital customer journey

AUTOMOTIVE INDUSTRY in china: Trends & Players

Since the beginning of the lunar new year, "Search" and "Social Buzz" have decreased – a typical decrease for this time, but both factors have remained low even during the long holiday period.

The automotive industry has been shaken by consumers staying away from car dealerships, with car sales falling by 92% in the first half of February.

Those car manufacturers who already have a large digital footprint, allowing consumers to view, order and personalize cars online, are seeing a payoff for their digital showrooms. Tesla remains the most sought-after car brand, but brands with a better digital retail experience, such as Baic Bjev and Jetour, are gaining ground.

Within a few days, the two brands have managed to secure a place among the Top 5 players in terms of search volume and have thus removed Toyota and Honda from their respective 3rd and 4th positions.

Jetour attracted special attention with the live streaming of the dismantling of the new JietuX96 on major Chinese online platforms on 27 February 2020.

BIGGEST PLAYERS PRE-COVID-19 *

1

1.88M
search
vol

2

1.51M
search
vol

3

1.27M
search
vol

4

1.23M
search
vol

5

1.13M
search
vol

*1 December 2019 – 15 January 2020

BIGGEST PLAYERS DURING COVID-19**

1

1.73M
search
vol

2

1.15M
search
vol

3

1.10M
search
vol

4

1.07M
search
vol

5

1.07M
search
vol

**16 January 2020 – 29 February 2020

FOCUS ON EUROPE

At the beginning of March, while new infections in China are declining sharply, the number of cases in Europe is only just beginning to pick up speed – the only advantage is that Europe has the opportunity to learn from developments in China.

Italy the 1st country under complete lockdown

As COVID-19 spreads extremely quick.

25 Billion Euro Emergency Plan

The EU plans to allocate €25 billion to combat the epidemic and its economic consequences.

Most European countries affected

As of 11th March 2020, every country in Europe except Montenegro and Kosovo has reported at least one case of COVID-19.

EUROPE Between Anxiety and action

The first reaction to health threats like COVID-19 is usually panic and anxiety. Over time, however, people begin to move towards helpful measures. These actions reflect the willingness of the population to respond to the crisis. The index below is calculated by comparing Google searches between action-oriented keywords (e.g. “masks”, “hand disinfectants”) and anxiety-oriented keywords (e.g. “coronavirus symptoms”, “what is coronavirus”).

Action

Anxiety

Source: Google Trends - Timeline: 20 January to 3 March 2020

“Hand washing” TRENDING ONLINE

Basic hygiene measures such as hand washing have become commonplace in online searches. People are looking for the "right" way to wash their hands, as preventive measures and halting the spread of COVID-19 are considered by most health authorities to be the most effective way to combat it – for as long as there is no vaccine.

Source: Google Trends

ITALY HAS ALREADY BECOME DEEPLY INVOLVED IN DIGITAL WORK SOLUTIONS

To date, the “actions” of European countries have mainly revolved around the cancellation of major events such as concerts and trade fairs. Gradually, however, companies have also started to ask employees to work from home: a first noticeable effort towards social distancing and a shift of activities to the digital world. This is also clearly evident from the app downloads in Italy, Germany, France, Spain and the UK. Above all in Italy, currently the country in Europe most affected by COVID-19, solutions for remote working and education are very high up in the ranking.

FRANCE

1

Trivia.io

2

Slap Kings

3

The Seven Deadly Sins

4

TikTok

5

Slap that

6

McDo+

7

Easy Game – Brain test

8

Whatsapp

9

Brain out

10

Amazon Prime Video

11

Instagram

12

Telegram

GERMANY

1

Slap Kings

2

Whatsapp

3

Tiktok

4

Easy Game – Brain test

5

YouTube

6

Instagram

7

Google Maps

8

Ebay Kleinanzeigen

9

Slap That

10

Spotify

11

S-push TAN

12

Galileo

ITALY

1

Hangouts Meet

2

Slap Kings

3

Google Classroom

4

Brain Out

5

Easy Game – Brain test

6

TikTok

7

Tellonym: Honest Q&A

8

Parking Jam 3D

9

Gmail

10

Telegram

11

Woodturning 3D

12

Skype

SPAIN

1

McDonalds

2

Slap Kings

3

TikTok

4

Parking Jam

5

Whatsapp

6

Easy Game

7

Instagram

8

YouTube

9

Vinted

10

Gmail

11

Google Drive

12

Hunter Assassin

UK

1

Overtake

2

Slap Kings

3

TikTok

4

Chores!

5

Trivia.io

6

Whatsapp

7

Shredder Arcade

8

Watermarbling

9

Slap that

10

YouTube

11

Instagram

12

Facebook

Source: Similarweb Apple store downloads per market; 4 March 2020

CONSUMER INTEREST IN SMART WORKING & SCHOOLING rises in italy

Italy is the European country most affected by COVID-19 and is therefore seeking measures to control the spread of the virus. In Italy, schools, kindergartens and businesses have been closed, which has led to a growing interest in online or home entertainment, education and home offices, as well as care facilities for children of parents who have to go to the office.

Source: Google Trends, 1 January – 3 March 2020

THE EUROPEAN SHIFT TO THE DIGITAL WORLD

Further adaptation to the new situation can also be seen in the rest of Europe, as cancelled trade shows lead to online presentations of new product launches and football games are being played behind closed doors, only available to view on television or in live streams.

STOCKPILING

high demand for online grocers

Online grocery retailer Ocado has noted "exceptionally high demand" for its delivery services in the UK as UK consumers shift their supermarket visits to the online world. The company has seen an increase in unusually large orders, with delivery slots quickly filling up and a 6% increase in stock levels.

MARKETING

Product launches move online

Due to the cancellation of industry and corporate conferences, many brands had to move their product marketing launches and announcements to the Internet. One example is the Sony Xperia 1II, which was to be announced at the cancelled MWC.

SPORT

Sporting events behind closed doors

Instead of postponing them, many sporting events are instead held "behind closed doors", meaning no audience is allowed in the stadiums or other sports facilities. This is the case, for example, in the Serie A, the Italian football league - fans have to be satisfied with live broadcasts of the matches.

EDUCATION

#LaScuolaContinua

Cisco, Google & Weschool have responded to a request from the Italian government to help continue educational activities in the face of school closures in Italy. This switch to digital tools can help to promote the digitization of Italian schools in general.

A historical comparison

Although there is a risk of recession due to the novel coronavirus, historical data suggest that the global economy is likely to recover.

Previous epidemics, such as the SARS outbreak in 2002, the Hong Kong flu in 1968, the Asian flu in 1957 and the Spanish flu in 1918, led to a V-shaped development of economic performance, with annual growth rates absorbing the real economic shock.

Historically, crises leave a structural legacy for the global economy. SARS, for example, speeded up the introduction of online shopping in China – which helped Alibaba to become the number one Chinese online shopping company.

FROM Contingencies TO A new normal

1

Smart Working
& Learning

Many employees are being encouraged to work from home – which promotes the further development of Smart Workspaces. Many companies believe that this will be the turning point that makes remote working the new normal. The increased organization of virtual conferences will also play a major role in establishing their legitimacy. China is already exploring AR's potential for education, with a focus on how to encourage interaction between students and teachers.

2

Robotics
& Tele-medicine

Telemedicine, robotics and camera technology are now being used to treat coronavirus patients and limit the exposure of medical staff. These developments have initiated a reduction in waiting times for patients, relieving nursing staff of tasks and advancing diagnostic technologies.

3

Delivery Robots
& Automation

The Chinese company Meituan has started piloting its driverless food delivery service in Beijing. Contactless delivery reduces the risk of infection for delivery staff and consumers alike. Companies are using the current crisis to test these technologies and promote the benefits of increased automation to consumers.