As the nationwide lockdown lifts, high streets that have been hard hit for the past three months are coming back to life. Retail and leisure businesses will now be wondering if customers will return and whether they’ll spend their money. To find out, we asked consumers what they’ve missed, what they’re looking forward to and what it would take for them to come back.
The good news is that consumer sentiment is remarkably resilient. After a sudden decline at the start of lockdown, it has recovered and stayed stable over the past three months. June’s survey found sentiment of -11, a slight recovery on May and April, and a significant improvement on -26 in March. A fifth of respondents now think their households will be better off in the next year, with just under a third worse off.
Despite lockdown restrictions being lifted at different speeds, there is little difference in UK-wide results, with Scotland marginally more positive than the UK average and Wales and Northern Ireland slightly more negative.
The key differences are demographic, with 18-24 year olds once again the most optimistic age group (+24) and 45-64 year olds the most pessimistic (-24).
Disposable income is not a current concern for most consumers, which is positive news for the reopening of leisure businesses.
While sentiment remains below a post-election high of +3 at the end of 2019, it is still higher than during the 2008-09 recession and the 2011-13 austerity period. In fact, at the lowest point of the Global Financial Crisis in October 2008, two-thirds of adults thought they would be worse off at the time, and every age group recorded negative sentiment levels.
This time, despite the sharpest fall in GDP in living memory, our May survey showed that the majority of households have to date been unaffected financially, and one in five are even saving money. Government stimulus has cushioned the blow for many.
Whether sentiment remains resilient will depend on unemployment levels as these schemes end in Autumn. But, for the moment, consumers have money in their pockets, which means that discounts and promotions will have limited effect in attracting them back to the high street. So what will it take for them to spend?
The UK lifted restrictions on the opening of most non-essential retailers during June. While this was considered safe, it wasn’t top of most consumers’ lists of things they are missing. The queues we saw for the reopening of some shops may seem meagre when restaurants and pubs in England reopen on 4 July, dubbed ‘Independence Day’ by some newspapers.
Almost as many people were missing having a meal in a restaurant (83%) or taking a holiday (86%) as spending time with friends and family (91%).
Attitudes to the pub and the gym were more polarised between those who don’t miss these places at all (38% and 32%) and those who miss these places ‘a lot’ (33% and 30%). The pub was particularly missed by men (36% miss the pub a lot vs. 24% of women), while the gym was more popular with 25-34 year olds (43% miss it a lot).
Meanwhile, ambivalence towards non-essential shopping and the cinema (only one in five miss these a lot, while around 35% don’t miss these at all) suggests that online shopping and streaming alternatives have made substantial inroads. It will take more than reopening to attract customers back.
Friends and family, holidays and meals out feature heavily in the top three things that consumers are looking forward to.
However, for single most important priorities, the gym (10%) came ahead of every category except friends and family (47%) and holiday (21%). This might explain some of the frustration about the lack of a reopening timetable in England, Wales and Scotland.
Pubs were the top choice for 15% of men, and were particularly popular amongst 45-54 year olds and in the Midlands and Yorkshire.
In contrast, consumers were more ambivalent about non-essential shopping (only 4% were looking forward to this the most), as well as cinema and live events such as spectator sports, concerts or the theatre.
Many are looking forward to holidays and leisure activities, but how quickly will consumers return once allowed?
For every activity except visiting high street shops, most consumers won’t return until ‘things get back to normal’, with a further 20-30% saying they’d rather wait a few months. Few will return immediately, ranging from 17% of gym-goers to just 7% of airline flyers.
Although more consumers will likely participate in activities once they see others doing so safely, leisure operators may struggle to persuade others to return, particularly with ‘back to normal’ months or even years away. Therefore, after the initial excitement of Independence Day, sales could fall off if enough customers don’t believe it’s safe to return over the summer.
On a positive note, fewer than 5% say they won’t return to leisure at all. Higher spending 25-34 year olds are more enthusiastic than other age groups, with one in five saying they’ll return to pubs and restaurants immediately, and almost a quarter saying they’ll be at the gym on opening day.
For between a fifth and a quarter of all respondents, ‘back to normal’ means they won’t visit shops, restaurants or gyms until a vaccine is available. But most people expect operators to put in place precautions such as limiting customer numbers, reconfiguring space to allow social distancing and regular cleaning.
Despite temperature checks commonplace in other countries, Britons would rather see staff regularly tested for COVID-19. There’s also an acceptance of wearing facemasks in shops, members cleaning their own equipment in gyms, and disposable plates and cutlery in restaurants and pubs, all of which is relatively easy to implement.
|Non-essential shops||Gyms||Restaurants and Pubs|
|Reconfigured for social distancing/customer numbers limited
|47%||Regular disinfecting of space||35%||Reconfigured for social distancing/customer numbers limited||40%|
|Regular disinfecting of space||40%||Reconfigured for social distancing/customer numbers limited||32%||Regular disinfecting of space
|All visitors and staff are required to wear masks||29%||Disinfecting products available for customers||25%||Regular staff virus testing||24%|
|Regular staff virus testing||26%||Regular staff virus testing||21%||Disposable plates and glasses||16%|
|Temperature checks on arrival||19%||Temperature checks on arrival||18%||Temperature checks on arrival||16%|
The precautions required to operate safely and reassure customers come at the price of reduced sales or increased costs. Consumers are unwilling to pay for this, with half refusing to pay a premium for a guaranteed higher standard of safety.
However, some consumers, especially younger ones, would pay more for extra safety in certain circumstances. Across the population, customers were most willing to pay extra for safety in hotels and restaurants. Among the most keen customers, half of cinema and gym-goers would pay more.
The reopening of retail and leisure could not have come at a better time. For the moment, consumers still have money to spend and are missing their favourite activities, particularly eating out and holidays. And even for the pub and the gym, there’s a hardcore base of customers who can’t wait to come back. While many have safety concerns, these can be mitigated, and some customers may pay the extra costs that entails. There’s every opportunity for operators to maximise consumer willingness to spend through the summer.
However, the future may see increased risks of unemployment affecting consumer sentiment and further virus outbreaks causing restrictions to be tightened. This will favour those businesses that are better prepared, through embedding longer-term resilience, capitalising on emerging consumer trends and embracing new business models. See how operators can prepare for an uncertain future in our Where next for retail? and Where next for travel and leisure? reports.
1. PwC’s latest consumer sentiment survey was conducted between 19-21 June 2020 and includes responses from a nationally representative sample of 2,068 adults.
2. PwC has asked the same question every few months since April 2008: “Thinking about your disposable income (money remaining after household bills, credit cards, etc.), in the next 12 months do you expect that your household will be better off or worse off?”. The index is calculated by subtracting the percentage of people who think they will be worse off from those who think they will be better off. Historically this index has provided an insight into the pulse of the nation, and has been a good indicator of future consumer spending patterns.
3. This report also includes some additional questions asked as part of the June survey, as well as a separate survey of 2,107 adults conducted by Strategy& in May 2020.
Director, Strategy& Travel & Leisure, PwC United Kingdom
Tel: +44 (0)7748 965165