Priority Reset: Consumer Insights — Edition 1, Part 3

Since the beginning of the pandemic, L.E.K. Consulting has been at the forefront of understanding how consumer behaviors are changing. Through a recurring U.S. consumer “pulse” survey, L.E.K. has reported on rapidly changing consumer dynamics as well as the future outlook for a post-pandemic world.

Our latest survey includes responses captured July 26-28, 2021, from ~800 U.S. consumers who are demographically representative of the general population. In this iteration, we have focused specifically on the Food & Beverage sector, in addition to our other recurring questions.

We first wanted to understand how consumers’ perceptions regarding the severity of the pandemic have evolved, and to what extent the pandemic continues to consciously factor into consumers’ daily decisions. Survey results suggest that a minority of consumers (~11%) believes COVID-19 is “fully contained and/or sufficiently managed,” and thus it is not impacting their behaviors in any significant way. However, most consumers (the remaining ~89% of respondents) say they believe the pandemic is still not contained and that it thus continues to impact their behaviors to varying degrees.

Important note: All forward-looking data reported are reflections of consumer sentiment/expectations, and this is not an official L.E.K. forecast. Additional surveys can be found at the L.E.K. COVID-19 Insights Center. 

Current spend levels continue to be impacted in some categories

As of July 28, 2021, among consumers who believe the outbreak is not fully contained, spend levels across categories continue to be impacted. Categories with higher than pre-pandemic spend levels include groceries, food takeout/delivery, vitamins/minerals/supplements, digital fitness subscriptions, home furniture/furnishings/décor and digital video streaming services. Categories that are below pre-pandemic levels include dining out, gym/fitness services outside the home, movies/concerts/sporting events, apparel/footwear/accessories and taxi/Uber/Lyft. 

Most other categories have essentially returned to pre-pandemic levels, according to consumers. These findings are similar to the findings in L.E.K.’s May 2021 survey.

For consumers who believe the outbreak is fully contained and/or sufficiently managed and thus not impacting their behavior, spending has largely returned to pre-pandemic levels across categories. Notably, though, dining out and taxi/Uber/Lyft remain below pre-pandemic levels even for these consumers. 

Expectations for future spend levels indicate that some subsectors can expect long-term impacts  

Consumer expectations for future spend levels, once the outbreak is fully contained and/or sufficiently managed, are largely a regression to pre-pandemic spend levels. However, spend is expected to be significantly elevated for grocery, takeout/delivery, digital video streaming services and vitamins/minerals/supplements. Further, spend is expected to be significantly diminished for taxi/Uber/Lyft. 

Many in-person activities remain dampened but are recovering

In-person activity frequency remains below pre-pandemic levels among consumers who believe the outbreak is not fully contained. This includes going to visit friends/family, spa/beauty service providers, movies/live events, gyms/fitness centers, bars/nightclubs and eating indoors. However, when compared to last year (spring 2020), participation levels have increased across all of these categories.

Post-pandemic, consumers expect to participate in all activities as often or a little more frequently than they did pre-pandemic. The expectation for increased frequency across many categories is likely driven by pent-up demand. 

Where and how consumers work are also changing. Before the pandemic, consumers spent on average ~33% of their time away from the office, either at home or at another location. As return-to-work policies continue to be formalized and announced, ~40% of post-pandemic working hours are now expected to be away from the office, a +7PPT increase from pre-pandemic. Almost all of this increase is expected to be driven by more time spent working at home. This expectation has not changed much since fall 2020, when the percentage of time spent working from home was expected to increase +6PPT.

For the consumers who expect to work more at home post-pandemic, they feel that working at home gives them flexibility, helps minimize commuting and enables them to save more money. 

Cooking at home is expected to remain elevated post-pandemic; consumers expect to order more groceries online

Consumers indicate that they expect to cook more often at home than they did before the pandemic, driven by the desire to both save money (e.g., in lieu of paying for a lunch while they were at the office) and eat healthier. As a percentage of meals, meals cooked at home are expected to increase +3PPT relative to pre-pandemic. This expectation is consistent with prior surveys conducted by L.E.K. Consulting.

In addition to cooking more often at home, consumers are also cooking more often from scratch. Of the consumers who learned to cook from scratch during the pandemic (52%), most of them (86%) expect to maintain or even increase their amount of cooking from scratch in the future/once the pandemic is fully contained.  

How consumers buy groceries is also changing. Consumers expect to utilize online ordering for groceries more often than they did pre-pandemic. This includes both in-store/curbside pickup and shipped/delivered to home. This behavior is directly a result of increased online ordering during the pandemic, as well as further investments in these capabilities by retailers. 

Meal kit adoption remains low at 16% of consumers having ever tried a meal kit subscription. Of these consumers who have ever subscribed to meal kits, most of them began their subscriptions during the COVID-19 pandemic. However, adoption has since waned.

Online grocery shopping remains higher than pre-pandemic, while adoption of meal kits is slowing

Consumers indicate that they will continue to shop for groceries online more often than they did pre-pandemic, although at slightly lower levels than today/during the pandemic. Our results show that 13% will shop online for home delivery, compared to 8% pre-pandemic, and 11% will shop online for in-store or curbside pickup, compared to 7% pre-pandemic. Note that grocery spend is self-reported by consumers, and this chart illustrates relative shifts between channels. The online spend numbers are likely influenced upward compared to actuals, as this was an online consumer survey. 

Meanwhile, adoption of meal kits has slowed down so far in 2021 relative to the strong growth in new users seen in 2020. Survey responses suggest 16% of consumers have ever purchased a meal kit, with nearly half of those users subscribing in 2020. 

Consumers desire foods with ‘locally produced/sourced’ and ‘all natural’ claims, among others

When it comes to food attributes and claims, “locally produced/sourced,” “all natural,” “protein rich,” “no artificial ingredients,” “no preservatives” and “low calorie” claims were desired by >70% of consumers. When compared to the 2018 L.E.K. consumer food survey, claims that have had the most significant increases in stated purchasing frequency include “clean label,” “cage-free,” “fair trade sourced,” “antioxidant rich” and “low carb.”

On the other end, high fructose corn syrup, artificial sweeteners and sodium were the most-avoided ingredients at 43%, 35% and 29% of consumers, respectively. Avoidance of ingredients such as dairy, nuts, and eggs was all less than 10%, indicating that consumer avoidance is more likely due to allergies rather than broad cultural norms. The degree to which consumers wished to avoid these ingredients was largely similar, when compared to the 2018 L.E.K. consumer food survey.

A focus on health and wellness is expected to continue, especially for those who have gained weight

Health and wellness have been top of mind for consumers throughout the pandemic, and the future outlook is consistent. While trips to the gym/fitness center were dampened during the pandemic, consumers expect to visit the gym/fitness center more often post-pandemic (even when compared to pre-pandemic levels). Our current survey also found that  ~35% of all consumers intend to spend more time post-COVID on personal health and fitness.

The pandemic impacted waistlines in a bifurcated manner. Approximately 35% of Americans self-reported that they gained weight during the pandemic, compared to ~32% who said they lost weight. Of the consumers who have gained weight, ~68% are actively trying to lose that weight either by eating healthier, increasing fitness activity or both.

Even with the increased focus on health and wellness, consumers are not completely indulgence-free in their habits. For example, though ~93% of consumers try to eat healthy at least some of the time, ~78% of consumers mentioned that they still indulge in less-healthy, yet tasty foods.

Most consumers expect to save and invest their monthly Child Tax Credit in 2021

According to the U.S. Census Bureau, nearly 1 in 3 households expects to receive the monthly Child Tax Credit in 2021. Of these, ~53% expect to save it in a checking/savings account, contribute to paying off debt, or invest in an investment/brokerage account; ~26% expect to use it on essential monthly expenses, and ~21% expect to spend it on discretionary purchases either for their children or for the broader household.

In sum

This concludes our findings from the latest edition of The Great Reopening and Priority Reset Series: July 28, 2021. Be on the lookout for future editions where we will update consumer expectations on post-COVID-19 activities and spending, as well as explore the detailed drivers behind those changes across consumer subsectors.

Many of our clients are facing continued uncertainty in their business outlook as COVID-19 outbreaks from variants continue. Some of these changes are likely to endure well beyond when the current pandemic has passed. While many of these changes will create some challenges, many new opportunities will also emerge. We will continue to share our ideas and insights through our website and other media over the coming months.

We wish good health to you and your loved ones, and we look forward to continuing to support our clients through these changing times.

To continue the discussion, please don’t hesitate to contact us.

Shang Saavedra and Travis McNamara, Managers, contributed to this report.

Read more in our 2021 Priority Reset: Consumer Pulse Survey series

• Edition 1, Part 1: The Great Reopening
• Edition 1, Part 2: Changes in Consumer Behaviors Are Around for the Long Haul
• Edition 1, Part 3: Spotlight on Food & Beverage