COVID-19 and Consumer Behavior #26 June 5, 2020

Consumer Behavior and Attitudes Only 26% of Americans say they were self-isolating May 29-June 1, down from a peak of 55% at the beginning of April, while 80% say they are still social distancing as much as possible.1 In the past few weeks: • 18% have dined out, 69% have gotten takeout, 12% have visited a barbershop or spa, and 37% have visited a retail store. • 45% have visited friends or relatives, and 15% have visited elderly relatives. Americans vary on when they will be ready to dine in a restaurant again, but 55% say they will be ready within six months.2 • 25% say within one month, 17% within three months, and 13% within six months. • 15% say they will be ready only after a year or more, with 16% still unsure. 60% of Americans believe opening business puts too many people at risk, compared to 40% who say risk is minimal.3 • 48% believe most of the jobs lost will quickly return once lockdown is lifted – fairly even with the 45% who disagree. Only 49% of Americans think most individuals and businesses will follow social-distancing measures as the economy reopens.4 70% of American consumers would prefer to use voice interfaces in public places to avoid touching things. While voice control was seeing moderate growth in at-home use pre-pandemic, consumers’ new aversion to touch is pushing it out of the home for the first time.5 E-commerce is expected to account for 23% of retail purchases made by consumers in 2020, a growth of 5 percentage points year-over-year – compressing two years of adoption penetration into one.6 64% of Americans say now is a good time to buy a car, up from 57% in April.7 Students enrolled in or applying to colleges have new expectations post-pandemic.8 • 43% want smaller class sizes, 40% want temperature checks at every building, and 34% want private dorm rooms. • 53% say hygienic cleaning of shared spaces would help them feel safer.

Economic Uncertainty and Job Security Unemployment fell to 13.3% in May, down from 14.7% in April, as the states began reopening and the economy added 2.5 million jobs.9 Across the country, metro areas are struggling with some of the highest unemployment rates.10 • Las Vegas, which relies on travel, had the highest unemployment rate among large metro areas at 33.5%, with other areas reliant on manufacturing also disproportionately unemployed. The Congressional Budget Office revised down its January projections for U.S. growth through 2030 by 3%. This represents a loss of $7.9 trillion in GDP growth over the next decade.11 48% of Americans believe the economy will quickly rebound, while 46% believe the recovery will be slow. Those who are unemployed are less confident in a fast recovery than those employed.12 COVID-19 and Consumer Behavior #26 June 5, 2020

Media Programmatic ad transactions on connected TV rose 40% April 5-May 11 after falling 14% in March.13 • Platforms managed by Vizio (+108%), Insignia (+74%), and Roku (+44%) were the top performers. • Travel-related streaming services saw a 76% decline in spending over the same period. With sports slowly returning, but with the stands empty, Nielsen has launched a program to help teams assess the value of the new white space previously occupied by fans.14 With sales up during the pandemic, Campbell’s is boosting its ad spending by 29%.15

Other Industry Impacts Smartphone sales are expected to fall 12% worldwide in 2020, with production cuts in June expected to be around 16.5%.16 With 61% of consumers still delaying visits to brick-and-mortar stores out of fear of getting sick, retail store compliance with best-practices safety measures was found to be spotty in a secret-shopper program executed by Ipsos.17 • 82% of stores did not provide a hand sanitizing or washing solution at checkout. • 77% of stores did not provide a hand sanitizing or washing solution at the entrance. • 64% of stores had no staff actively cleaning high-traffic areas. • 58% were not managing the number of customers allowed to enter. • 51% of stores did not have employees wearing gloves. • 31% of stores did not have plexiglass dividers at checkouts. • 25% of stores had employees who wore face coverings improperly or not at all. With retail partners canceling orders, many apparel brands that traditionally relied on a wholesale model are moving to direct-to-consumer sales, with the move expected to stick post-COVID-19.18 Apparel brands are expected to take a hit in 2020, with a forecasted decline of 22% in apparel and accessory sales, representing over $100 billion in year-over-year losses.19 With vehicle production halted or at reduced capacity, and with deals motivating consumers to buy, auto dealers are starting to run out of inventory, with shortages possible lasting into July. 20 With the collapse of the travel industry leading to a restructuring of rental car companies, the auto industry could see a 12% decline in annual U.S. market sales.21 According to the American Hotel & Lodging Association, the coronavirus outbreak has cost hotels in the United States more than $23 billion in room revenue since mid-February.22 • With an industry survey finding that improved health and cleaning is a chief influencing factor in hotel selection, many hotels are rolling out a variety of new cleaning standards. • Unite Here, a hospitality workers union, says that while 95% of its members are out of work, these new cleaning protocols will require more workers than in the past. The hospitality industry is expected to see revenues decline by $120 billion in 2020, but there are signs that hotel occupancy is starting to trend upward again.23 Campbell’s lower price, robust channels, and consumer familiarity have helped it push back against new brands amid the pandemic.24 • Campbell’s soup sales skyrocketed 42% in the four weeks ended April 19 from a year earlier. • Campbell’s-owned Pepperidge Farm sales rose 28%, and sales of Prego pasta jumped 49%. COVID-19 and Consumer Behavior #26 June 5, 2020

Industry insiders from Disney to Michael Bay are finding inspiration in the outbreak for a new era in pandemic movies and television, though some question the audience’s appetite for such content.25 Around 41% of retail rents were not paid in May, leaving commercial real-estate firms in a lurch as tenants are either unable or unwilling to pay.26 Smelling blood in the water, payday loan companies that charge triple-digit interest rates are continuing to find ways around ad bans from Google and Facebook, who consider these services predatory, as they look to cash in on desperate unemployed Americans.27

Signs of Business Recovery Applications to buy a home are 18% higher than a year ago as pent-up buyers rush back to a market that is offering all-time-low interest rates.28 American Airlines Group Inc. says it will boost July flights 74%, signaling that U.S. travelers freed from shelter-in-place orders are returning more quickly than expected.29

Business Responses With production limbo weakening the positions of the traditional leading media companies and publishers, Amazon Publisher Services is building an extensive network of partnerships to place ads on and host a wide variety of content, ranging from apps to streamed video.30

Business Reopening Marriott has reopened all its hotels in China, with occupancy rates in the country now at 40% compared to 8% in February. The rate in the United States, for Marriott’s open hotels, now sits at 20% compared to 16% in April, with steady improvement expected.31 The NBA will restart July 31, housing 22 teams in Disney World to isolate the players and eliminate travel. The season will be cut short, with eight regular-season games scheduled before 16 teams stick around for the playoffs.32 Drag racing will resume in mid-July, with fans in the stands at a reduced capacity.33

Ongoing Protests With 16.6 million households tuning in, more Americans watched the racial protests the weekend ending May 31 than during the first weekend of widespread shelter-in-place orders (March 23).34 Consumers are buying more pepper spray as protests and unrest lead to some having self-defense top-of-mind.35 With protests motivating donations to categories as diverse as politics to communal bail funds, the Democratic organization ActBlue saw its biggest one-day take May 31. Half of those donations were to charitable causes, not candidates.36 With many dating platforms taking a stance in support of the protests, some are seeing pressure to do more to end racism and bias on their apps, leading Grindr to remove the option for users to filter matches by ethnicity.37 Verizon has paused its traditional Pride Month campaign to fully focus on content and donations that engage the current moment of protests.38 COVID-19 and Consumer Behavior #26 June 5, 2020

Bloomberg has covered guidelines for how brands can best engage in this tumultuous moment.39 • Sincere messages of support, well-placed donations, and internal reflection that leads to changes to practices. • For some brands, it may be best to stay quiet publicly, avoiding the risk of accusations of self-serving efforts or reminding consumers of past missteps. The chart below shows the net favorability that consumers would feel toward a company that performed one of the actions listed.40

In a YPulse poll, 69% of Gen Z and Millennials believe brands should be involved in the Black Lives Matter movement, and 55% of Gen Z and Millennials say they have participated in Black Lives Matter protests or awareness in some way.41 • The top way young people believe brands can be involved is making a statement on social media (69%). Half believe brands should create marketing campaigns vocally supporting the cause. With many brands taking a vocal-ally stance on twitter, calls are growing among activists for brands to do more than pay lip service to their cause.42 A new effort calls on major retailers – including Target, Sephora, Whole Foods, and Shopbop – to pledge 15% of their shelf space to black-owned businesses and business owners.43 • 21% of black-owned businesses say they don’t think they’ll survive the pandemic, compared to 5% of white-owned businesses. COVID-19 and Consumer Behavior #26 June 5, 2020

Spirit Lifters Frontline flea and tick has teamed with Spotify to produce a playlist designed to calm dogs when their owners return to work, leaving them alone.44 Next Insurance built its new campaign by hiring the struggling small businesses it serves to create the campaign for them.45

1 May 29-June 1 Ipsos https://www.ipsos.com/sites/default/files/ct/news/documents/2020-06/topline-axios-wave-11.pdf 2 May 22-26 YouGov Poll https://today.yougov.com/topics/food/articles-reports/2020/06/03/when-will-americans-be-ready- dine-again 3 May 21-24 Ipsos https://www.ipsos.com/sites/default/files/ct/news/documents/2020-06/coronavirus-wave-14-pr-june-3- ipsos.pdf 4 June 3 Ipsos https://www.ipsos.com/en-us/social-distancing-chances 5 June 1 Ad Age https://adage.com/article/brand-playbook/how-use-voice-tech-during-covid-19/2260006 6 June 1 Business Insider https://www.businessinsider.com/morgan-stanley-covid-accelerating-us-e-commerce-penetration- rate-2020-6 7 June 2 The New York Times https://www.nytimes.com/reuters/2020/06/02/business/02reuters-usa-autos- rentals.html?searchResultPosition=133 8 May 29-31 The Harris Poll https://theharrispoll.com/class-of-covid-19 9 June 5 The New York Times https://www.nytimes.com/2020/06/05/business/jobs-report-stock-market-coronavirus.html 10 June 3 The Wall Street Journal https://www.wsj.com/articles/coronavirus-pandemic-drives-unemployment-up-across-u- s-metro-areas-11591205949?mod=searchresults&page=1&pos=18 11 June 1 The Washington Post https://www.washingtonpost.com/business/2020/06/01/coronavirus-cbo-economic-impact 12 May 28 IPSOS https://www.ipsos.com/en-us/expectations-swift-recovery-employment 13 June 2 Adweek https://www.adweek.com/tv-video/programmatic-advertisers-rebound-connected-tv 14 June 4 Adweek https://www.adweek.com/tv-video/nielsens-new-service-helps-the-sports-industry-understand-the- value-of-whitespace-in-stadiums 15 June 4 Marketing Dive https://www.marketingdive.com/news/campbells-boosts-ad-spend-as-sales-surge-during- pandemic/579175 16 June 3 The New York Times https://www.nytimes.com/reuters/2020/06/03/business/03reuters-health-coronavirus- smartphone.html?searchResultPosition=37 17 June 3 Ipsos https://www.ipsos.com/en-us/news-polls/Brick-and-Mortar-Retail-for-Fear-of-Getting-Sick 18 June 1 Adweek https://www.adweek.com/retail/wholesale-brands-excess-inventory-new-sales-tactics 19 June 2 eMarketer https://www.emarketer.com/content/apparel-sales-take-a-hit-as-consumers-pull-back-spending-on- clothes-9 20 June 1 USA Today https://www.usatoday.com/story/money/cars/2020/05/30/chevy-silverado-ram-ford-jeep-explorer- shortage/5290917002 21 June 2 The New York Times https://www.nytimes.com/reuters/2020/06/02/business/02reuters-usa-autos- rentals.html?searchResultPosition=133 22 June 3 The New York Times https://www.nytimes.com/2020/06/03/travel/the-most-important-word-in-the-hospitality- industry-clean.html?action=click&module=News&pgtype=Homepage 23 June 3 Adweek https://www.adweek.com/brand-marketing/not-every-brand-will-survive-covid-19-according-to-hotel- executives 24 June 2 The Wall Street Journal https://www.wsj.com/articles/customers-come-back-to-campbells-soup- 11591111836?mod=lead_feature_below_a_pos1 25 June 2 The Wall Street Journal https://www.wsj.com/articles/from-disney-to-michael-bay-coronavirus-tv-and-movies- are-coming-11591114851?mod=searchresults&page=1&pos=13 26 June 4 The Washington Post https://www.washingtonpost.com/business/2020/06/03/next-big-problem-businesses-cant- or-wont-pay-their-rent-its-setting-off-dangerous-chain-reaction 27 June 3 The Wall Street Journal https://www.wsj.com/articles/how-payday-lenders-target-consumers-hurt-by- coronavirus-11591176601?mod=lead_feature_below_a_pos1 28 June 3 Business Insider https://markets.businessinsider.com/news/stocks/mortgage-home-purchase-applications-jump- demand-housing-market-interest-rates-2020-6-1029277508 29 June 4 Bloomberg https://www.bloomberg.com/?sref=GpFKMtCi 30 June 1 Ad Age https://adage.com/article/digital/amazon-pursues-ties-disney-and-other-publishers-connected-tv/2260041 COVID-19 and Consumer Behavior #26 June 5, 2020

31 June 1 The New York Times https://www.nytimes.com/reuters/2020/06/01/business/01reuters-health-coronavirus-marriott- intnl.html?searchResultPosition=22 32 June 3 The Wall Street Journal https://www.wsj.com/articles/the-nba-has-a-plan-to-restart-the-season- 11591207131?mod=searchresults&page=1&pos=16 33 June 3 The New York Times https://www.nytimes.com/reuters/2020/06/03/sports/autoracing/03reuters-health-coronavirus- mortor-racing-nhra.html?searchResultPosition=21 34 June 3 Ad Age https://adage.com/article/cmo-strategy/regularly-updated-blog-tracking-brands-responses-racial- injustice/2260291 35 June 1 Bloomberg https://www.bloomberg.com/news/articles/2020-06-01/amazon-shoppers-snatch-up-pepper-spray- as-u-s-protests-continue?sref=GpFKMtCi 36 June 1 The New York Times https://www.nytimes.com/2020/06/01/us/politics/donations-protests-actblue- democrats.html?searchResultPosition=46 37 June 2 Adweek https://www.adweek.com/brand-marketing/dating-apps-racism-ethnicity-filters 38 June 2 Ad Age https://adage.com/article/digital/verizon-pauses-pride-campaign-support-black-lives-matter- movement/2260451 39 June 2 Bloomberg https://www.bloomberg.com/opinion/articles/2020-06-02/george-floyd-protests-companies-can- respond-with-compassion?sref=GpFKMtCi 40 May 31-June 1 Morning Consult Poll http://morningconsult.com/2020/06/02/brands-black-lives-matter-response-poll 41 June 1 YPulse Poll https://www.ypulse.com/article/2020/06/01/most-young-consumers-want-brands-to-support- blacklivesmatter-heres-how 42 June 2 Mashable https://mashable.com/article/brands-statements-george-floyd-protests 43 June 3 Business Insider https://www.businessinsider.com/15-percent-pledge-urges-retailers-to-promote-black-owned- businesses-2020-6 44 June 1 Adweek https://www.adweek.com/digital/frontline-spotify-team-up-on-playlist-to-help-dogs-adjust-to-being- alone-again 45 June 3 Adweek https://www.adweek.com/tv-video/why-this-insurtech-company-hired-its-clients-instead-of-running- its-first-national-tv-ad