Comparing Consumer Confidence in the US, China & Italy

4 minute read

By Adam Sandzer, Hot Pot Strategy Director

Retail spend across the globe has taken a significant hit due to lockdowns, social distancing, and financial uncertainty. Many global brands and retailers are seeking to understand if the pause in retail sales will manifest as deferred revenue, or if the sales are lost forever?

To help explore this question, Hot Pot strategists studied data from GlobalWebIndex, analysing more than 1,000 responses from the United States, China and Italy. 

Here is what they found when looking at consumer confidence, financial impact, and propensity to spend.

 

Consumer confidence is returning faster in China

While the crisis persists in Europe and North America, China is very much recovering, with life starting to return to ‘normal.’ 

A March 2020 study of consumer sentiment in China, Italy, and the US reveals that Chinese consumers are by far the most optimistic and truly believe that their country is well on the way to recovering from the pandemic.

Percentage of respondents that feel optimistic/not optimistic that their country will overcome
COVID-19 (1 = not optimistic at all; 5 = very optimistic) | Source: GWI, March 2020

 

Chinese consumers report a lower financial impact

The same study revealed that Chinese personal and household income has been significantly less affected by Covid-19, with 73% of respondents reported no or small impact and only 26% reported big or dramatic impact. Comparatively, 42% of Italian respondents reported a big or dramatic impact.

Percentage of respondents who say COVID-19 has had the following effect on their
personal/household income | Source: GWI, March 2020

 

The lower financial impact is driving pent up demand

After several months of lockdown, it is expected that consumers will have pent up demand to spend. Two key areas where Chinese consumers have held back are luxury items and vacations/holidays. The survey reveals that 20% of Chinese respondents have delayed purchasing luxury items and 53% have delayed purchasing holidays/vacations, exceeding both Italy and the US.

Spending has therefore been deferred in China, more than eliminated, as it has been in other markets. With confidence returning and a lesser impact on income, we can expect a strong rebound in demand for both luxury and holidays in the coming months.

Percentage of respondents who say they have delayed purchase
as a result of COVID-19 | Source: GWI, March 2020

 

Chinese consumers are ready to spend again

Luxury brands are starting to report positive signs from mainland China. According to Bloomberg, LVMH saw sales up 50% at Louis Vuitton stores in mainland China over the past month.

WWD reported that the Hermès Guangzhou flagship took in $2.7 million on the first Saturday they reopened, in a sign that China’s economy is quickly rebounding.

Additionally, L’Oréal Chief Executive Officer Jean-Paul Agon also said sales in China turned positive in March and are on track for a 5% to 10% gain this month.

In general, we are seeing a spirit of cautious optimism amongst Chinese consumers that stands in contrast to deeper uncertainty in other global markets. Smart brands are increasing their focus on the Chinese consumer and investing in strengthening digital resources to offset potential long-term revenue loss in home markets.

At Hot Pot China we partner with forward-thinking brands on their China activity. We guide our clients in maximising ROI from their short, medium and long-term marketing activity with Chinese consumers, both in China and in domestic markets.

Contact Hot Pot China here to discuss how our team of China specialists can help realise greater value for your brand, digital and eCommerce initiatives.