Global consulting giant McKinsey & Company recently released its latest U.S. Consumer Pulse report, which offers a deeply researched look at how consumer behaviors have changed since the start of the COVID-19 pandemic. For instance, consider the massive digital transition that many consumers faced early on, when in-person shopping was suddenly replaced by online orders. “We saw 10 years of digital adoption in a matter of 100 days during COVID,” says Jiamei Bai, associate partner at McKinsey.
What’s more, consumers were much more likely to try new products, casting aside brand loyalties amid a seismic shakeup of their purchasing habits. “The entire gameboard has changed for businesses with regard to how they sustain long-term engagement with consumers,” Bai says.
At the recent Fast Company Impact Council event, “Consumer Confidential: Fresh insights on what excites today’s consumer behavior,” Bai discussed the latest proprietary insights from McKinsey’s research, from the potential impact of the metaverse on consumer behaviors to how brands can take advantage of these shifting behaviors to drive growth, sustain loyalty, and deepen engagement.
Here are three key takeaways from Bai’s talk along with additional comments from a subsequent interview.
1. Brand loyalties are changing.
These days, it’s not enough for a company’s product to resonate with consumers. Now, consumers focus on issues such as a brand’s authenticity and its stance on global issues, including climate change. Indeed, 57% of consumers say ESG (environmental, social, governance) issues are “very important” factors that influence their purchases. And that number rises to 66% for younger millennial and Gen Z consumers.
What does that mean for brands? As consumers have broadened their purchasing decisions beyond value, convenience, and price, companies need to confront weighty questions such as their purpose and values—and effectively communicate those messages to consumers.
2. It’s still about nesting.
Thanks to the widespread shift to remote work, many consumers during the height of the pandemic spent inordinate amounts of time at home. In turn, that drove more spending on home-focused goods such as electronics, furniture, and home improvement products. But with nearly 40% of survey respondents now working exclusively outside of their homes, is the party over for the brands that have benefited from this spike in spending?
According to Bai, the answer is no—there are still plenty of people working remotely, and consumers continue to buy new gear for their home, from TVs and pet toys to curtain rods and sofas. In fact, spending on home improvement is 11% higher today than pre-COVID projections, even after adjusting for inflation. “Nesting continues as U.S. consumers continue to make their homes attractive and comfortable,” Bai says. “It signals a shift in how people have used their homes during the pandemic and [how they] will continue to work from home.”
3. The metaverse isn’t just for gamers.
Consumers are increasingly realizing that the metaverse is about more than games such as Fortnite and Minecraft. McKinsey’s latest research found that nearly six in 10 consumers are excited about the transition to the metaverse of everyday activities such as socializing, fitness, and commerce. Companies are excited, too: 95% of business leaders expect to see positive tailwinds from the metaverse within the next decade, and 61% expect the metaverse to shift the way their industry operates.
For many companies, the metaverse offers a new pathway to connect to consumers. But in order to make those connections, companies must determine how to balance marketing with an appealing consumer experience, and how to make sure their authenticity and unique brand attributes come across in this new digital realm. “We’re still in the first wave of consumer engagement with the metaverse, but I think we’ve already seen some lessons emerge and pathways of success,” Bai says.
Those lessons include companies getting very clear on their marketing goals for the metaverse. Are they diving into the metaverse to boost awareness of their brand or to build a strong community among existing customers? Brands also need to focus on what their customers want. In general, the answer is for the brand to, well, stay on brand. For instance, sneaker brand Vans had a hit last year with its interactive “Vans World” skatepark on the Roblox gaming platform. The park resonated strongly with its fans and has logged nearly 50 million visitors since its launch.
While staking out a spot in the metaverse may not be a necessity for brands today, that’s likely to change. The more work they can do now to integrate their brand into the metaverse space, the better. “Today’s digitally savvy consumers are extending their experiences and activities into the metaverse, and brands have to evolve their interaction models accordingly,” Bai says.