In Latin America, COVID-19 is a health crisis to some but an economic crisis to many. AMI surveyed over 2,000 consumers in Brazil, Mexico and Colombia in early June 2020, as households were nearing the end of almost three months under quarantine. Lockdowns have taken an economic and physical toll on societies, but also provoked introspection, curiosity and re-invention as consumers reboot their priorities, their career choices and their loyalties. For brands and marketers, this is a pivotal moment not to be missed. Our recent study is part of a new service we have developed, COVID Consumer Snapshot Studies, in which we conduct quick but deeply insightful studies to help companies understand how COVID is impacting not only consumers, but also various industry sectors.
Thus far, in the three countries surveyed, the immediate impact has been on employment, as shown in the graphic below.
The Economic Toll of Quarantines
Brazil is often singled out for mismanaging the COVID crisis while Colombia is widely lauded for containing the virus. With 28 deaths/100,000 in Brazil versus 6.5 deaths/100,000 in Colombia as of June 28th, 2020, there is certainly evidence to support that contrasting evaluation. However, the economic cost of virus containment has been very steep in Colombia, with 75% of surveyed Colombians registering a decline in monthly income (see the graphic above) and the majority declaring a loss of employment, be it temporary or permanent. This data point proved surprising to our webinar audience on June 25th who, before the survey data was revealed, selected Colombia as having the brightest economic future in Latin America over the next 12 months.
In Brazil, a more connected populace has adjusted better to quarantine versus the less digitally integrated Mexicans and Colombians. Brazil also has a higher percentage of its workforce in the formal sector, which makes it easier to extend government benefits to the unemployed. Brazil’s more advanced payment sector which puts a card product in more of its people, even the unbanked, versus other Latin American nations, also makes it easier for benefits to reach the those toiling in the informal sector.
The Physical Cost of Quarantines
The survey also revealed the physical toll of lockdowns. Close to two-thirds of Latin Americans were exercising the same or less than normal and close to half had gained weight. Many were eating poorly and more were sleeping worse, particularly those who kept working from home, implying longer work hours for those who kept their jobs.
Further evidence of the physiological toll combined with worry were high intentions to purchase life and/or health insurance in coming months as well as a very high propensity to purchase sports shoes. Latin Americans are feeling that: “I need to get back into shape.”
A few years from now, digital marketers will surmise that COVID-19 did for electronic commerce in Latin America what SARS did in 2003 for e-commerce in China. Locked inside, e-commerce laggards had little choice but to buy groceries and other essentials on a website, often navigating on their smartphone (owned by 70% of urban adult Latin Americans).
E-commerce share of total retail spend grew more in the last three months than the last three years. Though some will return to buying their groceries in a store, the threshold has been crossed and consumers have embraced the convenience and choice that online purchases provide.
AMI divided its sample into five e-commerce consumer profiles, illustrated below.
Of acute interest to marketers are Disruptors & Newbies. Disruptors are made up of the professional class and some business owners, who have been able to maintain (or suffer minimal loss of) their income, and who have embraced even further their strong propensity to purchase online. Educated, and blessed with good bandwidth (a big COVID income differentiator), the Disruptors have discovered new online products to entertain, educate, exercise and otherwise improve themselves. They have adapted well, in spite of the perils of COVID-19.
Newbies are the newest members of the online fraternity of consumers. Made up of 62% women, often single mothers, Newbies juggle a very time challenged life of work (usually in the informal sector), child rearing and sometimes caring for grandparents. Lockdowns left many under-employed and obliged them to buy essential products online. These highly adaptive consumers rarely own a credit card but the majority have a debit card and when not, learned how to buy online with a prepaid card, re-loaded with cash.
Resolute and Reflective
Quarantines are stressful and have tested the resolve of us all in a time of incredible doubt and generally under-informed political leadership (across the hemisphere). Uncertainty over the direction and severity of the virus translates into self-doubt as well. Thus, to see that 68% of Latin Americans have used this time to reflect and redefine themselves, appreciate the proximity and embrace of family, and reassess their values and priorities is one of the most extraordinary findings of the survey.
The Retreaters, as our analysis defined roughly 13% of the entire sample (21% of Colombians), are understandably frustrated, frightened and angry. They have lost the most in terms of income and are the first to criticize the logic of lockdowns. They are older, and presumably less digitally agile. They resemble the older generations of Eastern Europe left behind when the wall fell and predictable socialism was replaced by chaotic capitalism.
What the survey made clear to us was that the ground is shifting beneath the feet of Latin American consumers. Economic disruption is impacting close to 70% of the population. Technological disruption is impacting roughly one quarter of households and both trends are changing how and what consumers purchase. The strategic takeaways of the survey, shown above, make it clear that brands and marketers must engage now with consumers if they are to play a role in their lives over the next few years.
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