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McKinsey Survey: Japanese consumer sentiment during the coronavirus crisis

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McKinsey Survey: Japanese consumer sentiment during the coronavirus crisis

Japanese consumers’ behaviors and finances are gradually recovering to normal, though their responses indicate a slight increase in pessimism. The long-lasting impact of COVID-19 is prolonging Japanese consumers’ intent to stay conservative about spending across categories. In a further sign of cautiousness, the trend of shrinking pessimism over the past few years reversed for the first time. Meanwhile, people’s demand for travel is rising, considering the next seasonal vacations.

Japanese consumers’ behaviors and finances are gradually recovering to normal, though their responses indicate a slight increase in pessimism. The long-lasting impact of COVID-19 is prolonging Japanese consumers’ intent to stay conservative about spending across categories. In a further sign of cautiousness, the trend of shrinking pessimism over the past few years reversed for the first time. Meanwhile, people’s demand for travel is rising, considering the next seasonal vacations.

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McKinsey Survey: Japanese consumer sentiment during the coronavirus crisis

  1. 1. McKinsey & Company 1 Six emerging consumer themes in March 2022 1 Slow return to normalcy Only 6% of consumers in Japan expect a rebound within two to three months Splurging intent has decreased since October 2021; travel is the biggest spending category 2 Digital is ascendant Social-media influence is rising, especially among Gen Z and millennials; around 72% of consumers engage with a social- media platform Intention to use digital services post-COVID- 19 remains high 5 Divided loyalty Over half (58%) of consumers facing a stockout either did not purchase or waited for the retailer to restock 12% say they tried a new retailer and 11% tried a new brand in the past three months 4 Modified return to out-of-home Work, shopping, and personal-care services rebounded with modified behavior Travel, entertain- ment, and social activities have yet to rebound; no behavior change is expected 3 Low spending intent Net intent1 of spending for all categories other than tourism is negative Decrease in income is the primary reason for decrease in spend for most categories 6 Subdued holiday outlook Consumers expect to spend less than last year in all categories during this year’s Golden Week Responses suggest that travel is the most popular spending category 1. Net intent is calculated by subtracting the % of respondents stating they expect to decrease spending from the % of respondents stating they expect to increase spending.
  2. 2. McKinsey & Company 2 Confidence in own country’s economic recovery after COVID-19,1 % of respondents 15 15 21 14 29 32 20 29 46 56 51 63 48 47 75 68 38 28 27 23 23 21 5 3 29 59 12 Mixed: The economy will be impacted for 6–12 months or longer and will stagnate or show slow growth thereafter Pessimistic: COVID-19 will have lasting impact on the economy and show regression or fall into lengthy recession Optimistic: The economy will rebound within 2–3 months and grow just as strong as or stronger than before COVID-19 1. Q: What is your overall confidence level surrounding economic conditions after the coronavirus (COVID-19) crisis subsides (ie, once there is herd immunity)? Rated from 1 “very optimistic” to 6 “very pessimistic.” Bars may not sum to 100% due to rounding. Change in Optimistic vs. last wave survey, percentage points Source: McKinsey & Company COVID-19 Consumer Pulse Survey India 3/11–24 +1 Oct 2021 US 3/1–25 -6 Oct 2021 Japan 3/16–26 -2 Oct 2021 Indonesia 3/16–26 +15 Sept 2020 Australia 3/16–25 -10 Nov 2020 Korea 3/19–26 +15 June 2020 Germany 3/22–28 -10 Oct 2021 France 3/23–28 -9 Oct 2021 UK 3/22–29 -12 Oct 2021 Japanese consumers are the least optimistic geographic segment Slow return to normalcy | Current as of March 2022
  3. 3. McKinsey & Company 3 Slow return to normalcy | Current as of March 2022 1. Q: What is your overall confidence level surrounding economic conditions after the coronavirus (COVID-19) crisis subsides (ie, once there is herd immunity)? Rated from 1 “very optimistic” to 6 “very pessimistic.” Figures may not sum to 100% because of rounding. 2. Average of weekly pulse surveys shown for March and April 2020. Optimistic: The economy will rebound within 2–3 months and grow just as strong as or stronger than before COVID-19 Mixed: The economy will be impacted for 6-12 months or longer and will stagnate or show slow growth thereafter Pessimistic: COVID-19 will have lasting impact on the economy and show regression or fall into lengthy recession Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018; 10/18–10/20/2021, n = 1,014; 2/24–2/27/2021, n = 1,014; 11/9–11/15/2020, n = 1,039; 9/22–9/28/2020, n = 1,034, sampled and weighted to match Japan general population 18+ years Pessimism has seen a marked increase, while optimism has decreased slightly Confidence in own country’s economic recovery after COVID-19,1 % of respondents 41 46 42 35 31 33 21 21 29 53 49 53 60 62 60 67 65 59 6 5 5 5 7 7 12 14 12 Nov 2020 Oct 2021 Feb 2021 Apr 20202 Mar 20202 May 2020 June 2020 Sept 2020 Mar 2022
  4. 4. McKinsey & Company 4 Lower-income consumers are more pessimistic than higher-income groups 1. Q: What is your overall confidence level surrounding economic conditions after the coronavirus (COVID-19) crisis subsides (ie, once there is herd immunity)? Rated from 1 “very optimistic” to 6 “very pessimistic.” Optimism by income Pessimism by income Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018; 10/18–10/20/2021, n = 1,014; 2/24–2/27/2021, n = 1,014; 11/9–11/15/2020, n = 1,039; 9/22–9/28/2020, n = 1,034, sampled and weighted to match Japan general population 18+ years Confidence in own country’s economic recovery after COVID-19 by income level,1 % of respondents 5 8 10 8 15 9 8 17 18 13 35 0 30 5 20 10 15 25 40 45 50 55 Oct 2021 7 Sept 2020 5 Nov 2020 Feb 2021 14 Mar 2022 9 16 Low (<4M yen) Medium (4M–8M yen) High (>8M yen) 35 36 24 26 34 28 23 27 31 16 18 26 0 30 15 10 55 5 20 25 35 40 45 50 31 Sept 2020 17 Nov 2020 Oct 2021 20 Feb 2021 Mar 2022 Slow return to normalcy | Current as of March 2022
  5. 5. McKinsey & Company 5 The older the generation is, the less pessimistic respondents are about Japanese economic recovery Slow return to normalcy | Current as of March 2022 Confidence in own country’s economic recovery after COVID-191 % of respondents 28 33 61 50 11 18 Unvaccinated Vaccinated 1. Q: What is your overall confidence level surrounding economic conditions after the coronavirus (COVID-19) crisis subsides (ie, once there is herd immunity)? Rated from 1 “very optimistic” to 6 “very pessimistic.” 2. Baby boomers includes silent generation. 36 33 30 24 52 54 60 63 13 12 10 13 Gen Z Millennials Gen X Baby boomers2 Mixed Optimistic Pessimistic Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years By generation By vaccination status
  6. 6. McKinsey & Company 6 Slow return to normalcy | Current as of March 2022 23 25 29 19 2 2 2 77 73 69 79 Gen Z Millennials Gen X Baby boomers3 0 21 40 2 2 77 59 Vaccinated Unvaccinated 23 2 75 Overall 1. Q: When do you expect your routines will return to normal? Figures may not sum to 100% because of rounding. 2. Q: Which best describes your vaccination status? 3. Baby boomers includes silent generation. Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years After June 2022 By June 2022 Not affected/already returned By generation By vaccination status2 Expectations are similar across the generations, although baby boomers expect a slower return to pre- COVID-19 routine ~40% of unvaccinated consumers are engaging in pre- COVID-19 routines Key findings Overall, 75 percent of consumers expect pre-COVID-19 routines will return after June 2022 Expectations on routines returning to pre-COVID-19,1 % of respondents
  7. 7. McKinsey & Company 7 Perceived impact of COVID-19 on consumers’ income, spending, and savings has been limited and improved slightly in March 2022 Slow return to normalcy | Current as of March 2022 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018; 10/18–10/20/2021, n = 1,014; 2/24–2/27/2021, n = 1,014; 11/9–11/15/2020, n = 1,039, sampled and weighted to match Japan general population 18+ years 1. Q: How has the coronavirus (COVID-19) crisis affected the following over the past 1 month/2 weeks? Figures may not sum to 100% because of rounding. COVID-19 impact on household finances,1 % of respondents 26 26 24 20 72 71 73 77 2 3 3 3 Past 2 weeks Past 2 weeks Past 2 weeks Past 2 weeks 27 24 23 23 65 65 68 71 8 11 9 5 Past 2 weeks Past 2 weeks Past 2 weeks Past 2 weeks 19 19 18 13 68 63 70 73 13 18 12 14 Past 2 weeks Past 2 weeks Past 2 weeks Past 2 weeks Household income Household spending Household savings Nov 2020 Feb 2021 Oct 2021 Reduce slightly/a lot Increase slightly/a lot About the same Mar 2022 Nov 2020 Feb 2021 Oct 2021 Mar 2022 Nov 2020 Feb 2021 Oct 2021 Mar 2022
  8. 8. McKinsey & Company 8 Almost two-thirds of Japanese consumers say their finances have returned to ‘normal’ already Slow return to normalcy | Current as of March 2022 61 65 63 64 7 32 32 35 34 Gen X Gen Z Baby boomers3 Millennials 3 2 1 63 68 35 29 2 Vaccinated Unvaccinated 3 64 34 Overall 2 1. Q: When do you expect your personal/household finances will return to normal? Figures may not sum to 100% because of rounding. 2. Q: Which best describes your vaccination status? 3. Baby boomers includes silent generation. Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years By generation By vaccination status2 Expectations are similar across generations Unvaccinated respondents are more positive than the vaccinated about when their finances will return to ‘normal’ Expectations on personal/household finances returning to ‘normal,’1 % of respondents After June 2022 Not affected/already returned By June 2022
  9. 9. McKinsey & Company 9 Slow return to normalcy | Current as of March 2022 Intent to ‘splurge’ is greatest among higher-income Gen Z consumers; intent for middle-income Gen Z has risen 17 points Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018; 10/18–10/20/2021, n = 1,014, sampled and weighted to match Japan general population 18+ years 24 27 73 Do not plan on splurging Oct 2021 76 Plan on splurging Mar 2022 Millennials Gen X Baby boomers2 41% −4 42% 17 Gen Z 55% 3 36% −1 23% −10 39% 7 15% −1 23% 2 38% 10 20% −8 17% −6 19% −2 Generation Respondents who plan/do not plan to ‘splurge’ or ‘treat themselves’ in 20221 % of respondents Low (<$50K/year) Middle ($50K–100K/year) High (>$100K/year) >70% <30% 50-70% 30-50% p.p. change from Oct 21 XX Respondents who plan to splurge, by household income, % 1. Q: With regard to products and services you will spend money on, do you plan to splurge/treat yourself in 2022? For example, are there categories of products or services you have spent less on over the last year and a half which you feel you will spend more on in the next 3 months? 2. Baby Boomers includes silent generation.
  10. 10. McKinsey & Company 10 Tourism is the biggest category driven by baby boomers; younger generations want to splurge on fashion, entertainment, and cosmetics Slow return to normalcy | Current as of March 2022 Categories where consumers intend to treat themselves1 % of all respondents with intent to splurge 1. Q: You mentioned that you plan to splurge/treat yourself in next 3 months. Which categories do you intend to treat yourself to? Please select all that apply. 2. Baby boomers includes silent generation. 48 40 22 20 13 10 8 8 7 7 6 5 2 Electronics Sports apparel and equipment Items for your home Travel, lodging, and vacation Restaurants, dining out, bars Apparel, shoes, accessories Outdoor living Out-of-home entertainment Makeup and skin care products Household essentials Personal services Fitness Pets Millennials Gen X Gen Z Baby boomers2 43 46 32 62 43 39 40 40 31 30 17 15 25 22 19 18 24 14 15 7 7 12 11 9 12 13 10 3 10 8 6 8 7 12 6 5 Generational cut 8 11 7 2 5 14 4 2 5 9 5 3 0 5 2 1 Change from Oct 2021, percentage points Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018; 10/18–10/20/2021, n = 1,014, sampled and weighted to match Japan general population 18+ years Between −3 and +3 < −3 > +3 5 8 −12 5 −9 −5 −3 −1 2 −3 −1 0 −2 Categories Difference from all respondents, percentage points
  11. 11. McKinsey & Company 11 Social media has the strongest influence on Gen Z and millennials purchasing across all categories Digital is ascendant | Current as of March 2022 1. Q: Think about the purchases you have made in the following categories over the past 3 months. Were you influenced toward a certain brand by a post on social media in the following categories?. 2. Baby boomers includes silent generation. 31 30 26 26 23 23 21 15 14 13 11 11 10 10 8 8 Vitamins, supplements, and over-the-counter medicine Accessories Apparel Home decoration and furniture Jewelry Consumer electronics Sports and outdoors equipment and supplies Fitness and wellness services Skin care and makeup Groceries, food for home Footwear Kitchen and dining Pet food and supplies Personal-care products Home improvement and garden supplies Household supplies Millennials Gen X Gen Z Baby boomers2 44 28 0 39 44 11 33 37 36 18 19 52 30 21 8 59 32 24 7 35 41 26 15 58 33 13 10 54 23 12 6 47 22 9 5 Generational cut 26 21 11 9 30 18 7 8 23 22 8 6 36 15 6 5 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years Between −3 and +3 < −3 > +3 Categories Categories where respondents were influenced by social media1 % of all respondents 25 32 56 23 19 13 14 7 8 5 4 6 5 Difference from all respondents, percentage points
  12. 12. McKinsey & Company 12 About 70 percent of consumers engage on a social-media platform at least once a week Frequency of engagement with social-media platforms1 % of all respondents whose purchases were influenced in last 6 months (across any product category) 1. Q: What social media platforms do you engage with, and if so, how frequently? Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years 72 61 37 35 24 10 4 3 3 2 28 39 63 65 76 90 96 97 97 98 YouTube Overall Pinterest Twitter Instagram Facebook TikTok Reddit LinkedIn Snapchat Never/less than weekly Weekly or more Digital is ascendant | Current as of March 2022
  13. 13. McKinsey & Company 13 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years Intent to use when the COVID-19 crisis subsides2 % of new or increased users who intend to keep doing activity User growth since COVID-19 1 1. User growth is calculated as % of respondents who replied that they are new users over % of respondents who replied that they were using the product/service pre-COVID-19 (using more, using the same, or using less) on Q: Which best describes when you have done or used each of these items? 2. Q: Compared to now, will you do or use the following more, less, or not at all, once the coronavirus (COVID-19) crisis subsides (ie, once there is herd immunity)? Possible answers: “will stop this”; ”will reduce this”; “will keep doing what I am doing now”; “will increase this.” Number indicates percent who chose “will keep doing what I am doing now” and “will increase this” among new or increased users. Consumers have made shifts in loyalty and shopping behavior and intend to maintain changes in the next phase of COVID-19 76 10 52 92 86 54 18 94 68 70 88 72 74 22 8 12 60 14 78 16 90 80 0 84 56 20 58 82 2 4 6 Personal care/grooming at home New store/restaurant app Purchased pre-owned product Drive-thru lane Buy online, pick up in store Downloaded/used deal-finding plug-ins Paid more for same-day delivery Grocery delivery Meal kit delivery Purchased directly from social media Restaurant food delivery Shopped at a new store Changed my primary store Paid more for 2-hour or 1-hour delivery Digital is ascendant | Current as of March 2022
  14. 14. McKinsey & Company 14 Digital is ascendant | Current as of March 2022 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years Intent to use when the COVID-19 crisis subsides2 % of new or increased users who intend to keep doing activity User growth since COVID-19 1 1. User growth is calculated as % of respondents who replied that they are new users over % of respondents who replied that they were using the product/service pre-COVID-19 (using more, using the same or using less) on Q: Which best describes when you have done or used each of these items? 2. Q: Compared to now, will you do or use the following more, less, or not at all, once the coronavirus (COVID-19) crisis subsides (ie, once there is herd immunity)? Possible answers: “will stop this”; ”will reduce this”; “will keep doing what I am doing now”; “will increase this.” Number indicates respondents who chose “will keep doing what I am doing now” and “will increase this” among new or increased users. Intent to use digital services after the next phase of COVID-19 remains high for all service categories 81 96 51 62 92 93 95 50 64 52 97 99 98 61 85 63 100 65 3 70 74 0 67 66 77 79 68 6 69 84 71 72 73 75 82 76 78 80 83 9 86 94 87 88 89 90 91 Remote learning: myself Watching e-sports Social player/video app Playing online games Online fitness Wellness app Online streaming Videoconferencing: professional Remote learning: my children Social media Video chat: personal
  15. 15. McKinsey & Company 15 5 32 6 56 3 26 4 60 29 2 3 12 11 0 9 43 4 12 2 36 46 24 45 69 3 27 13 13 3 78 42 50 2 39 17 6 5 40 58 8 30 15 4 55 44 46 5 29 50 40 0 20 21 76 3 0 8 14 64 14 6 6 46 42 10 15 35 4 12 2 54 70 55 15 22 A drive-thru line for a fast-food restaurant Curbside pickup from a restaurant Curbside delivery at a store Buy online, pick up in store Self-checkout or scan-and-go at a physical store Downloaded/used deal-finding plug-ins Downloaded/used a new store/restaurant app 21 Purchased secondhand products online Used an app/website for delivery within 2 hours Used an app/website for same-day delivery Bought or sold a cryptocurrency Bought or sold an NFT Used an augmented-reality/virtual-reality headset Changed my primary grocery store Shopped at a store I had not shopped at before for groceries Cooked regularly for myself/my family Personal care/grooming at home Tried making something myself/DIY project Purchased directly from social media Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years Intent to continue2 Consumers who use alternatives to in-store shopping report using them as often or more frequently in the last three months Digital is ascendant | Current as of March 2022 88 78 81 79 74 68 93 53 83 90 50 70 95 92 97 88 88 Which best describes when you have done or used each of these items?1 % of respondents who have used in the last 3 months Just started using Using less Using more Using same 96 89 1. Q: And have you used or done any of the following in the last 3 months? If yes, Q: Which best describes when you have done or used each of these items? Possible answers: “just started using since COVID-19 started”; “I have not used in the last 3 months”; “I have used in the last 3 months at the same rate as before”; “I have used this more in the past 3 month than before”; “I have used this less in the past 3 months than before.” 2. Q: Compared to now, will you do or use the following more, less, or not at all, once the coronavirus (COVID-19) ) crisis subsides (ie, once there is herd immunity)? Possible answers: “will stop this”; ”will reduce this”; “will keep doing what I am doing now”; “will increase this.” Number indicates % of respondents who chose “will keep doing what I am doing now” and “will increase this” among new or increased users.
  16. 16. McKinsey & Company 16 Digital services are being used more frequently, and there is strong intent to continue this behavior 1. Q: Have you used or done any of the following since the coronavirus (COVID-19) crisis started? If yes, Q: Which best describes when you have done or used each of these items? Possible answers: “just started using since COVID-19 started”; “using more since COVID-19 started”; “using about the same since COVID-19 started”; “using less since COVID-19 started.” 2. Q: Compared to now, will you do or use the following more, less, or not at all, once the coronavirus (COVID-19) crisis subsides (ie, once there is herd immunity)? Possible answers: “will stop this”; ”will reduce this”; “will keep doing what I am doing now”; “will increase this.” Number indicates % of respondents who chose “will keep doing what I am doing now” and “will increase this” among new or increased users. Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years Digital is ascendant | Current as of March 2022 2 59 61 14 42 5 6 7 0 35 5 60 36 0 40 50 0 0 2 10 20 39 1 75 1 0 Online streaming 4 1 4 45 0 55 2 41 75 45 5 21 0 0 55 0 64 36 0 54 39 57 1 48 7 69 31 0 0 47 50 0 73 34 63 3 0 Online fitness Wellness app Meal-kit delivery Restaurant delivery Grocery delivery 3 Video chat: personal Telemedicine: physical Telemedicine: mental Watching e-sports Playing online games Remote learning: myself Remote learning: my children Social player/video app Social media Videoconferencing: professional 67 100 61 78 81 88 76 62 89 96 51 81 100 90 80 97 Intent to continue2 Which best describes when you have done or used each of these items?1 % of respondents who have used in the last three months Just started using Using less Using same Using more
  17. 17. McKinsey & Company 17 With increasing out-of-home activities, the in-store channel is seeing a rise, followed closely by omnichannel Digital is ascendant | Current as of March 2022 1. Q: Which best describes how you have researched the following categories over the last 3 months? 2. Q: Which best describes how you have purchased the following categories over the last 3 months? 85 80 77 77 72 72 68 63 60 54 53 53 52 48 47 47 46 42 40 32 14 18 18 18 22 20 27 27 33 30 36 29 28 34 34 30 28 28 35 45 1 2 5 5 6 8 5 10 7 16 11 18 20 18 19 23 26 30 25 23 Tobacco products and smoking supplies Books, magazines, newspapers Food takeout/delivery Home improvement and gardening supplies Groceries/food for home Household supplies Alcoholic beverages Pet care services (eg, walkers, grooming) Personal-care products Kitchen and dining Fitness and wellness services Skin care and makeup Home decoration and furniture Apparel Accessories (eg, handbags, sunglasses) Pet food and supplies Consumer electronics Vitamins, supplements, and over-the-counter medicine Sports and outdoors equipment and supplies Toys and baby supplies Research and purchase only in stores Omnichannel Research and purchase only online Product searches1 and purchases2 by channel % of respondents who purchased and searched in these categories in the last 3 months Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years
  18. 18. McKinsey & Company 18 Expected spending per category over the next 2–3 months vs usual1 Net intent2 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018; 10/18–10/20/2021, n = 1,014; 2/24–2/27/2021, n = 1,014; 11/9–11/15/2020, n = 1,039; 9/22–9/28/2020, n = 1,034; 6/19–6/22/2020, n = 664, sampled and weighted to match Japan general population 18+ years Spending intent is gradually recovering but expected to be lower than usual across most categories over next several months 1. Q: Over the next 2–3 months, do you expect that you will spend more, about the same, or less money on these categories than usual? Figures may not sum to 100% because of rounding. 2. Net intent is calculated by subtracting the % of respondents stating they expect to decrease spending from the % of respondents stating they expect to increase spending. Low spending intent | Current as of March 2022 0 −40 −50 20 −30 −20 −10 10 May 2020 Feb 2021 Mar 2020 Apr 2020 June 2020 Sept 2020 Nov 2020 Oct 2021 Mar 2022 Household supplies Groceries Consumer electronics Skin care and makeup Fitness and wellness ​Personal-care products Apparel
  19. 19. McKinsey & Company 19 Consumers report negative net intent to spend for all categories except tourism, which saw an increase since October 2021 Net intent >1 Net intent −15 to 0 Net intent: < −15 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018; 10/18–10/20/2021, n = 1,014, sampled and weighted to match Japan general population 18+ years 7 8 18 13 15 21 27 19 33 31 14 6 13 26 19 10 10 8 2 8 6 6 7 13 4 14 16 11 2 Alcohol Quick-service restaurant Footwear Restaurant Jewelry Accessories Toys and baby Household supplies Skin care and makeup Home and furniture Sports and outdoors Kitchen and dining Home improvement, garden 5 3 Apparel Groceries 12 11 5 Personal-care products Tobacco products 6 Food takeout and delivery 6 Increase Decrease Stay the same 10 12 10 25 18 12 10 12 14 16 15 17 21 19 21 15 5 11 15 20 23 28 100 21 21 25 16 Fitness and wellness Consumer electronics 5 Vehicles Pet food and supplies Out-of-home entertainment Vitamins and OTC medicine Entertainment at home Books/magazines/newspapers Pet care services 3 Personal-care services Gasoline Hotel/resort stays Short-term home rentals 13 5 3 Cruises 0 4 4 Adventures and tours International flights 12 Domestic flights Travel by car Net intent2 −1 −6 −20 −2 −8 3 −10 5 8 11 100 1 2 4 −4 −4 1. Q: Over the next 2–3 months, do you expect that you will spend more, about the same, or less money on these categories than usual? Figures may not sum to 100% because of rounding. 2. Net intent is calculated by subtracting the % of respondents stating they expect to decrease spending from the % of respondents stating they expect to increase spending. 3. Sample size < 30. Expected spending per category over the next 2 weeks vs usual1 % of respondents −5 −2 −14 −6 2 6 −10 −1 N/A3 −5 −2 −8 −3 −8 −6 1 2 −8 Change since Oct 2021 Change since Oct 2021 −2 −1 −5 −23 −3 −16 7 −8 7 −2 5 −2 N/A3 10 N/A3 13 N/A3 21 1 24 Net intent2 −22 1 −1 −3 −12 −6 −10 −8 −9 −10 −22 −13 −24 −3 −8 −3 1 −8 Low spending intent | Current as of March 2022
  20. 20. McKinsey & Company 20 Net intent to spend is expected to decrease across most categories, but vaccinated respondents are more likely than others to spend Low spending intent | Current as of March 2022 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years 1. Net intent is calculated by subtracting the % of respondents stating they expect to decrease spending from the % of respondents stating they expect to increase spending. 2. Q: Over the next 2–3 months, do you expect that you will spend more, about the same, or less money on these categories than usual? +4 percentage points Likelihood of vaccinated vs unvaccinated people to spend For selected categories Net intent1 for expected spending per category over the next 2–3 months vs usual2 Unlikely Cautious Interested Vaccinated Groceries Food takeout and delivery Restaurant Quick-service restaurant Home decor Home and garden Personal-care items Fitness and wellness Out-of-home entertainment International flights 4 −7 −12 −4 14 −20 −6 −31 −6 0 −3 −1 −12 −18 0 0 −11 0 21 0 −16 −22 −49 −13 −49 −14 −13 −17 19 0 1 −11 −9 −9 −14 3 −2 5 −3 2 Between −3 and +3 < −3 > +3
  21. 21. McKinsey & Company 21 Increase in price and shift to premiumization are the major factors across categories where spend has increased 4 6 5 4 16 7 11 35 8 3 9 12 15 22 20 16 5 15 10 33 25 33 37 18 19 20 40 18 25 27 16 33 14 7 13 37 16 15 19 30 32 32 31 62 36 43 46 46 35 33 57 79 48 33 47 32 56 40 33 40 26 11 27 15 32 18 49 29 14 Footwear Pet care services Groceries Food takeout/delivery Meal at restaurant Meal at quick-serve rest Pet food and supplies Personal-care products Household supplies Vitamins & supplements Vehicles Apparel Accessories Consumer electronics Home and decoration 0 Kitchen and dining Skin care and makeup Personal-care services Increase in income Larger quantity Increase in price Premium brands/products 1. Q: Please indicate the main reason for planning to spend more on the following categories. Reasons for increase in spend1 % of respondents who increased spend Low spending intent | Current as of March 2022 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years
  22. 22. McKinsey & Company 22 Decrease in income and quantity are the major reasons across categories where spend has decreased 43 21 27 28 32 40 40 40 39 34 26 42 26 41 30 62 38 49 31 33 26 26 12 27 26 24 28 26 45 23 34 9 25 20 27 28 11 18 18 15 19 20 14 12 11 16 7 8 7 24 10 8 12 9 14 28 29 30 18 13 18 12 19 24 19 24 30 25 30 10 23 14 1 19 2 11 3 1 4 3 3 5 Meal at quick-serve rest Kitchen and dining Pet food and supplies Groceries Food takeout/delivery 1 0 Skin care and makeup Meal at restaurant Household supplies Personal-care products Pet care services Vitamins & supplements Apparel Footwear 0 Accessories Consumer electronics 0 Vehicles Home and decoration Personal-care services Switch to less expensive Decrease in income Spend more on other categories Smaller quantity Reduced price 1. Q: Please indicate the main reason for planning to spend less on the following categories. Reasons for decrease in spend1 % of respondents who decreased spend Low spending intent | Current as of March 2022 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years
  23. 23. McKinsey & Company 23 Modified return to out-of-home | Current as of March 2022 Overall 14 25 Vaccinated Unvaccinated 18 Millennials Gen Z 20 18 Gen X Baby boomers3 12 Low (<4M yen) High (>8M yen) Medium (4M–8M yen) 16 16 16 1. Q: Which best describes when you will regularly return to stores, restaurants, and other out-of-home activities? Chart shows those already participating in these activities 2. Gen Z are people under 26 years old, millennials are 26–41 years old, Gen X are people 42–57 years old, baby boomers are 58 years old and above. 3. Baby boomers includes silent generation. Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018; 10/18–10/20/2021, n = 1,014; 2/24–2/27/2021, n = 1,014; 11/9–11/15/2020, n = 1,039; 9/22–9/28/2020, n = 1,034; 6/19–6/22/2020, n = 664, sampled and weighted to match Japan general population 18+ years By generation2 By vaccination adoption By income ~20% of Gen X are doing out- of-home activities ~16% of households across income levels are doing out-of-home activities ~25% of people who are unvaccinated are doing out-of-home activities Consumers engaging in out-of-home activities,1 % of respondents About one-sixth of consumers say they have returned to out-of- home activities 16 24 15 29 27 19 Nov 2020 Mar 2022 Sep 2020 Oct 2021 Feb 2021 Jun 2020
  24. 24. McKinsey & Company 24 Modified return to out-of-home | Current as of March 2022 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years Social Personal care Entertain- ment 80 57 59 51 60 93 62 78 55 Get together with family Attend an outdoor event Dine indoors at a restaurant or bar Go out for family entertainment Attend an indoor cultural event Go to the gym or fitness studio Visit a crowded outdoor public place Go to a hair or nail salon Get together with friends 82 99 97 84 71 53 89 36 51 58 57 Use public transportation Shop for non-necessities Work outside my home Use a ride-sharing service Shop for groceries/necessities Rent a short-term home Go to a shopping mall Travel more than 2 hours by car Travel by airplane Travel by train Stay in a hotel Work Shopping Transport/ travel −4 26 6 38 −3 61 26 2 45 43 13 42 49 40 27 42 58 14 58 34 50% and above Less than 50% Change >10 pp Change from Oct 2021, percentage points Change from Oct 2021, percentage points Consumers have increased most of their out-of-home activities since last year Out-of-home activities currently engaging1 % of respondents who reported doing this in the same or a modified way 1. Q: Which best describes how you are engaging in each of these activities? Possible answers: “Not doing this all”; “Doing this in the same way as pre-COVID-19 but less often”; “Doing this in a modified way vs pre-COVID-19”; “Doing this just as much and in the same way as I did pre-COVID-19”
  25. 25. McKinsey & Company 25 1. Q: With the rise of the omicron variant of COVID-19, how, if at all, has your out-of-home behavior changed? Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years 20 16 14 27 30 28 51 52 54 Low (<4M yen) 1 Medium (4M–8M yen) High (>8M yen) 2 4 Modified return to out-of-home | Current as of March 2022 8 16 30 28 27 55 36 1 Vaccinated Unvaccinated 18 28 52 Engage less Overall Engage with adjusted behavior Engage more Engage same as before omicron 2 By income By vaccination status Lower-income consumers are the likeliest income group to indicate they engage the same as or more than before omicron A third of unvaccinated consumers have not reduced or changed their out-of-home behavior, despite omicron variant Key findings Adjustments to out-of-home behavior due to prevalence of omicron variant,1 % of respondents About half of consumers reduced engagement in out-of-home activities due to the omicron variant; 28 percent engage differently
  26. 26. McKinsey & Company 26 Modified return to out-of-home | Current as of March 2022 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years 1. Q: Which best describes how you are engaging in each of these activities? Possible answers: “Not doing this at all”; “Doing this in the same way as pre-COVID-19 but less often”; “Doing this in a modified way vs pre-COVID-19”; “Doing this just as much and in the same way as I did pre-COVID-19.” Work Shopping Transport/ travel Social Personal care Entertain- ment 89 Visit a crowded outdoor public place 11 9 15 Dine indoors at a restaurant or bar 91 10 85 15 Go out for family entertainment 85 Attend an indoor cultural event 10 90 Attend an outdoor event Go to the gym or fitness studio 53 90 84 48 52 16 Go to a hair or nail salon 47 Get together with family Get together with friends 48 Work outside my home 52 84 45 55 Shop for groceries/necessities Shop for non-necessities 82 21 79 Go to a shopping mall 20 80 0 58 18 42 82 Use public transportation 23 77 Use a ride-sharing service 19 81 Travel by airplane 18 Travel by train 16 Stay in a hotel 100 Rent a short-term home Travel more than 2 hours by car Doing less, doing in a modified way Doing as much as and in the same way as pre-COVID-19 Out-of-home activities engagement1 % of respondents having engaged in activity pre-COVID-19 Japanese consumers modified their out-of-home behavior for all categories except working and grocery and non-essential shopping
  27. 27. McKinsey & Company 27 Main life events done in the last 12 months as a result of COVID,1 % of respondents Modified return to out-of-home | Current as of March 2022 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018; 10/18–10/20/2021, n = 1,014, sampled and weighted to match Japan general population 18+ years Change >3 pp 6 4 1 3 1 1 2 1 1 1 1 Worked more from home Renovated/remodeled my home Got a new pet at home (eg, dog, cat) Set up a specific work-from-home space Decided to change jobs Started homeschooling children Set up a gym at home Moved into a bigger home Moved into a smaller home Bought a property Sold a property Work/study change Mar 2022 Pet adoption House move Home renovation Investments/ divestments Total,2 % Change from Oct 2021, percentage points -1 -1 0 0 0 -1 0 -1 -4 -3 2 2 10 2 4 2 1. Q: Which of the following have you done in the last 12 months as a result of the COVID-19 crisis? 2. Total percentage of people who choose option(s) in the category. Fewer Japanese consumers are investing in their home environment due to COVID-19 than in October 2021
  28. 28. McKinsey & Company 28 Milestones for the Japan population not yet engaging with out-of-home activities1 % of respondents awaiting each milestone before engaging 10 33 15 42 Government lifts restrictions COVID-19 no longer spreading Vaccination coverage Government lifts restrictions and other requirements 84% of people are not currently engaging in ‘normal’ out-of- home activities Vaccination coverage Government lifts restrictions and… 1. Q: Which best describes when you will regularly return to stores, restaurants, and other out-of-home activities? Chart rebased to exclude those already participating in these activities and those who do not deem any of these items important. Figures may not sum to 100% because of rounding. 13% Medical authorities deem safe 9% Stores, restaurants, and other indoor places start taking safety measures 12% I see other people returning 11% Vaccine is widely distributed 3% I have been vaccinated 1% Family member(s) vaccinated Cautious consumers cite spread of COVID-19 and government restrictions as primary reasons for not yet engaging in out-of-home activities Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years Modified return to out-of-home | Current as of March 2022
  29. 29. McKinsey & Company 29 26 12 11 10 7 5 New digital shopping method Different retailer/store/website Any new shopping behavior Different brand Private label/store brand New shopping method3 Divided loyalty | Current as of March 2022 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018; 10/18–10/20/2021, n = 1,014, sampled and weighted to match Japan general population 18+ years 83 −9 96 13 90 2 84 −6 High (>8M yen/year) Gen Z Millennials 33 35 37 16 88 −2 11 16 17 17 16 10 8 17 12 15 11 8 7 12 Income cut Generational cut All consumers % of respondents Change from Oct 2021, percentage points Intent to continue behavior2 Between −3 and +3 < −3 > +3 1. Q: Over the past 3 months, which of the following have you done? 74% replied “None of these.” 2. Q: Which best describes whether or not you plan to continue with these shopping changes? Possible answers: “will go back to what I did before 3 months ago”; ”will keep doing both this and what I did before 3 months ago”; ”will keep doing this and NOT go back to what I did before 3 months ago.” Intent to continue includes respondents who selected “will keep doing both this and what I did before 3 months ago” and “will keep doing this and NOT go back to what I did before 3 months ago.” 3. “New shopping method” includes curbside pickup and delivery apps. Behaviors since COVID-19 started1 % of respondents Changes in consumer behavior have been more extensive among younger and higher-income consumers Difference from all respondents, percentage points
  30. 30. McKinsey & Company 30 Consumers facing a stockout of a planned purchase are most likely to not buy anything, followed by buying at different retailer Divided loyalty | Current as of March 2022 1. Q: Over the last 3 months, have you wanted to buy something and not been able to purchase it because it was out of stock or otherwise not available? 2. Q: The most recent time this happened (when you wanted to buy something and it was not available), what did you do? Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years 76 24 Could not purchase at least 1 item Able to purchase all items Mar 2022 Respondents who planned to purchase something but could not, due to unavailability1 % of respondents 24 9 10 14 44 Bought the product at different retailer Bought a different product at the same retailer Bought a different brand or similar product at a different retailer Waited until product was available at the same retailer Did not buy anything All consumers who could not make a planned purchase2 % of respondents
  31. 31. McKinsey & Company 31 Reason for trying a new brand since COVID-19 began1 % of respondents selecting reason in top 3 Divided loyalty | Current as of March 2022 1. Q: You mentioned you tried a new/different brand than what you normally buy. What were the main reasons that drove this decision? Select up to 3 relevant reasons. “Brand” includes different brand, new private label/store brand. Overarching reason based on % of individual respondents responding to at least 1 reason in the group. 2. Baby boomers includes silent generation. Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years Supporting local businesses Better value Is available where I’m shopping (ie, in-store or online) Larger package sizes Products are in stock Better prices, promotions 21 More sustainable, better for the environment Better shipping, delivery cost Shares my values 6 The company treats its employees well 3 Cleaner, safer 37 4 2 5 3 3 3 7 19 Using recyclable packing materials Wanted to try a new brand I found Better quality Is natural/organic 5 19 Wanted to try a type of product I’ve never tried before 25 26 7 Wanted to treat myself Wanted variety/a change from my normal routine 9 Novelty Personal choice Purpose-driven Quality/organic Convenience Health/hygiene Availability 7 Value 56 14 23 42 19 3 17 Baby boomers2 Gen Z/ millennials Gen x 20 21 25 36 26 57 6 4 9 4 2 6 23 33 20 26 24 22 15 33 3 5 4 6 24 15 15 6 8 9 13 6 6 1 4 0 6 2 0 6 0 0 1 11 3 6 2 0 8 4 10 All consumers Between −3 and +3 < −3 > +3 Value was a primary reason for brand switch; novelty came next for older consumers, and convenience for younger consumers x Net % of respondents per category Difference from all respondents, percentage points 5 2 0
  32. 32. McKinsey & Company 32 Out of non-daily-life categories, travel seems to be the most popular spending category for the new season Subdued holiday outlook | Current as of March 2022 1. Q: For the new season starting this spring, do you plan to spend money this year on each of the following items? 5 20 31 24 67 51 12 30 83 50 44 46 20 29 61 43 12 30 25 30 14 21 27 27 Gifts for others Clothes House-moving Furniture and home appliances Daily necessities Travel Special dinners at restaurants Luxury goods Don’t know Yes No Spending for new season starting this spring1 % of respondents who plan to spend money on each of the following items Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years
  33. 33. McKinsey & Company 33 Across categories, Japanese are generally willing to spend less than last year Subdued holiday outlook | Current as of March 2022 74 36 39 35 10 14 48 32 2 8 8 10 5 9 9 7 3 10 10 12 7 13 10 8 18 43 35 39 77 61 32 50 2 2 8 5 1 3 2 2 1 1 2 1 1 House-moving Luxury goods Special dinner at restaurants Furniture and home appliances Travel Daily necessities Gifts for others Clothes Won’t spend any Will spend about the same amount Will spend significantly less Will spend less Will spend more Will spend significantly more Change in spending for new season starting this spring1 % of respondents who plan to change spending vs 2021 Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years 1. Q: If you compare the upcoming new season starting in this spring with the one last year, how much do you plan to change your spending level in the following categories for each of the items?
  34. 34. McKinsey & Company 34 Out of non-daily-life categories, travel and special dinners at restaurants are the most popular spending categories Subdued holiday outlook | Current as of March 2022 1. Q: We would like to ask you questions about your plans for Golden Week this year. Do you plan to spend money this year on each of the following items? 4 9 19 17 40 23 6 14 83 61 55 54 36 47 69 60 13 30 27 29 24 30 25 26 Special dinners at restaurants Furniture and home appliances Gifts for others House-moving Travel Daily necessities Clothes Luxury goods Yes No Don’t know Plan to spend in Golden Week1 % of respondents who plan to spend during golden week Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years
  35. 35. McKinsey & Company 35 Japanese consumers are expected to spend less across all categories during this year’s Golden Week, compared with last year Subdued holiday outlook | Current as of March 2022 1. Q: If you compare the upcoming Golden Week this year with the one last year, how much do you plan to change your spending level in the following categories for each of the items? 77 55 52 45 26 36 59 51 60 2 5 5 7 6 6 5 5 5 3 6 6 7 5 8 6 6 4 17 32 30 36 62 48 28 36 26 1 1 5 4 1 2 2 2 3 1 1 1 1 1 1 2 Other special expenditure Luxury goods House-moving Travel Furniture and home appliances Special dinners at restaurants 0 Daily necessities Clothes 0 Gifts for others Won’t spend any Will spend about the same amount Will spend significantly less Will spend less Will spend more Will spend significantly more Plan to change spending from last year during Golden Week1 % of respondents who plan to change spending level Source: McKinsey & Company COVID-19 Japan Consumer Pulse Survey, 3/16–3/26/2022, n = 1,018, sampled and weighted to match Japan general population 18+ years

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