Chinese consumers exhibit more caution and price sensitivity as zero-Covid strategy fans jobs and income uncertainty: survey

Chinese consumers are becoming more cautious and price sensitive as the country’s zero-Covid strategy and gloomy economic outlook exacerbate concerns over job prospects and income.

Panic buying between March and April when residential compounds in major cities like Shanghai and Beijing were sealed off to guard against the Omicron variant of Covid-19 failed to drive up prices of fast-moving consumer goods (FMCG), according to a joint survey by global consultancy Bain & Co and market research firm Kantar Worldpanel.

“Chinese consumers are showing us new ways of thinking in a volatile environment, as they return to shopping with different behaviours, and brands should take notice of [this],” said Bruno Lannes, a partner at Bain. “Brands must work even harder to connect with their consumers.”

Sales volume of FMCG, which includes packaged foods, beverages, skincare products, shampoos and over-the-counter drugs, grew 5.6 per cent year on year in the four weeks ending April 22, the survey showed. But average selling prices dropped 5.7 per cent, indicating enhanced price sensitivity among consumers, said Jason Yu, general manager of Kantar Worldpanel China.

“The zero-Covid policy has had a huge psychological impact on consumers,” he said. “They are [now] prone to bargain-hunting amid uncertainties about their job security and wage income.”

Beijing’s zero-Covid policy, which involves stamping out infections with strict mitigation measures, has seen millions of residents stock up on food and home care products in larger pack sizes and spend less on higher-priced products, such as skincare and make-up, Bain and Kantar said in the China Shopper Report, which was published on Tuesday.