COVID-19: Turning Point for the Mexican Consumer

Q: What have been the main changes in the Mexican consumer due to the pandemic?

A: The pandemic has undoubtedly been a turning point in many respects. Over these past months, we have seen changes that typically take many years, mainly in how, where and what people buy. Since the crisis began, McKinsey & Company has been interviewing consumers to understand their perspectives, trends and above all to know how they are seeing the future. Since the beginning of March, we have seen radical changes. For instance, almost three out of four consumers in Mexico have changed the way they are shopping, buying in new stores and through new sales channels. 

In recent years, e-commerce in Mexico already had been growing; however, this crisis has been an accelerator for digital channels due to lockdowns around the country. Most people were forced to use digital sales channels to avoid going to the supermarket. This country has a tradition of going to the supermarket once or twice a week. Now, people of all generations have adopted platforms such as Rappi, Cornershop, Uber Eats or Amazon. 

This change in consumer habits sets a before and after. We do not believe that this is a temporary situation. People are getting to know the e-commerce experience and are enjoying it. Typically, a habit has to be repeated for two or three months to become permanent. This pandemic has already lasted almost six months and people will continue to repeat these buying patterns until they turn permanent.

Q: What characterized the Mexican consumer during the COVID-19 pandemic?

A: Mexicans have always distinguished themselves by their resilience during crises. Despite the economic crisis and physical and mobility restrictions, the consumer has adapted to focus their income on essentials products. It is surprising how Mexicans adapt to challenging circumstances. One of the characteristics of the Mexican consumer during these months has been their ability to make their budget more flexible. In economic crises, it is very common to see consumers trading down, meaning that they seek cheaper brands that allow them to maximize their income. Likewise, people are looking to buy products in sizes that are more cost-effective and have a smaller average ticket size. 

However, an interesting trend is the polarization in the sizes of products that consumers buy. There are people who look for smaller presentations but there are also people who buy larger presentations to optimize the cost and minimize the visits they make to the supermarket or their online purchases. This is further evidence of how the consumer has become much more resilient and flexible in their buying habits. 

Without a doubt, physical shops will remain the most relevant sales channel in Mexico. However, a trend that we believe is here to stay is the habit of using both digital and physical sales channels. In these months, the frequency of visits to supermarkets has decreased as people have minimized emergency and unplanned purchases. While the number of visitors to brick-and-mortar stores has decreased, the average consumer ticket has grown. Although the shopping experience is an essential component of Mexican habits, people who were still on the fence of trying digital platforms have realized that it is not that hard to use them and that they can trust these channels. Both physical and digital shopping experiences will continue to transform due to the health measures, which will linger for a long time. 

Q: How will changing consumer habits impact brands?

A: Consumer loyalty has been shaken. At the beginning of the health crisis, people made panic purchases. This caused a shortage of many products in supermarkets and thus consumers were led to try products they had not considered before. Currently, supermarket chains have normalized their inventories but people are still concerned about their income. For the time being, they still favor more affordable brands. Since March, about 40 percent of people have tried out new brands.

Companies that have very large product portfolios have struggled to meet the demand, which has led to a simplification of total offering to maximize production efficiency and product availability, with the aim to retain customer loyalty. If consumers go to a shop and do not find their favorite brand, it is an open invitation to try other products. Organizations in the consumer sector need to review their product portfolio to analyze whether their products offer the best value proposition to the customer. Likewise, brands need to redesign their products to tailor them to a omnichannel experience. The pandemic showed that many companies were not prepared to handle the changes required in their  operations and their products to handle the challenges brought by the significant growth in their digital sales channels. 

McKinsey & Company is a leading consulting firm. It provides strategic management to corporations, governments and other organizations covering industries like automotive, oil and gas, retail, agriculture and financial services