#Market Strategy — 29.03.2021

Consumers: home is the new hub

Our 2021 Updated Investment Themes

Edmund Shing, Global Chief Investment Officer

Vaccines, recovery and reflation

Consumers: home is the new hub

MediumTerm-High Risk


  • Release of pent-up consumption: travel and travel-related consumption, housing-related demand (construction, DIY, flooring, furniture).
  • Structural consumption growth trends: pet care, personal health & fitness (health nutrition, home exercise equipment/sportswear, fitness trackers, telemedicine).
  • Growth of click-and-collect hybrid model: consumers like to browse products online, but are ready to then visit physical stores to check products, ask for advice and then to purchase or to collect what they have ordered online, speeding up fulfilment times

The household strikes back

Over much of 2020, American and European households accumulated cash savings in their bank accounts thanks to a combination of: a) salaries, social benefits and US stimulus cheques, and b) lockdowns plus restrictions for travel, entertainment and sporting events, and even shopping in physical stores. US households already hold $1.5 trillion in excess cash savings in bank accounts, and this figure may potentially rise to around $2 trillion on the back of a further US stimulus package from the new Biden administration.

But with new Covid-19 infection rates falling rapidly in most Western countries, plus the beneficial effects of accelerating Covid vaccination programmes, we expect to see these physical restrictions gradually ease over Q2 2021. We would expect these two trends to result in a boom in household consumption over the remainder of 2021, fuelling strong earnings recovery in a number of service sectors, such as retail, travel & leisure, media and autos.

We focus on consumption categories which have already exhibited strong growth over the past few months, including DIY and home improvement, gardening, pet care as well as sporting goods and “althleisure” clothing.

Health will remain a key focus of middle-class consumers, not only in the area of sports & fitness, but also healthy nutrition (more plant-based foods which are better for health and for the environment, functional foods which aid cardiac function, weight loss and stress management), mental health and wellness, and telemedicine solutions for a more effective delivery of health care services and diagnosis.

Sustainability remains a key preoccupation of Millennial consumers in particular – sustainable fashion (note the rise in popularity of second-hand clothes shops), ecological and reusable food packaging and biodegradable materials such as plastics made from corn starch.

Once travel restrictions and national lockdowns are lifted, we can expect lockdown-weary consumers to rush to travel once again. The World Tourism Organisation expects domestic tourism to return faster than international tourism, boosting demand for oil via increased car journeys and also for hotels for short stays and weekend breaks.

In addition, when social gatherings (in some form) are permitted once again, we expect people to spend on cosmetics, perfumes and celebration clothes as they will be able to dress up and socialise in safe conditions again. This could be good news for luxury goods companies, which have suffered from the drop in duty-free retail sales and restrictions on social events.

The future of entertainment

  • E-consumption habits: e-gaming, 5G-related mobile internet phones + infrastructure, audio & video streaming, semiconductors, AI/Big Data-assisted personal shopping recommendations, e-transportation (electric cars, scooters, hydrogen vehicles).
  • vOnline and omnichannel retail: logistics real estate, logistics operators, ecological packaging, online retail  fulfilment, online retailers, cybersecurity (for consumer trust).

Technology remains at the forefront of consumption

Global online sales are estimated to have increased by an impressive +27.6% in 2020 whereas traditional sales decreased by -3% (source: McKinsey and Retail Info Systems). This growth is expected to slow down to +14.3% in 2021 as most shops and restaurants are likely to reopen progressively, attracting customers again. Nonetheless, individuals who were reluctant to buy online for security (or other) reasons have now been ensnared in the web. This trend of purchasing online has accelerated and is set to continue. E-commerce, streaming, video gaming, and e-sports are reaching a widening audience. Companies active in these segments are doing very well.

Due to consumers requiring increasing speed, reliability and sophistication, there is huge demand for quality equipment and infrastructure to support the growth in online business and entertainment (5G smartphones and infrastructure, high-end semiconductors, cybersecurity, etc.). There is currently a shortage of some components and their prices are rising. This is boosting profit margins.

The demand for more ecological products such as hybrid or electric cars is also supporting the demand for some special materials and components that are becoming scarce. And these companies having invested early in the less-polluting hydrogen solutions will generally enjoy a much faster and higher return on investment than anticipated.

Many end customers still like to see the goods before purchasing. Therefore, we can expect clients to massively go back to shops and showrooms when, hopefully, the sanitary crisis is under control and the majority of people are vaccinated.

Therefore, new winners will be companies that offer customers a pleasant onsite experience as well as an attractive online platform and offer. Many companies have had to rethink their distribution channels (even traditional luxury companies) and some have been more successful than others in this regard, for instance Walt Disney and Wal Mart.

The B2B sector and platforms have also been developing fast due to the convenience of dealing remotely. These new B2B habits are likely to last. Companies proposing online advertising and/or providing various other marketing services on the net such as customer targeting are thriving nowadays.

Let’s not forget the huge ongoing development of logistics and warehousing related to online purchasing and other new consumption habits. The transportation business has to develop new solutions to deliver increasingly more goods on time.

Amongst new habits, the sharing economy and related services such as online sharing platforms continue to develop, particularly among Millennials.