The Covid-19 pandemic has led to huge shifts in the consumer sector. Equity investors need to understand these trends to identify opportunities and risks. Aviva Investors sees three key trends emerging:

Consumer spending has shifted

Following the pandemic boom in consumer spending in the US, it has returned to pre-pandemic levels across various sub-sectors. However, spending remains “severely below” pre-Covid trends in the eurozone and the UK. Aviva cites saving rates, differences in the mortgage rate system, gas prices and fiscal stimulus as the reasons for the difference.

Inflationary pressure

“Consumers are feeling the impact of inflation and are now adjusting their spending habits,” says Aviva. Additionally, potential tax cuts in the US and higher tariffs by the Trump administration might have implications for consumer companies and consumers.

The Chinese consumer challenge

The Chinese consumer market poses a significant challenge for multinational companies as weak consumer sentiment and high savings rates persist. Key issues include concerns over employment and the property-market crisis, which have dampened spending throughout 2024. Aviva underlines that unblocking consumer confidence will be critical for revitalising demand and re-engaging spending on goods.

Read the full insight here.