In March 2020, almost all of Europe plunged into a devastating health crisis caused by a coronavirus from China's Wuhan region. Covid-19 has killed more than two million people worldwide, so far. One way to contain its spread and prevent the collapse of the various national health systems was to keep people at home and close commerce, schools, and services.
These restrictions have changed consumers' consumption habits, but not investors' as financial markets maintained their activity during the pandemic. To what extent do these new consumer habits impact trade, markets, and consumers itself?
We spoke with Dominique Henneton, Director of Information and Services for the largest consumer defence network in Europe. Euroconsumers is represented in four European countries (Belgium, Italy, Portugal and Spain) and one in Latin America (Brazil) and comprises 1.5 million members.
The organisation composes of four product lines: Consumer (Line C), Health (Line H), Legal (Line L) and Finance (Line F). Its main task: consumer protection, through information, comparative tests and services. These four product lines end up crossing each other in consumers' everyday lives, as demonstrated by the Money Framework, our eight-article series that gives all consumers/retail investor investment tips.
The former journalist with a degree in Languages German and English and MBA in finance started at Brussels' Test Achats office in 1991. In this interview, Dominique explains some of the key actions Euroconsumers took during the pandemic and what to expect for the post-Covid years about consumer activity regarding shopping, health, legal and financial investments.
Euroconsumers Invest (ECI): We know that one of the essential standards for a satisfactory quality of life is good family budget management. In this context, what conclusions can be drawn from all that happened in 2020 in terms of consumer behaviour: shopping, consumer credit, working from home?
Dominique Henneton (DH): Apart from some marginal phenomena that we have had at the beginning of the first pandemic wave (people were rushing into the supermarkets to buy everything they could like long-lasting food products or toilet paper), we can say the most important things that happened were the acceleration of some existing trends. Meaning, there is no new trend emerging with the covid-19 pandemic but rather the acceleration of existing ones, and I will name the main three.
E-commerce. With the shops closed, people had to go digital and buy their goods. The increase of entertainment platforms like Netflix and the emergence of new social media like TikTok — the Chinese platform is a natural lockdown product; without it, TikTok would have taken more time to develop and compete with big players like Facebook or Instagram.
The third one is the increasing awareness of "sustainability". In northern Europe, in the first phase of the crisis, we saw the rise of local food buying. People preferred to escape from the big supermarkets, at that moment using mask wasn't mandatory yet, and changed their buying habits by buying local products: fruit, vegetable from local producers.
Another big trend, especially in the first lockdown and less in the second one, was the home cooking boom and the "tiny gardening", where people grew small vegetables for their meals.
The e-commerce development and some sustainability movements like nutrition will be trending in future.
ECI: What about the family budget, people were not ready for this kind of crisis?
DH: When there is uncertainty, there is a risk. So, families should plan for the uncertain times ahead.
ECI: What kind of (new) concerns are consumers bringing to Euroconsumers?
DH: The first one is very conjectural, and it's about travelling. Many people were concerned about flight and trip cancellation. Travellers called us asking for support because they weren't receiving accurate information about cancelling their travel packages from travel and aviation companies. People were confronted with a complete absence of answers from the airliners. In some countries, we started collective legal actions against the biggest aviation players. We conducted lobbying at the EU level to better protect consumers and carry these actions during the year.
But travelling is not the only problem the pandemic brought. We also see more questions about e-commerce, customer complaints around the delivery, warranty issues, and faulty products. In terms of interaction with our websites, we registered a great demand for products linked to teleworking: printers, personal computers, etc.
The consumers are still focusing on the quality of the products. Still, my feeling is, as the sanitary crisis could evolve into a financial crisis, people will change their focus on price, instead of the quality of the products.
Therefore, as a consumer organisation, we will boost our price comparators because consumer demand will shift. So, hot topics for Euroconsumers during 2021 amid this pandemic: travel and travel insurance, health and nutrition, e-commerce.
ECI: This crisis is a series of crises: it starts with the health calamity develops into the economic crisis. Let's hope it does not end in a general financial collapse. Regarding Euroconsumers H Line, we know that new health problems will emerge quickly because of the pandemic. The risk of cardiovascular issues, due to people's sedentarism because telework is very high. The same goes for mental health problems derivate from social distancing — less in-person interactions. The isolation of the elder and young people is also a potential factor for the rise of depression cases in the community. The whole question of vaccination mixed by the amount of fake news and false testimonies circulating on the Internet, which Euroconsumers should have a crucial role in fighting it, is also worrisome. What is your reading of all this, what has changed for Euroconsumers in 2020 and what is being prepared for the coming years?
DH: This is a sanitary crisis, and, in the beginning, it was a life and death priority. The authorities and society, in general, were focused on protecting the health of the people. Protect yourselves to protect the others. This was the message of all the experts and government authorities. And we have seen many solidarity movements, with the Health Systems.
Some organisations, including Euroconsumers, helped in the collection of funds to buy equipment for hospitals. In the beginning, you remember this big fear that there wouldn't be enough breathing systems in the north of Italy, in Belgium and Spain the tree primary first wave concerning countries that are also within the Euroconsumers Group. Our DNA was "protect yourself, protect others — Protection".
As we learn from these events, we realise that health and care insurance are crucial for everyone, and people should look at it differently. In the first wave, I'll give you the Italian example with all people going to the hospital, many dying, others losing their mobility… We reacted as a consumer organisation by launching and negotiating a long-term care insurance contract. This was a great success from the beginning because it answered to the increased fear of losing your most precious capital, health, at one moment in your life. And seeing all the consequences on you and your family. This was an eye-opener on the importance of health insurance.
We also had to debunk fake news, and this pandemic brought heaps of disinformation like the supplements that boost your immunity. In contrast, you only need to have a good sleep, not stress too much and balance food with lots of fruit and vegetable. All the rest is mostly literature. We had to debunk this by reinforcing that buying all these products only makes you lose money and not beneficiate your health.
Concerning the mental health, the main issue is that you don't see it initially, so when you become aware of it, in most cases, it is already late. Sometimes the problem is there for a while. We saw the same phenomenon for the globality of the society like in the beginning people didn't speak so much about mental health. We saw the domestic violence problems, but mental health only came to the public debate in October/November for various reasons: It's wintertime, and usually, people are more depressed during winter: no sun, holidays are over, etc. In Belgium, for example, the psychiatric intensive care services are at fullest capacity due to the rise of mental health issues, facing now the same problem hospitals ICUs had during the first wave.
About the vaccine, despite all the fake news surrounding it, where we have a role in debunking it, we also thrive for transparency. Meaning we are not just giving the global message "take the vaccine because it is safe", we also want the vaccine's price to be transparent. Though they could be limited, the information about its possible second effects need to be as transparent as possible. If you don't create this transparency, you will not gain the trust of all consumers. So, asking for transparency is also a way to boost the number of inoculated people in Europe.
ECI: You are also the Director of the entire Financial line that we can translate here as Euroconsumers Invest. The lack of financial literacy remains a significant challenge for any consumer-oriented organisation. We also witness an immense pressure on the banks due to the historical levels of interest rates and the reflection of all this in the markets. How do you see this whole situation?
DH: Financial literacy remains a significant issue despite all the promises and engagements taken during the Lisbon treaty by the European Union. After the Internet crisis, the bubble of 2000/2001, the EU authorities received much attention to fighting financial illiteracy, … a lot of words but few deeds. Unfortunately, it remains an issue for investors. The legal framework of the EU (and the rest of the world) about the investor, adapts only when there is a significant crisis, in other words, when it is too late!
Do you remember the Internet bubble crash in 2000/01? Europe started working on the MIFID – Market in Financial Instruments Directive. We thought the EU learned the lesson with these different directives, but then another crisis arose: the 2008/09 banking crisis after the US subprime. At that moment, again, the MIFID framework evolved. One of the most significant introductions was the minimum level of € 100 000 protection for your savings, which is positive. Still, it leaves the impression that we need a crisis before things evolve. We think the authorities don't take all these crisis lessons further to mitigate banking solidity problems. We hope we don't need another crisis before improving the legal framework around investment.
I would emphasise the difference between the legal framework — where you must protect consumers against abusers — and the market's normal movement. This goes back to the importance of the financial literacy you mentioned. In other words, someone investing in the stock exchange today must be aware of the risk of losing money.
Thanks to the MIFID, banks and brokers do not push consumers towards the stock exchange without providing accurate information anymore. The policy prevents it from happening. These tools are available to mitigate that risk; however, the lesson needs to improve since we know, sometimes, the information provided has flaws. And this is where financial literacy needs to be improved.
As a consumer organisation, we want to keep playing our role by showing consumers the opportunities on the market, its risks, and finding the right balance between these two.
ECI: Sustainability has gained decisive weight in financial discussions, especially over the past two years, notably with decisions such as the EU Green Deal and action plans of different market regulators. In your opinion, is this something that will have a bearing on investor decisions or is it always a marginal process for the investor?
DH: The investor doesn't exist; you don't have one behaviour of investor. You have different investing clusters. There is a cluster, which is still marginal, of people that are very demanding towards investments. They only invest in environment safe companies, or they choose banks with a green savings account. But this is still quite limited, I would say. You also have investors whose behaviour is filtering the "bad companies", like those coming from the weapon industry, tobacco, petrol, alcohol. So, it is another behaviour, which illustrates that what we have in investment is behaviour and not the individual investor.
The ESG investments are not the majority in the current funds. It is a long process. But what we see is a growing concern on the funds to start taking these elements into account in their policies for a simple reason: companies in the environment-related industry are becoming more profitable!
There's a lot to be done in the ESG information since it also has fake news. Euroconsumers Invest has two leading roles: debunk these fake ESG news and counterfeit labels to help create transparency.
ECI: In what aspect can Euroconsumers Invest contribute to consumer protection concerning banking and financial services?
DH: Euroconsumers has always been in favour of the free market; we are not a consumer organisation playing a role for the state, for the authorities. We are in favour of liberalisation of the telco companies or energy. Still, we also say transparency is crucial in a free market. The authorities must play their role as regulators and supervisors to maintain the market's correct and balanced functioning, without distortions or favouritism.
We believe we are an essential player in transparency by comparing products and prices, by providing consumers with trustful information demystifying fake news. I would say debunking and creating transparency on the market are our two leading roles so that the free market can also work for the consumers and not just for the companies.
Euroconsumers Invest: Recently, we have seen unusual phenomena in the financial markets. Two weeks ago, a group of users used the Reddit network to play on the New York Stock Exchange. Through r/wallstreetbets community, they bought shares of short selling companies such as Gamestop, AMC, Blackberry and Nokia. The speculation has caused these shares to increase in value by forcing the Hedge funds (large institutional investors) to buy massively to limit losses. Some called the phenomenon a "master move". Others called it "the Main Street versus Wall Street uprising". How do you see this type of online movements? Should consumer/investors take financial advice from Reddit? What are the associated dangers?
Dominique Henneton: I would be very cautious with that episode because to me until now it is just a one-shot buzz. Everybody likes to read stories about the small investor winning against the big ones. Still, there are so many other cases where the small investor pays the bill of the big ones that this small victory is seen as "this time they nailed them" but to me, it is not a fundamental movement. I don't think there is a lot to expect from that spontaneous movement in a structural way.
If we want to move structurally, we also must let the legal framework evolve so that the consumers are better protected. Once again, this is a fun story, nice to see and read, but I don't imagine it can be a real trend.
Therefore, people should diversify their sources of advice and work with expert advisors like Euroconsumers Invest. The reason is the experience accumulated at Euroconsumers and the way we do things independently.