Current reports indicate that it may take up to two years for our society and economy to recover from the COVID-19 pandemic. With travel spending down nearly 100%, restaurants limited to 50% capacity, summer camps working to incorporate distancing and mask-wearing, and 20.5 million Americans reporting losing their jobs in April, this summer will look nothing like the last.
Social recovery is expected to be slow and challenging, as increasing feelings of isolation and anxiety permeate the country. Concerns about the economy rage on as well, and early research gives a look at some of the trends that may start to shape consumer behaviors.
An April Consumer Index Survey identified four directional segments, of which:
- 42% believe that the way they shop will fundamentally change as a result of the COVID-19 outbreak
- 34% would pay more for local products
- 25% would pay more for for trusted brands
- 23% would pay more for for ethical products
Mindset and economic realities shaped the key differences between the segments.
“Cut deep” segment: 45+ years old, 25% have seen their jobs suspended, either temporarily or permanently. 78% are shopping less frequently, 64% are only buying essentials. 33% feel that brands are far less important to them in the current climate.
“Stay calm, carry on” segment: Do not feel directly impacted by the pandemic and aren’t changing spending habits. 21% are spending more on groceries, 18% are spending less.
“Save and stockpile” segment: Concerned for their families and the long term. 36% are spending more on groceries, 72% are spending less on clothing, and 85% are spending less on leisure.
“Hibernate and spend” segment: Aged 18-44, most concerned about the impact of the pandemic, but only 40% are shopping less frequently. 42% say the products they buy have changed significantly, 46% say brands are now more important to them.
Insights:
Everyone is considering their spending and purchase decisions more than ever before.
With each choice representing greater potential impact, brands and products that can truly understand their audience and deliver on the things they care about have the best chance of surviving. Calls for “voting with your wallet” to support local businesses are balanced with large chains that may be the first to re-employ those who have lost jobs.
Spending on experiences hasn’t stopped, it’s just changed.
The pandemic has been seen to accelerate trends, not to drastically change them. Consumers are still looking to find joy and excitement, albeit distanced for now. Restaurants have found ways to meet this need and improve profit margins with “DIY Cocktails,” delivering the measured ingredients for a fancy cocktail and instructions for you to shake it up yourself.
Money matters, and people are turning to each other for help.
Marketplace reported that GoFundMe has seen unprecedented use in the face of the pandemic. CEO Tim Cadogan explained that “the first wave of activity is around medical workers, PPE, and equipment, that then is shifting to small businesses, businesses, and their employees. And that then is shifting deeper into the areas like food security, rent relief, and then starting to touch on the more hidden factors like mental health.”
Limited spending keeps consumers closer to home and pushes them back to basics.
Furniture and home goods retailers are seeing major spikes. “People are finding that the more time they spend in their home, the more time they want to have those things that make it more meaningful, more beneficial,” said Ron Hilton, chief sourcing and operations officer for Overstock.com. In the DC area, bike shops that were on fragile financial ground before the pandemic struck are seeing sales quadruple. If nothing else, Bill Gates still wants everyone to do their summer reading assignments with 5 books you should read in the pandemic summer.
