How COVID-19 Has Impacted Consumer Spending Habits
Consumers have had to adapt and adopt a new normal since the coronavirus pandemic hit the UK back in early 2020 which sent consumers into months of lockdowns.
As a result, consumers have been forced to shop differently but not just in the way in which they shop but also what they consider to be essential.
According to PWC, consumer sentiment remained largely resilient during the pandemic but has shown significant increases since June, returning to levels before the emergence of COVID-19. Currently, consumer sentiment is at -1 (Autumn 2020) which is comparable to the level seen between 2015-2019 and is higher than at any point during 2008-2014.
Let’s take a look at how consumer shopping has changed since COVID-19...
The Online Shopping Trend
As lockdown saw all brick and mortar retailers close their doors, consumers turned to online shopping to find everything from groceries to skincare products and clothing.
Despite the reopening of brick and mortar stores in most parts of the UK, consumer confidence to shop on the high street still remains low and online shopping preferable as Alvarez & Marsal found that an estimated 17.2 million UK consumers plan to make permanent changes to their shopping habits. Shopping at brick and mortar stores is expected to fall by 35% due to the perceived risks of contracting COVID-19 whilst frequency to shop online is expected to grow by 34%.
This is further supported by research from Mckinsey & Company, which found categories such as food and grocery, apparel, household goods and entertainment have all seen 10% growth in their online customer base during the pandemic.
Not only has there been a change in how and where consumers shop, there has also been a shift in spending intentions.
For example, research suggests consumers plan to shift their spending habits to essential items such as grocery and household supplies which comes as no surprise as people become more concerned about job security.
What is also unsurprising, consumers plan to spend less on going out and eating out, as well as cut back on holidays due to the uncertainty in lockdown and quarantine rules.
As a result of an expected prolonged financial and personal impact of COVID-19, consumers have adopted more mindful shopping habits in a bid to save money as 33% of consumers are finding themselves with less disposable income than before the crisis, according to Accenture.
Moreover, consumers have become more conscious about what they are buying. 75% of consumers are limiting food waste, whilst 67% are said to be shopping more health-consciously looking for local goods as consumers favour products they can trust.
Brand Loyalty Weakened
During the pandemic, brand loyalty experienced an obvious weakening as manufacturers and retailers suffered from disruptions to their supply-chain.
Because of the lack of access to some products and retailers, consumers have tried different brands or shopped at different retailers due to value, availability and convenience.
According to Mckinsey & Company, 71% of UK consumers tried a new shopping behaviour and 73-80% intend to continue their adopted behaviour. This will hit many brands across the UK and those in particular which rely heavily on brand loyalty.
The Future Of Consumer Spending
With an uncertain outlook on consumer spending due to job security and uncertainty of lockdowns happening across many parts of the country, retailers are going to have to continue to adapt.
More people expected to make online purchases post-COVID-19 even with the reopening of brick and mortar stores meaning it is more important than ever that businesses have an online presence and eCommerce offering .
Find ways to retain and increase brand loyalty as the rediscovery of local shopping is intended to be adopting long term.
Consumers are more mindful where they spend their money as they look to spend less on expensive products and opt for essential goods over discretionary goods and services.
At Opayo, we offer a number of payment processing solutions which align with the future of consumer spending post-COVID-19. Our online payment gateway can easily be integrated on your eCommerce store so you can accept a range of payments securely and reliably.
What’s more, our Virtual Terminal means you can accept payments over the phone from anywhere at any time without having to be in the physical presence of the customer.
For more information, please call us now on 0191 313 0300