COVID-19 has dramatically changed how businesses and consumers behave. We’ve seen panic buying, the rise of the “homebody economy” and a strong shift towards contactless shopping.
As we emerge from the worst of the pandemic, it seems the right time to reflect on the most important changes in consumer behaviour we’ve seen, and to make some predictions about COVID-19’s lasting and pervasive effects on how we shop.
One of the first impacts of COVID-19 was supermarket shelves being repeatedly stripped of toilet paper and other products ahead of lockdowns.
One debate this behaviour sparked was about how much it could be considered irrational panic buying – or if it was rational to stockpile in response to the irrational behaviour of others.
It was a real-life lesson in game theory. Decisions that make perfect sense for individuals can add up to a bad outcome for the community.
Spending more money at the supermarket was at least possible.
Consumption patterns changed significantly due to closed borders, restricted shopping, stay-at-home orders and general uncertainty.
Data from the Australian Bureau of Statistics shows large drops in spending on transport, accommodation, recreation and entertainment services, and catering.
Spending on food increased marginally, and on alcohol even more. The main reasons cited for increased drinking, according to one study, were stress (45.7%), increased alcohol availability (34.4%) and boredom (30.1%).
Spending also increased on home-related electronics, streaming services, furnishings, hardware and pet-related items.
Interest increased in traditional activities such as cooking, reading and gardening.
It is too early to tell to what extent these pandemic-driven shifts will translate into permanent behavioural change. However, research published last month, based on surveying 7,500 households in France, Germany, Italy, the Netherlands and Spain, supports the likelihood of at least some long-term sectoral shifts in consumer behaviour.
As restrictions relax, some marketing experts are predicting “revenge spending” – shopping sprees with abandon.
Certainly many higher-income households have the money to splash out on a holiday, or new car, or home renovation, with Australians banking an estimated A$140 billion in extra savings during the pandemic.
Other research, such as the National Australia Bank’s quarterly Consumer Sentiment Survey, suggests the pandemic has engendered greater caution. In its most recent survey, 37% said they were mindful or careful of where they spent their money (42% of women and 33% of men). In terms of purchasing influences, 43% nominated supporting local businesses, compared with 15% environmental issues and 14% social concerns such as labour practices.
Some have wondered if, in the wake of COVID-19, we are about to experience another “Roaring Twenties” – emulating that period of economic prosperity and cultural dynamism in the 1920s following the deprivations of the first world war and the “Spanish flu” epidemic.
The circumstances are not exactly analogous. But new technologies and changes in habits are likely to drive several long-term changes in the way we shop.
Our desire to reduce physical contact accelerated contactless payment methods. Research (from the Netherlands) suggests this will, for most, be a permanent change, accelerating a steady decline in the use of cash for shopping.
Technology enabling payments using smartphones, such as supermarkets introducing a way to pay by scanning a QR code, will contribute to this shift.
