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As new COVID-19 infection rates, deaths and other daily measures begin to taper, consumers cautiously peek out of their blinds and begin to imagine a future beyond COVID-19. History tells us that seminal events impact us for years after. The Great Depression created a generation that was forever frugal. September 11th compelled all Americans to question their fundamental safety in ways that persist two decades later.
COVID-19 will not be an exception.
To understand where consumers’ minds are today, CommerceNext partnered with BizRate Insights to survey Americans about what they have done differently because of the threat of COVID-19 and how they expect their shopping behaviors to change.
Methodology and demographics
Surveys were fielded between April 29th and May 3rd, 2020, generating 1,030 completed surveys that represented a general sample of the US population, ages 18 and up. Sixty-eight percent of respondents were female. Age breakouts of survey respondents are shown below.
The last bit of methodological context to consider is the progress of the virus at this point in time. Data from Johns Hopkins University of Medicine shows us that at the time of fielding this survey, the rate of new infections had been trending down for about a month. A vague, cautious optimism was in the air.
The stickiness of new habits
As we’ve all experienced, COVID-19 has forced us to change virtually every habit in one way or another and we’re finding that some behaviors might well become new habits. The chart below quantifies the new habits developed by respondents as a result of the COVID-19 crisis that they believe will stick in the long term. After having been compelled to cook far more meals at home, 54% of our respondents say they will continue to do so, even when they don’t have to anymore. Forty-eight percent say they will continue shopping online more. Thirty-nine percent say that they will more frequently pick up meals from restaurants. Only 19% of respondents say that none of their COVID-19 imposed habit changes will stick.
The data suggests a bright future for orders generated online, whether those orders are delivered or picked up in-store, curbside or in-restaurant. This is good news for the merchants that embraced ecommerce and invested in resilient infrastructure before the pandemic, but has likely created negative sentiment among retailers that executed poorly. Notably, only 13% of respondents said that they will continue to utilize grocery delivery when they don’t need to anymore. Wait times of several days, or weeks, for open grocery delivery time slots have not made a positive first impression on many first-time online grocery shoppers, it seems.
A grim outlook for discretionary categories
Through the survey, we also examined what consumers are saying about their expected purchasing, by category, post-COVID-19. The good news is that the majority of respondents intend to return to their past spending levels or intend to increase spending in every retail category. Some categories hold up better than others. Ninety-three percent of consumers expect to maintain or increase their spending on health and beauty products, 86% in home goods and kitchen supplies and 86% in grocery, food and beverage. Non-discretionary categories, though, are clearly at more risk.
Consumers expect that post-pandemic shopping will be more focused on essentials. In the chart below, we see the percent of consumers that plan to increase spending in each category compared with those that intend to cut spending. This is essentially a product category representation of Maslow’s hierarchy of needs in 2020. Consumers are telling us that the things that they need to survive will garner a larger share of spend. Those that are just nice to have, will not. It seems clear to us that any retailer or brand in the CPG space needs to be investing for growth. Those outside of CPG cannot assume that pent up demand awaits in the short term.
As we would expect to see in a recession, consumers will be more frugal. Forty-nine percent of respondents plan to buy only what they need and 42% plan to increase their savings. A double click on that data, though, yields very interesting results. There is a clear correlation between age and intent to save, with younger consumers planning to curtail spending. Seventy-one percent of respondents between 18 and 24 years of age intend to increase savings, compared with only 34% among those 55 and over. Conversely, 34% of those 55 and over expect that their spending and saving habits will not change, compared with just 9% among those 18 to 24.
Will the impact of COVID-19 fundamentally alter the spending patterns of young shoppers, as the Great Depression fundamentally altered the spending patterns of the Greatest Generation? Or are younger shoppers just naïve as they suffer through their first crisis, likely to bounce back to old spending habits when the dust clears? That is the million dollar question.
Coronavirus has introduced consumers to new technology and brands
Technology has clearly benefited during the COVID-19 pandemic. Under duress, grandmothers across the land have been forced to wrestle their personal technologies to the ground in an effort to see their grandchildren and generally avoid insanity. The more tech-savvy have gone to greater digital extremes, adopting a multitude of new technology solutions to support their virtual programs. While COVID-19 has been the bad guy to beat all bad guys, some brands have proven to be saviors and heroes for consumers.
Zoom tops the list. When asked to respond to an open-ended question about the products that consumers discovered, or began to use, due to Coronavirus, Zoom was the most commonly cited by a wide margin. Clorox and Lysol, long staples of kitchens and bathrooms across the globe, have both been elevated to savior status. Newcomers Instacart and Doordash, prominently cited by our respondents as “discovered” brands, are in eminent company. Finally, Walmart’s house brand, Great Value, made its way onto our list. Whether this was driven by a scarcity of national brands on Walmart shelves or a desire to save money, it represents a clear opportunity to Walmart, and more broadly for retailers’ private label brands.
The resilience of the American consumer
Surveys are a terrific instrument to take the temperature of consumers, but results cannot be interpreted literally. During the worst year of the Great Recession, 2009, total US GDP shrunk by only 2.5 percent. In 2001, the combined impact of the dot-com implosion and September 11th couldn’t push GDP growth below zero. Our current crisis is more significant than either of these, but the American consumer economy will persevere. Our survey data suggests that a return to normal spending isn’t likely to happen as quickly as we would all like, but history strongly suggests that it is virtually inevitable.
Our innate desire to connect with each other has never been more clear as we continue to muddle through Zoom cocktail parties, struggling to determine whose turn it is to talk, dying to physically touch those on the other end. These unsatisfying interactions only make us want real experiences more than ever. We want to eat together, to travel to see each other, to go to the theater together, to golf together. And we are going to want to look good while we’re at it.
Consumers’ perception of the future, at this point in time, is inundated by the threats that define the short term. But the darkest of times inevitably precede the brightest. The Roaring Twenties followed World War I and the Spanish Flu. The Great Depression and World War II preceded the longest economic growth period in American history. Winston Churchill said it best: “We don’t develop courage by being happy every day. We develop it by surviving difficult times and challenging adversity.”
Get more details on this COVID research
We’re going to deep dive into these results live with the retailers surveyed in the upcoming CommerceNext Webinar sponsored by Exponea on Wednesday, May 13th at 2pm ET / 11am PT.
- Tim Hartman, VP, Digital Commerce, Hugo Boss
- Shawna Hausman, CMO, Health-E Commerce
- Jamie O´Gorman, Global VP – Client Services, Exponea
- Veronika Sonsev, Co-Founder, CommerceNext (moderator)
Catch up on all our COVID research and content
You can find replays of past webinars, CommerceNext original research summaries, data from numerous sources and COVID-19 blog posts on our COVID Resource Center.
As our community faces both immediate and long term impacts from COVID-19, we’ll keep gathering data to help you better understand how the industry is doing. And, once this is behind us, we’re here to help you share knowledge on how to rebuild.