verde consumer behavior report - october 28, 2020
Don’t expect any predictions from us this week! With under seven days until the election, we’ll leave forecasting to the pundits and pollsters. What we can say with certainty is that uncertainty is a primary driver of consumer behavior right now.
A streak of consumer optimism is poking its head up. The past seven months of pandemic stress and lost income aren’t yet entirely in the rearview mirror for most Americans.
Pandemic Stress is Real
To quote from an infographic from VisualCapitalist.com, “For millions of people, economic disruptions associated with COVID-19 are beginning to take their toll.”
57% of Americans are experiencing COVID-related income reductions
75% of Americans are “very worried” about their financial future
70% of Americans delayed big purchases this year
35% report that their current savings can only cover one month of expenses if they lose their job
Which Leads to Changes in (Possibly Permanent) Consumer Behaviors
Results from McKinsey’s September consumer research poll were posted last week. The research recognizes these COVID-inspired changes in consumer behavior:
20-40% decrease in intent to spend on discretionary categories
20-40% increase in intent to shop online
73% of consumers have switched brands, stores or the way they shop (a.k.a. decreased loyalty)
64% have not returned to pre-COVID shopping behaviors
The big question is which of these will establish post-COVID permanence in consumer shopping behaviors?
Holidays Aren’t Cancelled, But Priorities are Shifted
Deloitte came out with holiday 2020 forecasts that emphasize what we’ve been reporting on consumer preferences: price, value and convenience are top priorities. The “2020 Deloitte Holiday Research Survey: Reimagining Traditions” confirms some results from similar research, and draws a few conclusions that we haven’t seen elsewhere. According to SGB Media, the Deloitte survey expects:
7% overall drop in holiday spending per household, compared to 2019 (McKinsey suggests this number may be as great as 25% decrease)
38% of consumer plan to spend less than they did in 2019
71% of consumer report a same or better financial situation compared to 2019; 29% a worse household financial situation
69% of consumers prefer to shop in-store close to home, but this year plan to spend 64% of their total holiday shopping budget online
51% of consumers are nervous about shopping in-store; 65% will shop online to avoid crowds
61% of consumer still say a “great deal” will persuade them to shop with a retailer
What’s a Specialty Brand and Retailer To Do?
The most straightforward way to answer this question is, “Help your consumer.” Faced with tighter discretionary spending, less anticipated family time over the holidays, and ongoing safety concerns, consumers are more concerned than ever about making smart buying choices.
As Marshall Cohen, chief industry advisor for NPD, puts it, “Brands have the opportunity to really speak directly to the consumer and not rely on traditional forms and methods...during this very competitive time period.” Paraphrasing his advice for retailers, it’s really about helping consumers pick and choose, feel like they’re in a safe environment, have confidence that the brands and products they’re choosing will be coveted by those that they love and recognizing the basic needs of price and availability.
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