We are five months into one of the most catastrophic events of recent history, and the world’s economies are still reeling from its effects. Almost overnight, people’s lifestyles and behaviours have changed dramatically. Small businesses and major corporations alike are struggling to cope with a radically different retail landscape that seemed to appear out of nowhere.
The retail sector has suffered tremendous losses under the constraints of the pandemic. People’s attitudes towards spending have drastically changed for many reasons. Some have kicked into doomsday mode; stocking up on grocery and household goods out of fear and uncertainty. Others are rationing their savings and spending only on essential items. Those who are fortunate enough to still be gainfully employed and earning are using this time to invest in their homes or newfound interests, like gardening or baking.
In a recent survey by KPMG of over 12,000 people across 11 markets around the globe, they found significant shifts in spending priorities because of the effects of the pandemic. While there are stark differences based on their financial situations, what is common is that there is a heightened consciousness about what customers are willing to spend their money on, and how they spend it.
The pandemic has already shuttered many retail businesses or at least shrunk their physical presence and forced them to go online. Analysts suggest that companies who want to try to survive in this “new normal” world will need to respond to the following shifts in consumer behavior:
- There is a decrease in overall spending
Nearly half of all people surveyed by KPMG indicated they were worse off than before the pandemic. Eight in 10 people of the same lot say they have put spending on hold for the time being and applied for bank holidays on their mortgages and loans to relieve some of their burdens. This type of widespread decreased spending means that businesses will have to reframe their expectations, given the incredibly limited budgets most people have.
- Focus on savings and home improvement
There is a lot of uncertainty about the future, so many customers choose to focus on increasing their savings. Previously, going to shopping centres, dining out at restaurants, and taking holidays abroad was a part of normal life. Nowadays, these things are nearly impossible to do. If people are spending at all, they are doing it for home improvements, local trips, or eating in. Some businesses may be able to find successful opportunities in these demands, as these priorities are not likely to change, at least in the short- to medium-term.
- Increase in digital activity
While physical distancing is necessary and most bricks and mortar establishments remain closed, most customers have used online channels to transact their business. Even older generations who are first-time users of the internet and new to visiting websites have learned to embrace some digital avenues. People have turned to Facebook pages, Whatsapp groups, and video conferencing to interact with one another, to trade wares, and to offer services. Companies need to adapt quickly to compete against their digitally-savvy counterparts.
- Emphasis on value for money
Value for money is the most critical factor noted across all global markets surveyed that influences customers’ decisions to spend. The pandemic has forced many people out of their jobs and placed tremendous psychological pressure on them. They have stopped nearly all non-essential spending and instead focused their efforts on recovering financially.
- Positive support for local spending
One bright spot that has emerged out of shifts in customer behaviour is the increased support for local businesses. Buying locally has possibly risen out of logistical limitations, as well as a growing sense of community and camaraderie. People are placing more value and trust in local suppliers and products that are manufactured domestically.
- Looking for trustworthy brands
There is a growing sense of responsibility in consumers if they are spending at all. They are more likely to purchase from brands that they trust. This trust is founded on the perception that the company is customer-centric, that it will provide adequate after-sales support, and that their data will be safe and secure. They are also growing increasingly aware of a brand’s efforts to contribute positively to the environment and to social causes as well.
While there are many things uncertain about the next few months and years, what is sure is that the pandemic has permanently changed the way we consume anything. While a possible vaccine may be on the horizon, and the virus may run its course, most experts do not expect consumer behaviour will ever be the same. Both small and large enterprises will need to make profound changes to respond to this new type of customer in order to survive or succeed in this new environment.
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