COVID-19 has changed nearly every aspect of our daily lives, and consumer spending is no exception. With the UK economy already more than a fifth smaller that it was at the end of 2019 (1), consumer spending has altered massively since the pandemic began, from socially distanced supermarket checkouts, a surge in online spending and restaurants pivoting to offer takeaway services.
COVID-19 has forced many of us to question our lifestyle habits, with more time at home and less security about money, many people in lockdown developed a thrifty ‘make do’ mindset, with a focus on fixing and maintaining what they have rather than buying new. As a nation we spent more on gardening and DIY supplies, as well as hobbies, crafts and technology. It could be said that people started seeking activities that give them longer lasting feelings of wellbeing rather than the instant gratification of buying something new. It’s given people a chance to reconsider what they value the most — health, family and friends and suddenly the latest gadget may not seem worth spending money on. Instead we are opting to purchase affordable household value brands over premium label brands.
For others the pandemic brought a return to a simpler way of living, people have started to grow their own food and even cut their own hair; instead of hitting the high-street on a Saturday they are cooking, quizzing or going for a run. Psychological studies suggest that it takes as little as 18 days for new behaviours to become habits (2), this new perspective may lead to longer lasting changes to consumer spending habits, especially where there it is a catalyst to the fulfilment of an already long-held aspiration.
The pandemic has also been a wake-up call for people who although in secure employment, were living from monthly paycheck to paycheck and who now realise the risk of not having 3–6 months of rainy-day money to help tide them over emergencies. A recent study found that over three quarters of the participants said they have changed their attitudes to savings in light of COVID-19 (3). The same study also found over half of those surveyed said they had learnt about financial tools, price comparison platforms, savings platforms and investment opportunities over lockdown.
Generally, it is the renters, the self-employed and the oldest and youngest workers who are most likely to have had their finances hit hardest. Many people have already lost their jobs and other will need to make readjustments after government-guaranteed schemes finish. There will be naturally less consumer demand as people re-evaluate their financial position, considering the UK has officially entered into a recession.
E-commerce around the world, across sectors has surged this year as consumers looked for anything from cleaning products, coffee, vitamins, pet food and groceries online. It would seem we are also managing our finances more on-line too, even though most bank branches remained open through lockdown, Virgin Money saw online banking registrations almost double in the first week of lockdown in the UK (4).
Some industries however have suffered an alarming decline in revenue — hospitality, travel and transport have been hit hardest as travel restrictions were put in place and people have been socially isolating. Clearly COVID-19 has not impacted every industry equally and for some it could result in a much-needed revival but for others there is no choice but to play the waiting game. Regardless, every industry faces one universal truth: life after the pandemic will look significantly different.
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