Buyers wearing protective masks leave a Hennes & Mauritz (H&M) store in the Herald Square area of New York, USA, on Thursday, August 6, 2020.
Nina Westervelt | Bloomberg | Getty Images
As more people receive the Covid-19 vaccine, corporate leaders and investors are asking themselves a new question: What will consumer spending look like next?
About a third of the US population has received at least one dose of the Covid-19 vaccine. Airport and store traffic is rising. And some economists predict a major boom that could last for years.
Even so, the global health crisis will continue to shape the mentality of consumers and their purchases.
Here are four predictions of post-pandemic trends, based on expert surveys and reports:
Consumers are still impatient – and this can influence what they buy and how they buy.
Even after you get beaten up, Americans’ health and safety concerns are likely to persist. The US has the highest level of consumers who are “most anxious” about their health and finances, and China has the lowest levels, according to a January survey and analysis of more than 7,000 consumers in nine countries. to the consulting firm AlixPartners.
In the US, nearly one in three consumers reported being extremely or very concerned about physical health, and about one in four said they were extremely concerned about mental health, according to a report released in early April.
For retailers, these concerns may increase the importance of maintaining safety protocols, such as more rigorous cleaning.
Target said it will influence safety in its future store design. Chief Operating Officer John Mulligan said one investor day in March that the retailer will include more contactless functions in toilets and other places and add more space so people can be spaced between goods and payment slots.
Food shopping can be one of the most sticky changes in the pandemic.
Home offices, boarding and many cooking practices – all will take into account people’s food shopping habits in the future.
According to the AlixPartner survey, the restaurant and travel will be the slowest to go back. Among American consumers who reported permanently changed habits, 30% said they plan to spend more on groceries and 44% said they will spend less on meals after the vaccine compared to what they spent in those areas before pandemic.
General Mills CEO Jeff Harmening said many Americans used to eat at restaurants on business trips or dine in the coffee shop. This dynamic of frequent jets, frantic trips and lunches over the table from colleagues has disappeared.
“People want flexible programs,” he told investors last week in a earnings call. “While consumers are making more holiday plans now than they have, business people won’t travel as much as technology has caught up and we realize we can do a lot of things remotely.”
The way people store their pantry also looks different. Prior to the health crisis, about 7% of food purchases were made online, according to a report by the Mastercard Economics Institute. That share is expected to grow to around 9% of food sales in the future. If this happens, the food industry will be holding back 70% to 80% of the digital gains it saw during the peak of the pandemic.
According to a report by the Mastercard Economics Institute, it is estimated that grocery stores and discount stores, such as wholesale clubs and dollar stores, will show the most dramatic and permanent gains in e-commerce emerging from the pandemic.
Customers are warming up to this approach, even if there may be a barrier to trust, Mastercard chief economist Bricklin Dwyer said in an interview with CNBC’s “Worldwide Exchange” on Tuesday.
“You have to trust someone else to pick your peaches,” he said. “You have to trust someone else to deliver your goods and keep them good when they arrive. So that’s really some of the barriers we’re going through.”
Teenagers and twenties can be the first wave of eager buyers.
Young consumers want to go out again – and start spending and dressing appropriately.
As after the Great Recession, teenage girls are in first place as they open their wallets after the latest pandemic recession, according to a survey conducted by Piper Sandler on teenagers and twenties. The 41st semester period “The balance with adolescents”. Nearly 30% of high-income women ‘s wallets go to clothing – an unprecedented value since 2013, according to the report. Expenses for handbags rose to $ 93 per teenager, an increase of 4% year-on-year.
Chip Bergh, CEO of Levi Strauss & Co., told CNBC on Thursday that the pandemic has inspired the fashion that young customers also accept. Instead of slipping into skinny jeans, he said they would denim with wider and wider legs.
“It’s not the first time we’ve seen this resonate with consumers,” Bergh said. “Cycles come and go. And I think the pandemic has certainly played a role in helping consumers looking for a more comfortable and relaxing denim.”
Nearly half of young shoppers surveyed by Piper Sandler said they plan to fly a plane in the next six months, up from 33 percent in the fall.
Among generations, Gen Z is also the most enthusiastic about spending time with people outside their households once they are vaccinated, according to a survey of more than 15,000 people in nine countries by the IBM Institute for Business Value. Nearly 30% of Gen Z respondents said they intend to interact with other people more than they did before the pandemic, compared to Gen X and those over 55 who intend to return to pre-pandemic interaction levels.
Contactless ways of shopping and eating will remain popular, even if the virus disappears.
Buyers may have opted for drive-thrus pickup and curb because of safety over the past year. However, they have discovered the convenience of the approach and this will make them come back while juggling again with more complete calendars, shuttles and children’s car parks.
Retailers have increased their investment to adapt their e-commerce business. Best Buy tests stores that dedicate more square feet to fulfilling online orders than displaying flat-screen TVs and smartphones. Walmart and Kroger have both announced plans to invest in automation to keep up with the volume of online grocery orders. Walmart is adding high-tech automated systems to dozens of stores and Kroger plans to open at least 11 giant facilities with Ocado. Kroger’s first two sheds will open in the next few weeks.
“As the company has jumped into a new digital age, so has Kroger,” Rodney McMullen, the CEO, said last week in an investor day. He said the company will double its digital sales by the end of 2023.
And the restaurant chains have caught attention. McDonald’s is closing hundreds of restaurants in Walmart stores, and chains such as Sweetgreen and Shake Shack have announced plans to add lanes as diners choose to order from inside their cars. Chipotle Mexican Grill said it is accelerating plans to add even more “Chipotlane” to its footprint.
Even as its dining halls reopen, Chipotle chief financial officer Jack Hartung said online sales remained strong.
“The pandemic, of course, really put some turbulence behind our digital business, but as we start to see Covid move behind us – and we still have a way to go – we keep most of the digital business, about 80 percent, “Hartung said in an interview with CNBC’s Closing Bell on Friday.