Mar 18 How Consumer Behavior Is Changing Amid the COVID-19 Pandemic

It feels almost surreal to think that it’s been more than a year since COVID-19 first hit the headlines. However, with the vaccine rollout, there finally seems to be light at the end of the tunnel.

But questions remain over what the new normal will be. After a year, these behaviors feel so ingrained into us that it’s difficult to think of them as anything but irrevocable.

For businesses, the big question is how the COVID-19 pandemic has affected consumer behavior and whether those effects will continue once it has passed. Keep reading to find out more.

Changes in Consumer Behavior

We all know the havoc the pandemic has wreaked across economies globally. The FTSE 100 fell more than 14% throughout 2020, banks slashed interest rates and governments created huge stimulus bills to keep the economy afloat.

Now the dust has settled, there is a renewed sense of caution surrounding consumer behavior. While the original economic chaos can be contributed to the national lockdowns, many countries have tentatively lifted these measures. 

Despite this, economic uncertainty remains. Research from McKinsey suggests businesses are right to tread carefully. Their research suggests five key shifts in consumer behavior and sentiment.

1. The Initial Shift to Essential

The initial months of the pandemic led to panic-buying of the essentials. While this has died down over the past year, research suggests consumers will remain mindful of discretionary spending.

4 out of 10 Americans say their finances won’t return to pre-pandemic levels until the second half of 2021 or beyond. They also say they’re being more careful with their spending.

2. Shock Loyalty

The pressures that the pandemic has put on household income have led to somewhat of a phenomenon. Brands with excellent customer retention rates and customer loyalty felt the effects of this most. 

Some of this was due to supply chain interruptions at the start of the pandemic. As brands struggled to get products out to consumers, this led to many consumers switching to brands that could still manage this.

Consumers also shifted to brands with better value, as they spent more cautiously. Where consumers could save money and keep the same quality of product, they have.

Convenience has also been a huge contender in the new norm. Brands that can deliver fast were the big winners of the pandemic. This is how the King of Convenience Amazon, managed to double their net profit to $5.2 billion during an economic crisis.

The research states that this behavior is likely here to stay. 3 out of 4 US consumers have tried a new shopping behavior during the pandemic. With most participants stating they intend to continue this new behavior after the pandemic subsides. 

3. Homebody Economy

One of the biggest changes to our lives was the reality of staring at the same four walls all day. Work became remote, the shutters closed on shops and restaurants shut their kitchens down.

The good news is many consumers are eager to get back out into society and begin socializing again. But research suggests this in-home behavior may continue. While consumers are eager to see family and friends, many state they will keep the new in-home alternatives like online streaming and cooking post-pandemic.

4. Digital Growth Continues to Accelerate

All of the factors above led to a huge shift to digital consumption. Those who already shopped online moved the rest of their shopping habits to online. But it also led to a huge increase of new digital consumers across the US.

The research suggests that this will remain the new normal post-pandemic. Many consumers state they do not plan to revert their habits back to the pre-pandemic norm.

5. Travel

No industry was hit worse by COVID-19 than the travel industry. Though many have been given significant government assistance to get through the various lockdown restrictions, it may not be enough.

Research shows consumers globally plan to reduce holiday spending throughout 2021. While staycations are likely to do well from this, it’s bad news for airlines and the larger tourism industry.

How Permanent Are the Changes to Consumer Behavior? 

Other research backs up the idea that these changes aren’t going anywhere anytime soon. It states the pandemic has consistently impacted consumer behavior in 9 out of 10 participants. 

Further than this, the study shows consumers’ likelihood to shop online instead of in-store has increased throughout the pandemic. The convenience of online shopping has continued to attract more first-time online shoppers.

This is in spite of the fact that concern around COVID-19, although still high, has decreased considerably since last year. Specific concerns have shifted from health and economic concerns to concern over the inability to see family. 

All of this data suggests the new consumer behaviors are permanent. Consumers are less worried about the economy, less inclined to spend and where they do spend, are more likely to spend online. 

What Does This Mean for Businesses?

It might sound bleak for businesses, but it’s not the case. Businesses that will suffer are those who can’t keep up with the new norm. Those that can will thrive. 

What is important to keep in mind is that all of this was inevitable. The shift to digital has been occurring over the past decade, the pandemic has only accelerated it.

Most businesses are aware of the importance of their online presence already. It’s not brand new information.

But the change in consumer behaviors has increased the emphasis on businesses’ digital presence. Not only must they have one, but to compete they need to be their market leader in terms of convenience, value, and customer service.

What Will Happen Next With Consumer Behavior?

Consumer behavior learned throughout the pandemic seems set to stay, for the foreseeable future at least. For those businesses who wish to thrive, the digital experience you offer your customers will be vital in helping you do so.

We can help you improve your digital experience, scale your eCommerce and strategize your marketing. Get in touch for a free initial consultation.