More shoppers, uncertain of their financial security in the COVID-19 crisis, are cutting back on spending and avoiding even the temptation to buy unnecessary items. Old staples are new no-no’s, so a new burden is on retailers and brands to help shoppers feel good about the spending choices they do make. Here’s what our own research, from past crises, can teach us.
Canned Chickpeas are In; Pricier Chickpea Pasta is Out
These are among the kinds of products shoppers are likely seeking out, or avoiding, during the COVID-19 pandemic. Motivated by financial insecurity that has no certain timeline, we predict millions of Americans will soon be rethinking the items on their shopping lists and trading down on favored brands and products to choices that better fit their tighter budgets.
Our past research into how shoppers respond in a financial crisis bears this out. From the early 2000s dot-com bubble to the housing crisis to the 2008 global recession, consumers have proven to be extraordinarily resilient, changing and adapting their behaviors with each event – and in turn altering how brands and retailers meet their needs.
Now, in the Midst of COVID-19, Shoppers are Doing it Again
American shoppers know how to manage in a recession. So we conducted fresh research to gauge how shoppers are reacting to the COVID-19 pandemic and lockdown, and then compared it to our research results from financial crises in the past.
What we found is the newly competent consumer is already emerging: 52% of shoppers told us they are proud of how they are managing in the crisis, but their financial uncertainty is also coming through. According to our report and recent webinar, How America Shops® In a COVID-19 Crisis:
- 33% of shoppers are avoiding websites that might tempt them into unnecessary purchases.
- 51% are already asking themselves before making a purchase, “Is this a smart use of my money?”
- 51% are cutting back all together, uncertain of what their future holds.
Past Crises Hint at Even More Belt Tightening
Yet while the rate of shopper caution is high, it is likely rising further even as you read this, if the results of our earlier crisis-related surveys are an indication.
For example, results of our 2009 How America Shops ® shopper survey, following the global recession, reveal that 64% of respondents questioned if a desired purchase was a smart use of money (compared with 51% of today). More than half – 54% – avoided tempting stores and websites, 21 percentage points above today’s 33%.
These high figures hint at what we should expect, and what retailers and brands should consider when building appropriate shopper relationships for these times.
The ‘Feel-Good’ Business of Retail Must Adapt
The implication is stark: We have less control over the activities and preferences we long took for granted, so shoppers are laser focused on controlling whatever choices remain, such as how they spend their money.
We also should recognize that each crisis underscores the same lesson: To survive, retailers and brands need to be equipped to adapt as fast as their customers do. This is what we suggest:
- Help shoppers be responsible. Retailers and brands should help their shoppers feel good about how they are spending. This requires showing that they understand the shopper’s struggle and staying in touch with changing ideas of what shoppers “need.”
- Let them trade up or down, but not out. Marking down prices is not always the best response to cost consciousness. If there is one lesson we learned about the dangers of always being on sale, it’s that people prefer to know they are getting a good value, and that sometimes, value can be worth paying a little more for.
- Create a community. Retailers and brands have an opportunity to prove they care about their best customers now – and those that can will likely leave a lasting imprint. This means gearing up for omni-shopping and being where shoppers need them to be – fast – as well as creating shopping environments, and offerings, that reinforce wellness.
Read more of our research, and other materials here.