Consumer behavior shifts due to COVID-19 may be permanent [REPORT]

By Andreas Marathovouniotis

A recent KPMG survey of 1,000 consumers in the U.S. revealed that consumer behavior and purchasing patterns are rapidly changing, and is impacting consumer and retail companies. As consumer-facing businesses adapt to the “new reality,” they face more challenges to innovate and reinvent their businesses to survive.

The survey found that:

•     49% of consumers said that they will not return to pre-COVID-19 levels of activity until there is a vaccine available.
•     Millennials saw an average of 47% reduction in their income.
•     Most consumers expect recovery within two years; however, there are significant numbers of consumers who believe the economy will not return to pre-COVID-19 levels.
•     Survey respondents indicated that consumer activities that migrated to online shopping due to COVID-19 will remain online in the future.

“Retailers need to rapidly re-evaluate their customer base, uncover the signals of permanent change and transform their business to meet customers where they are, in the new reality,” said Scott Rankin, Principal, Advisory, Strategy, KPMG LLP. “Strategies may include revised price, promotion and discount structures, as well as preparing leading digital platforms and applying advanced data and analytics to achieve greater efficacy.”

Three key themes have emerged from the consumer survey results:

1.      Consumers have been deeply impacted by COVID-19 and have uncertainty about  the recovery

•     Almost half have had their income negatively impacted as a result of the pandemic.
•     Wide range of views on recovery: both when economy and consumer spending returns to normal.
•      Significant shift in spending away from discretionary categories during lockdown.

2.      Four key consumer archetypes have emerged

•     “Hit hard and cutting deep” (~23% of our respondents): Heavily impacted by job loss and reduction of income. They were also in a difficult financial position prior to the pandemic.
•     “Proceed with caution” (~45% of our respondents): Less impacted by job loss but bearish on economic recovery. Still have not altered spend dramatically.
•     “Hunker down and save” (~27% of our respondents): Relatively affluent and most concerned with the economy. They are saving more and spending less on discretionary categories.
•     “Ready to roll” (5% of our respondents): Youngest group, spending more across categories despite some concern over the economy.

3.      Lasting changes regarding where and how consumers spend are underway

•     To maintain social distancing, consumers migrated online and plan to stay online.
•     Online shift is favoring scaled players (e.g., Amazon and Walmart).
•     Post lockdown, consumers expect to engage in smaller group activities like “seeing friends.”
•     However, businesses will have to make changes to attract customers (e.g., increase table spacing in restaurants, have staff wear masks).

To download report CLICK HERE.