The Conference Board finds split in pandemic consumer habits
Consumers were driven to digital convenience, frugality and some healthy habits during the pandemic, a recent report from The Conference Board, “Consumer Behaviors and Business Opportunities in the COVID-19 Era,” said. These three trends stood out among the findings, though The Board also found a number of contradictory behaviors in how consumers responded to the pandemic.
“For American consumers, COVID-19 has accelerated pre-existing trends and crystallized new preferences and priorities,” said Denise Dahlhoff, senior researcher, consumer research at The Conference Board. “The three trends promoted by the pandemic — digitally-enabled convenience, frugality and health and wellness — will continue to drive consumers’ behavior as the pandemic subsides. The most successful brands will be those that address these needs, ideally offering solutions for consumers that don’t force trade-offs but, rather, balance these three at-times divergent priorities.”
Pandemic stress drove unhealthy behaviors, but it also strengthened consumers’ focus on health, personal well-being and self-care, The Conference Board said. Due to the emotional pressures brought on by social isolation during the pandemic, many consumers turned to familiar coping mechanisms; drug and alcohol use, gambling, less healthy diets and under-exercising all rose during the pandemic. For trending “vices” like legal cannabis and online gambling, COVID-19 may prove to be a turning point toward broader consumer adoption.
At the same time, though, the health crisis and home-centered way of life brought on by the pandemic motivated many Americans to focus on healthier lifestyles, The Board also found. Regardless of where people fall on the spectrum of current health behaviors, the longer-term legacy of COVID-19 may be that health, wellness and self-care play an even bigger role in consumer decision-making. Digital health and fitness, in particular, have surged, from exercise apps and devices to telehealth counseling and therapy solutions. This trend creates opportunities for businesses to cater to people’s health needs, The Board said. It has already fed sharply-higher sales in natural products, fresh produce and anti-anxiety products and services — from medication to meditation, CBD products and aromatherapy.
Greater frugality and value-seeking forced on consumers by COVID-19’s economic shock may endure beyond the pandemic in significantly altered spending patterns, The Board also found. At the peak of the pandemic, 64% of U.S. consumers reported actively cutting back on spending, according to “The Conference Board Global Consumer Confidence Survey.” After a drop in late 2020, it was back up at 62% in Q1 2021. Frugality will continue to reign for many consumers, especially if the jobs recovery remains sluggish if and when government fiscal support recedes.
Black, Latinx, lower-paid and less-educated workers bore the brunt of lost jobs and wages, The Board reported. In January 2021, over 40% of consumers in each of these demographics reported having difficulty meeting regular household expenses.
Furthermore, nearly one in five grocery shoppers in a national survey last September reported buying more private-label goods to stretch their dollars during the pandemic. As in previous downturns, this change in spending patterns may be slow to reverse, with many likely to stick to cheaper products and sales channels over name brands even after their finances recover, The Board said.
The organization predicts that consumers’ focus on frugality will reward companies that invent novel offerings and business models catering to more frugal wallets. These include secondhand markets, rental services and “sharing economy” businesses — all likely to be facilitated by digital features.
Indeed, digital services have been one of the greatest growth sectors over the past year. The pandemic accelerated the move to digitized lifestyles, permanently raising expectations for convenience. Faced with pandemic lockdowns, consumers have become accustomed to digital capabilities that save time and effort in every stage of the customer journey. In both consumer and B-to-B industries, brands will need to meet new standards: “anytime–anywhere” access; real-time information; high-quality filtering, search and review functions; and responsive support across multiple channels, The Board found.
E-commerce surged during the pandemic, peaking at 16.1% of total retail sales in Q2 2020, the report said. This figure — a metric of where a purchase took place — dramatically understates digital’s true influence, though, The Board said. Consumers now expect digital convenience at every stage of the shopping experience, even if the final sale occurs in a brick-and-mortar outlet.
Mobile devices have also become the “remote controls” of many people’s lives, a decade-long trend intensified by the pandemic. As 5G networks proliferate, the centrality of mobile will only become more entrenched and must shape all business decisions in the post-pandemic economy, the organization added.
With these trends in mind, we may see businesses adapt in the coming months to better fit the demands of consumers.