The outbreak of COVID-19 has caused many consumers to change their shopping behaviors and preferences. Therefore, the consumer mindset is completely different than it was before. This shift has caused consumers to toss their preferences and loyalties aside, purchasing new brands and channels. Changes to consumers shopping that are because of the Coronavirus are likely here to stay. As a financial advisor, you must understand how potential and current clients are processing purchasing goods and services in the new normal that we are living. Now, we will take a closer look into five trends that we are seeing in consumers.
Increase in Ecommerce
Over the past few years, the rise of e-commerce has been on a steady flow upwards. With the recent social distancing implementation, e-commerce has become the one-stop-shop for many consumers to purchase their goods. Thus, e-commerce is growing among all industries. Many industry categories have seen a 10% growth in online consumer shopping since the pandemic. CNBC compiled data that shows the spending of e-commerce in the U.S. has increased more than 30% from the start of March through April, compared against the same period as last year. Additionally, consumers are adapting to online shopping and the convenience of it, e-commerce is going nowhere, and the number of consumers purchasing their goods and services this way will only keep increasing.
Loss of Loyalty
Companies spent millions of dollars on creating a seamless customer experience that builds brand loyalty. According to a consumer research report, 44% of shoppers in the U.S. tried at least one new brand during the pandemic because their typical brand was sold out, or delivery time was too long. Covid-19 also caused a significant shift in the supply-chain distribution, making various products out of stock, backorder, or unavailable. Consumers were forces to look elsewhere for the products they typically shopped for when this disruption occurred. Thus, they had to move away from their preferred products and retailers. Many consumers had to shop with a new mindset, one that prioritized simply getting the products they needed over what they may prefer. Many consumers had to toss their brand loyalty aside and venture out to trying different products from different retailers.
Value on Essentials
Many Americans were left suffering from a loss of finances throughout the pandemic. One contributing factor in lower finances was that over 40 million Americans lost their jobs and filed for unemployment. Consumer spending has dropped. Mckinsey has reported that “about 40% of consumers in the U.S. have reduced their general spending, and will keep cutting back on nonessentials”. Not only are consumers cutting back on overall spending, but they are also looking for the best value. For example, instead of buying name brand items, consumers are reaching for off-brand items that essentially give them the same solution to their pain point but for less. The consumer mindset is focused a lot more on essential items than ever before.
Conclusion
As an independent financial advisor running your own business, it is crucial to understand how the pandemic has shifted the mind of the consumer so you can make sure you are continuing to target your audience adequately. This consumer mindset shift is likely to stick around for a long time to come.
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Sources
Shifting U.S. Consumer Behavior in the Face of COVID-19
U.S. Savings Rate Hits Record 33% as Coronavirus Causes Americans to Stockpile Cash, Curb Spending
