COVID-19 has transformed consumer behaviour
Nearly a year into the pandemic, economists believe it’s abundantly clear that COVID-19 has psychologically and materially transformed Canada’s consumer behaviour.
But with lockdowns and restrictions still in effect across much of the country, business experts say the dust has yet to settle around these “tectonic shifts” in the state of commerce. That means for retailers–big and small; local or national–preparing a pathway to adapt beyond the pandemic remains a muddy prospect.
A new report by fintech firm PayBright released this week suggests the key to navigating future strategies for businesses is to use concrete data about where potential customers and clients stand in 2021.
Surveying more than 2,500 people from coast to coast, the 24-page study points to statistics that show how Canadians are approaching, and not approaching, their future shopping habits. Trends indicate significant changes have been seen in the “5 Ps” of consumer behaviour: products, payments, planning, place and psychology.
“If 2020 was a year of disruption and uncertainty for Canadians, this will certainly be the year of building safety, security, and long-term solutions,” said Wayne Pommen, senior vice-president of Affirm Holdings Inc., which owns PayBright. “This is especially crucial as Canadians gain access to vaccines and look ahead to living in a post-pandemic world.”
Findings in the report show shoppers are becoming increasingly discerning about where and how they spend their money.
Around 55% said they now read several product reviews before making a purchase, and 38% said they prefer to spend more money to purchase premium brands or products to avoid lower-quality items that do not last. Around 52% also said they are likely to avoid doing business with a brand that does not align with their ethics and values.
On top of that, the pandemic has caused people to hold back on their overall spending.
While 49% anticipated no significant change to their planned 2021 budget, 36% predicted a decrease and only 3% said they would increase their spending. From an age perspective, those most likely to experience a decrease in their 2021 budget are those in the 18-24 and 35-44 age ranges.
In terms of clothing and basics (such as groceries or pharmaceuticals), only about 10% of respondents said they would spend more in those categories. But 43% said they’ll be spending less on clothing versus only 22% for basics.
Authors of the report believe retailers with basics in their catalogue should emphasize essential products both in-store and online, citing a rise in earnings for supermarket chains who have done this. They also said stores should ramp up on their reviews because fewer of them could mean less likelihood of making a sale. Deals and sales, however, will continue to be significant drivers behind consumer purchases in 2021, they added, noting personal protection is almost just as important when it comes to in-store purchases.
“Frankly though, no matter what time period you compare this to, we haven’t seen trends like this ever before,” said Sylvain Charlebois, a leading supply chain expert who’s a professor at Dalhousie University. “COVID’s legacy is concerning because it’s pretty much changed everything.”
From skyrocketing e-commerce as businesses quickly moved online, to the lasting trends predicted for in-store shopping such as sanitization stations and social-distancing measures, Charlebois explained how none of those changes would have ever happened without the pandemic.
“Even if everyone does get vaccinated, people are just generally very risk-averse now,” he said. “That’s a massive psychological shift which translates to the fact that businesses will also not be taking risks by eliminating these measures anytime soon.”
Dan Pontefract, a strategist who consults for large companies like Salesforce and TD Bank, said businesses would need to get creative and unique with their solutions. “And it has to happen fast,” he said, “or they probably won’t survive.”
He also said creating the “perfect COVID shopping experience is incredibly important,” whereby customers can seamlessly be moved from shopping in-person to shopping online.
“Ultimately, it’s all about the consumer,” said Pontefract. “And for better for worse, what we do know is that they’re the ones making these trends go all over the place –so they’re the ones you should follow.”