4 Ways COVID-19 Is Impacting Shopping Habits
The coronavirus (COVID-19) is already having a material impact on consumer behaviour. Consumers that have never purchased groceries online before are trying it for the first time. In a country like China which appears to be on the other side of the pandemic, the quick and lethal toll of the virus has consumers focused on their health and wellness like never before.
At a macro level retail spending could rebound within one or two quarters. It is predicted that post pandemic spending will follow a pattern similar to what happened in the aftermath of the spread of the Severe Acute Respiratory Syndrome (SARS). SARS took place in the early 2000s infected 8,000 people and killed nearly 800 people globally. Two months after retail sales bottomed out in China due to SARS spending was back at pre-SARS levels. But COVID-19 is much more contagious than SARS and more than 500,000 people globally have contracted the virus. That means the recovery will likely take longer.
But as retail spending recovers certain shifts in consumer behaviour will likely take place. These shifts include increased spending online for food and beverages, increased demand for healthier products, more conservative spending, and avoidance of densely populated areas such as busy restaurants and movie theatres.
1. Increased online shopping
Before the COVID-19 pandemic online shopping for food and beverages was one of the least penetrated eCommerce categories. In 2019 only 3.2% of consumers in the United States purchased food and beverages online. Most people prefer to see and touch their produce before buying it. This is one of the reasons Amazon purchased Whole Foods and why it is opening a new supermarket chain this year.
But the spread of the coronavirus has caused a material shift in behaviour. Due to quarantine restrictions more and more consumers are going online to shop for their groceries. For example, on Sunday March 15, 2020, downloads of Walmart’s grocery app, increased by 160% versus one year earlier. This behavioural shift is also taking place amongst older people. "We are seeing a larger percentage of customers over the age of 60 that are coming online," said JJ Fleeman, Chief Ecommerce Officer at Ahold.
As more and more consumers shop online for groceries and experience how easy it is and how convenient it can be more people are expected to use this service in the future. A shift in behaviours within this category which experts thought would take many more years is suddenly happening now.
2. Increased demand for healthier products
As with any life-threatening situation it makes people pause and take stock of their life. In China, purchases of vitamins, minerals and supplements quickly spiked after the onset of the pandemic. Now that consumers are more aware of their mortality it is likely that they will continue to be more health conscious in the future. For example, 75% of Chinese consumers surveyed said they will adopt a healthier lifestyle as a result of the pandemic.
Speaking about changes in consumer behaviour post SARS, Ryan Zhou, Vice President, Consumer Packaged Goods, Nielsen China said “health and hygiene is a natural habit shift post epidemic, and we observed a continuous boom in this area after SARS. Now is a key time for brands to consider upgrading for health and hygiene concepts”
The health and wellness trend has gained steam over the past several years with the global wellness market growing at a rate of 12.8% between 2016 and 2018. COVID-19 will only boost consumers’ focus on this area.
52% of Chinese consumers surveyed said they will look for foods or medicines that will strengthen their health and boost their immunity. It is also expected that there will be a demand for more clean products. This is a movement that has been going on for some time. For example, Sephora launched Clean at Sephora in 2018, an initiative aimed at selling products that are free of toxic ingredients.
Do you like this content? If you do subscribe to our retail trends newsletter to get the latest retail insights & trends delivered to your inbox
3. More conservative spending in the short term
The coronavirus caught the world off guard. No one was expecting it. Millions of people are expected to lose their jobs and a quick and scary collapse of the stock market put a spotlight on the financial health of consumers around the world. Such an event will make people more aware of the importance of saving especially those who are most in need.
A survey found that 38% of Chinese consumers plan to save more in the future as a result of the COVID-19 pandemic. More saving means deferred purchases and likely those that are of a discretionary nature. Another survey found that 41% of Chinese consumers will also reduce overall spending to deal with uncertainty.
4. Avoidance of densely populated areas in the short term
Although China has eased its quarantine restrictions people are still scared about spending time in dense areas such as restaurants. They are worried about the virus coming back and understandably want to protect themselves. This behaviour will not last forever but in the short term it will impact retail sales. Speaking about the coronavirus in China, Tim Cook, CEO of Apple said: “work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated.”
Kai Ostwald, an Assistant Professor at the University of British Columbia’s School of Public Policy and Global Affairs who wrote a report on the impact of SARS said that: "specifically, fear of contagion prompted widespread aversion behaviour, in which people significantly reduced activities that put them in close proximity with others. This included not only things like flying and eating in restaurants, but also activities like workplace and school attendance."
So far post pandemic behaviour in China is following this trend. 40% of Chinese consumers surveyed said that because of the pandemic they will choose low density communities which thus will have lower epidemic rates. And recently 500 movie theatres opened in China after being closed for close to eight weeks due to COVID-19 and collectively they made only 30,000 yuan ($4,245)
But over the long term retail spending will return to normal. Although the coronavirus is expected to have a larger negative impact than SARS looking at retail spending pre and post the SARS outbreak demonstrates that in time retail sales will bounce back.
