Retail Trends

Coronavirus Impact on Consumer Spending

*This article was originally published on August 6, 2020

Last week the US posted its worst quarter on record. With an historic GDP drop of -32.9%, retailers face a steep uphill battle to capture consumer spend. Yet, even among the numerous market demands, there are still positive signs, notably the 5.6% increase in consumer spending throughout the month of June

Overall, it is unclear what consumer spending and economic recovery will look like. However, five months into the US response to the COVID-19 pandemic, we are beginning to see some clear consumer trends that present new opportunities to retailers. 

Increased digital wallet adoption

In a recent report released by Blackhawk Network, 55% of US consumers are now using digital wallets, compared to the reported 38% before the pandemic. Further, Blackhawk reports over half of shoppers have purchased or received a digital gift card with many reporting purchasing gift cards for self-use. Key priorities consumers are concerned with when adopting a digital wallet include security, reliability, and no fees. As consumers continue to consider alternative payment methods to traditional cards or cash, brands with mobile wallets need to include these identified priorities to help usher customers to adopt their platform. 

Expanded mobile app usage

According to a recent TechCrunch article, mobile app usage increased 40% when compared to Q2 in 2019, with in-app spending hitting a record high of $27 billion. This increase in mobile app usage and spending is likely due to increased social distancing practices and consumers spending much more time on their devices. While much of the increased spending is attributed to games, Apple reports that 35% of app spending is connected to non-gaming apps. This means retail and dining apps are in fact capturing this shift in consumer spend. In fact, since the pandemic started, 61% of consumers reported making purchases within a retail app.

Recovery varies by area

In order to make the most informed and strategic decisions, it is imperative that national retailers look at promotions and plans at a regional or state level. Just as US states are experiencing COVID-19 case spikes at different times, brands need to plan to capture consumer dollars in different regions at different times. Brands can no longer reference historical data in planning. Access to data and easily managed promotional tools are necessary pieces brands need in order to capture recovery spending the moment it starts. 

Increased engagement opportunities are essential for success

It used to be that six months ago brands were discussing how to get in front of customers in the age of unending promotional messages. Brands still have that same problem, but now it is compounded with concerns associated with the current pandemic. It is not enough for brands to assume that they can rely on prior brand equity or expect consumers to maintain their same shopping habits as before. For example, a customer’s weekly after school Tuesday grocery shopping trip may no longer exist because the kids are now doing e-learning. Brands need to find new ways to be in front of consumers at different times and in new channels or they risk being forgotten. 

Because many customers no longer have their pre-pandemic routines, we’ve seen that pre-pandemic engagement strategies will not work. With consumers being more conscious of their spending habits, brands need to shift their strategy to incorporate opportunities for engagement to develop brand affinity and loyalty so the brand is top of mind when a consumer is ready to make a purchase. The most efficient way to capitalize on the current market is to maximize opportunities with B2B partners. Placement in these programs not only increases brand exposure but also facilitates an easy way for consumers to commit spending dollars to the brand before they shop. 

Personalization is a top priority

The topic of personalization has been a growing trend for both large and small brands in order to create positive brand affinity. Consumer acceptance and expectation of personalized messaging is at an all time high; a recent article from Media Post reports 43% of surveyed consumers say it is important for ads they see during COVID-19 be personalized. Tools such as AI and channels that allow the creation of data-driven personalized promotions will be lifelines for all brands going forward.

Ultimately, many of the shifts in consumer behavior driven by the COVID-19 pandemic are not new or unexpected–they are trends we have seen through the years. This pandemic, and the associated economic fallout, has rapidly shifted these trends from being idealized best practices to essential strategic pieces. Now is the time for retailers to look beyond traditional marketing strategies and partnerships to find new outlets that capitalize on these trends.

As Head of Merchants at Prizeout I’m encouraged each day at how our brand partners are able to utilize our platform and data insights in order to not only increase their customer base, but do so in a way that is in-line with their brand and supporting their unique goals.  

If you’d like to learn more about how your brand can be a part of this new platform, reach out on LinkedIn or email me at holly@prizeout.com.

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