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How Consumerism Changed After COVID-19: 3 Trends You Need to Know



Consumerism After COVID-19: Post-Pandemic Consumer Behavior Changes

The COVID-19 pandemic has been a global crisis that has disrupted the lives of billions of people. It has also changed the way consumers behave, shop, and spend their money. Some of these changes may be temporary, while others may last for years or even become permanent. In this blog post, we will explore some of the major trends and implications of the post-pandemic consumer behavior changes for the finance industry.

E-commerce boom

One of the most obvious and significant changes in consumer behavior during the pandemic has been the surge in online shopping. As lockdowns, social distancing, and health concerns limited physical store visits, consumers turned to digital channels to buy everything from groceries and essentials to clothing and electronics. According to a report by PwC1, more than 50% of the global consumers surveyed in June 2021 said they had used digital devices more frequently than they had six months earlier for online shopping. The report also found that the use of smartphones for shopping had more than doubled since 2018.

The e-commerce boom is not likely to slow down after the pandemic, as consumers have become accustomed to the convenience, variety, and safety of online shopping. According to a survey by McKinsey & Company2, more than half of the US consumers who tried new digital shopping methods during the pandemic said they intend to continue using them in the future. The survey also found that online shopping penetration had increased across all product categories, especially for groceries, household supplies, personal care products, and over-the-counter medicines.

The implications of this trend for the finance industry are manifold. On one hand, it creates new opportunities for online payment platforms, digital wallets, and fintech startups to offer fast, secure, and seamless transactions for online shoppers. On the other hand, it poses challenges for traditional banks, credit card companies, and retailers to adapt to the changing consumer preferences and expectations. For example, consumers may demand more flexible payment options, such as buy now, pay later schemes or installment plans. They may also expect more personalized offers, rewards, and discounts based on their online shopping behavior and data.

Value-consciousness and frugality

Another major change in consumer behavior during the pandemic has been the increase in value-consciousness and frugality. As the pandemic caused economic uncertainty, unemployment, and income loss for many consumers, they became more careful about how they spend their money. They reduced their spending on non-essential and discretionary items, such as travel, entertainment, dining out, and fashion. They also switched to cheaper or private label brands, shopped at one-stop-shop retailers or discount stores, and looked for deals and coupons online.

According to a report by GlobalData3, 69% of the global consumers surveyed in December 2020 said they were extremely or quite concerned about their personal financial situation due to the pandemic. The report also found that 40% of the consumers said they were spending less on non-essential items than before the pandemic, while 36% said they were buying more private label products.

The value-consciousness and frugality trend may persist after the pandemic, as consumers may remain cautious about their future income and savings. According to a report by Accenture4, 60% of the global consumers surveyed in April 2020 said they expect to make more careful spending decisions after the pandemic. The report also found that 64% of the consumers said they plan to limit food waste, 52% said they plan to shop more health-consciously, and 50% said they plan to buy more locally sourced products.

The implications of this trend for the finance industry are significant. On one hand, it creates new opportunities for financial service providers to offer budgeting tools, saving plans, investment advice, and financial education to help consumers manage their money better. On the other hand, it poses challenges for financial service providers to retain customer loyalty, as consumers may switch to cheaper or alternative providers or reduce their usage of certain services or products. For example, consumers may opt for debit cards instead of credit cards, use peer-to-peer lending platforms instead of banks, or cancel their insurance policies or subscriptions.

Digital adoption and innovation

A third major change in consumer behavior during the pandemic has been the acceleration of digital adoption and innovation across various aspects of life. As the pandemic forced consumers to stay at home and work remotely, they embraced digital technologies to connect with others, learn new skills, entertain themselves, and access various services. According to a report by McKinsey & Company2, US consumers adopted digital technologies at a rate that would have taken three years under normal circumstances. The report also found that US consumers increased their usage of video conferencing, streaming services, online gaming, e-learning, telehealth, and online fitness during the pandemic.

The digital adoption and innovation trend is likely to continue after the pandemic, as consumers have discovered new benefits and possibilities of using digital technologies. According to a report by Accenture4, 75% of the global consumers surveyed in April 2020 said they expect to increase their use of digital technologies after the pandemic. The report also found that 46% of the consumers said they plan to work more from home, 44% said they plan to use more online learning platforms, and 43% said they plan to use more online health and wellness services.

The implications of this trend for the finance industry are enormous. On one hand, it creates new opportunities for financial service providers to leverage digital technologies to offer more convenient, accessible, and personalized services and products to consumers. On the other hand, it poses challenges for financial service providers to keep up with the rapid pace of digital innovation and disruption, as well as the changing consumer needs and expectations. For example, consumers may demand more digital banking options, such as mobile apps, chatbots, biometrics, and robo-advisors. They may also expect more digital financial solutions, such as cryptocurrencies, blockchain, artificial intelligence, and big data.

Conclusion

The COVID-19 pandemic has changed consumer behavior in profound and lasting ways. The e-commerce boom, the value-consciousness and frugality trend, and the digital adoption and innovation trend are some of the major changes that have implications for the finance industry. Financial service providers need to understand these changes and adapt their strategies accordingly to survive and thrive in the post-pandemic world.

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