How Shopping Habits Changed Due to COVID-19

E-commerce and contactless payments are here to stay

The COVID-19 pandemic forced everyone to change the way they shop. Whether you were a fan of online shopping or in-store browsing, the pandemic altered routines in many obvious, and some not so obvious, ways. Grocery store shelves were quickly emptied of toilet paper and cleaning supplies as everyone scrambled to stock up amid the global lockdown. As the lockdown continued, supply chains tightened, cleaning supplies were increasingly hard to come by, and everyone was scrambling to find basic food staples and necessities.

An interesting side effect was how quickly brand loyalty fell by the wayside. In fact, 40% of consumers said they switched brands during the pandemic, according to McKinsey & Company research.

As shoppers grew accustomed to waiting in lines, online shopping and curbside pickup also became the norm. With vaccines now being administered and the economy reopening, there are some post-pandemic shopping trends emerging:

  • There has been a steady increase in hand sanitizer sales.
  • Travel to see family and friends is being prioritized over international trips.
  • Cooking from home is benefitting grocery stores.
  • Consumers are being selective about retail spending.
  • There is a rising demand for e-commerce and contactless payments.

It’s not just what we buy, but also how. It turns out that 48% of consumers say their shopping habits have been permanently changed by the pandemic, according to a January 2021 survey conducted by AlixPartners.

Key Takeaways

  • There was a bump in grocery store buying as consumers grew accustomed to eating at home.
  • With an emphasis on health, cleaning supplies and hand sanitizer continue to be in demand.
  • Travel is on the to-do list depending on the speed of vaccinations, but many are wary of air travel and international destinations.
  • Retail sales are seeing a bump as more workplaces ease restrictions and more people seek in-person socializing with family and friends.
  • Contactless payments are here to stay.

Spending Patterns Are Starting to Change

While there has been pent-up demand as those who could saved money, a rush to spend by vaccinated people has not yet materialized, according to reporting by the Wall Street Journal. A March 2021 survey conducted by Experian did find, however, that consumers spending habits are changing somewhat, with 11% saying they are spending more on clothing now than before the pandemic, while spending on groceries and in-home entertainment were both down 7% from March 2020. And with a renewed focus on health, hand sanitizer and other cleaning supplies continue to be in high demand. In fact, the global hand sanitizer market is expected to grow at a compound annual growth rate (CAGR) of 22.6% from 2020 through 2027.

Travel is another evolving area. While there is an increasing desire to get out and about, most travelers are keen to visit friends and family first, with only about one-third considering a leisure vacation. Vaccines will likely be the biggest driving force behind a travel recovery, with 74% of Americans saying they would be willing to sign up for some version of a vaccine passport or an app to show airlines and border officials their vaccine status.

Beyond travel, the way we eat has also shifted during the pandemic. As restaurants were forced to shut down, cooking at home became more commonplace and cost effective in many cases. Although more people are starting to dine out (both indoor and outdoor) again, home cooking seems like it will stay on the menu as well. A recent survey showed 14% of respondents saying they planned to increase their grocery-store buying. In fact, 43% in a recent EY survey said they expect to cook at home more often. That’s good news for grocery stores, many of which faced supply-chain shortages and were forced to pivot to online orders, delivery, and contactless payments. 

It’s unclear whether delivery options will even out or evolve, as some consumers resume in-store visits. However, one thing is certain: The rise in online shopping and contactless payments has provided a huge opportunity for grocers, and those numbers are expected to continue growing. Online grocery sales are predicted to top $250 billion by 2025. That's up 8% from pre-pandemic levels and accounts for 21% of total grocery sales. That doesn’t mean shoppers are abandoning their local market. One 2021 survey found that 95% of shoppers did some form of hybrid grocery shopping three months post the first wave of the pandemic. Also worth noting on the loyalty front is that 34% of those who shopped online used more than one service, signaling a trend that best deals may continue to beat out brand loyalty.

Retail Sales Bouncing Back

Retail sales are starting to rebound as companies begin to make plans for bringing employees back. That means no more sweatpants—or at least only while you’re on the remote rotation. Even for those not looking to spruce up their work wardrobe, there’s a desire to snap up some new outfits for in-person social gatherings. 

The vaccines are a big driver behind all the renewed activity. “We are very optimistic that healthy consumer fundamentals, pent-up demand, and widespread distribution of the vaccine will generate increased economic growth, retail sales, and consumer spending,” said National Retail Foundation President and CEO Matthew Shay in a statement. Still, consumers are divided by how eager they are to shop, with 50% saying they plan to splurge on clothing and other retail items, while the other half is waiting a bit longer for the pandemic to wane further.

U.S. retail sales jumped 23.3% in April, with online sales growing nearly 20%, according to Mastercard SpendingPulse. And department store sales surged more than 200% in April as shops reopened and people began looking forward to sprucing up their wardrobes for both work and play. Online, shoppers were spending the most on clothing, with sales rising more than 61% in April.

Regardless of what people are buying, e-commerce is expected to lead the way. Even brick-and-mortar shops that previously had little to no e-commerce plan in place transformed how they served consumers during the pandemic. That’s a trend that’s likely to stay and continue evolving.

Contactless Payment Options Are Here to Stay

One of the biggest changes to emerge from the pandemic is the rising interest in contactless payment options. Nearly two-thirds of consumers who previously said they wouldn’t have been keen to try new forms of payment under normal circumstances did just that during
the pandemic, while some 93% of consumers now say they are willing to try new payment systems that include everything from quick response (QR) codes to biometrics to digital payments. Indeed, according to Mastercard, there were nearly one billion more contactless payments made during the first quarter of 2021 compared with the same period of 2020.

Even more convincing is that 74% of those who used contactless payments during the pandemic plan to continue doing so. “The pandemic made us think differently, partly out of necessity,” said Craig Vosburg, chief product officer at Mastercard, in a statement. “To deliver the choice and flexibility that consumers need—and increasingly expect—retailers worldwide need to offer a range of payment solutions that are easy to access and always on.”

The Bottom Line

The COVID-19 pandemic changed much about how Americans live their lives, and some of those changes look likely to remain in place once it’s over. The U.S. won’t be returning to normal; rather, it will be creating a new normal. When it comes to how we shop, one thing is clear: Geography is no longer the barrier it once was. E-commerce and contactless payments are now here to stay.

 

Article Sources

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