Consumer Behavior

COVID-19 may impact US consumer spend for years to come

Photo by istock.com

July 27, 2020

The U.S. consumer is still spending on non-essential items as the coronavirus continues to spike again across the country, according to a Simon-Kucher & Partners study on consumer optimism and spending behavior.

That's despite a high level of uncertainty consumers are dealing with, according to a press release on the findings.

The study reveals 61% of U.S. consumers are uncertain regarding their financial outlook but are more optimistic than other consumers worldwide. China's consumers are the most optimistic, noted the data.

The number of U.S. consumers making non-essential purchases is higher than in the U.K. (54%) and China (55%), but not as high as Germany (73%).

Those who believe the pandemic will last a year or longer are cutting back on spending at restaurants and bars by 41%, as compared to only 17% by those who think it will be over in three months.

"What we are seeing is that are consumers are not so much cutting categories of non-essential purchases entirely, but more shifting the amount they are willing to spend or the frequency in which they make those purchases," Ricardo Rubi, global head of Consumer Goods & Retail at Simon-Kucher, said in the release. "Thus, brands need to make sure they have the right assortment and prices to capture this new behavior — having products that cover different price points and better stocking consumers up since they are not buying as often."

The study data noted that COVID-19-driven consumer behavior will likely last long after the health crisis ends.

"It makes sense that grocery and cleaning supply budgets will rise. The fact that people are otherwise anticipating cutting budget across the board tells us there may not be a quick bounce-back to 'normal' levels as we think," Vincent Duong, senior director at Simon-Kucher, said in the release. "Brands will thus need to plan for that and set their strategy and growth expectations accordingly — reviewing their assortment, reassess their promotional calendar, exploring new channels, and of course optimizing their pricing strategy."