Four ways to change consumer spending once people are vaccinated

As more people receive the Covid-19 vaccine, corporate leaders and investors are asked a new question: what will consumer spending look like next?

About a third of the American population has obtained at least one dose of the Covid-19 vaccine. Traffic from airports and shops is increasing. And some economists predict a big boom that could last for years.

However, the global health crisis will continue to shape the mentality of consumers and their purchases.

Below are four predictions of post-pandemic trends, based on surveys and expert reports:

Even after being punched, Americans ’concerns about health and safety are likely to persist. The United States has the highest level of consumers who are “most anxious” about their health and finances, and China has the lowest levels, according to a January survey and analysis of more than 7,000 consumers in nine countries. the consulting firm AlixPartners.

In the United States, nearly one in three consumers reported being extremely or very concerned about physical health, and about one in four said they were extremely or very concerned about mental health, according to the report released in early December. ‘April.

For retailers, these concerns may increase the importance of maintaining security protocols such as having more rigorous cleaning.

Target said it will consider security in the future design of its store. Chief Operating Officer John Mulligan said on an investment day in March that the retailer will include more contactless features in restrooms and other places and add more space so people can have space between merchandise and cash lanes. .

Home offices, sidewalk pick-up and lots of cooking practice will all take into account people’s food buying habits in the future.

According to the AlixPartner survey, food and travel to the restaurant will be the slowest until recovery. Among American consumers who reported permanently changed habits, 30% said they plan to spend more on groceries and 44% said they will spend less on food after the vaccine compared to what they spent on these. areas before the pandemic.

General Mills CEO Jeff Harmening said many Americans used to eat at restaurants on business trips or dine at the work cafeteria. This dynamic of frequent jet-setting, frantic displaced displacements, and lunches across the table of co-workers has faded.

“People want flexible hours,” he told investors last week in a profit call. “While consumers can now make more holiday plans than they have, employers won’t travel as much because technology has caught up and we realize we can do a lot of things remotely.”

The way people store their pantry also looks different. Prior to the health crisis, about 7% of grocery purchases were made online, according to a report by the Mastercard Economics Institute. This share is expected to increase by around 9% of grocery sales in the future. If that happens, the food industry will have retained 70% to 80% of the digital gains it saw during the pandemic peak.

According to a report by the Mastercard Economics Institute, supermarkets and discount stores, such as wholesale clubs and dollar stores, are expected to show the most dramatic and permanent e-commerce gains coming out of the pandemic.

Customers are heating up with the approach, although there may be a barrier to confidence, Mastercard chief economist Bricklin Dwyer said in an interview Tuesday on CNBC’s Worldwide Exchange.

“You have to trust someone else to choose the peaches,” he said. “You have to have confidence that someone else will deliver your goods and have them good when they arrive. So it’s really some of those barriers that we’re going through.”

Young consumers want to go out again and start spending and dressing accordingly.

Just like after the Great Recession, teenage girls paved the way as they opened the wallet after the most recent pandemic-related recession, according to a survey conducted by Piper Sandler on teens and twenties. 41st semester “Taking stock with teenagers”. Nearly 30% of the portfolios of high-income teenage women go to clothing, a figure not seen since 2013, according to the report. Expenditure on handbags rose to $ 93 per teenager, a 4% year-over-year increase.

Levi Strauss & Co. CEO Chip Bergh told CNBC on Thursday that the pandemic has also inspired the fashion that young customers also accept. Instead of expressing himself with skinny jeans, he said they want a wider, wider leg jeans.

“It’s not the first time we’ve seen this resonate among consumers,” Bergh said. “Cycles come and go. And I think the pandemic definitely played an important role for consumers looking for a more comfortable and relaxing jeans.”

Nearly half of the young shoppers surveyed by Piper Sandler said they intended to fly on a plane over the next six months, up from 33% in the fall.

Among generations, Gen Z is also the most enthusiastic about spending time with people away from home once vaccinated, according to a survey of more than 15,000 people spread across nine countries by the IBM Institute for Business Value. Nearly 30% of Gen Z respondents said they plan to interact with other people more than before the pandemic, compared to Gen X and those over 55 who expect to return to pre-pandemic interaction levels.

Buyers may have opted for drive-thrus and sidewalk collection for safety over the past year. However, they have discovered the convenience of the approach and this will make them come back as they juggle calendars, travel and children’s car sharing again.

Retailers have increased their investments to adapt their businesses to e-commerce. Best Buy is testing stores where it spends more square feet fulfilling online orders than displaying flat-screen TVs and smartphones. Walmart and Kroger have announced plans to invest in automation to keep up with the volume of grocery orders online. Walmart adds high-tech automated systems to dozens of stores and Kroger plans to open at least 11 giant facilities with Ocado. The first two Kroger cutlery will open in the coming weeks.

“As society has jumped into a new digital age, so has Kroger,” CEO Rodney McMullen said at an investors ’day last week. He said the company will double its digital sales by the end of 2023.

Restaurant chains have also taken the lead. McDonald’s closes hundreds of restaurants in Walmart stores and chains like Sweetgreen and Shake Shack have announced plans to add access lanes as diners choose to order from inside their cars. Chipotle Mexican Grill said it is also speeding up plans to add more “Chipotlanes” to its footprint.

As the dining halls reopen, Chipotle chief financial officer Jack Hartung said online sales have remained strong.

“The pandemic, of course, really put a little bit of turbocharging behind our digital business, but as we begin to see Covid move behind us – and we still have a long way to go – we keep most of this digital business, about 80%, “Hartung said in an interview with CNBC’s” Closing Bell. “