Consumers More Open to Spending, but Less Comfortable Entering Stores

A report from financial services firm Cowen, which polled 2,500 U.S consumers in mid-May, found that 76% of respondents expect to spend either the same amount or more in the upcoming month. That’s up 10 points compared to mid-April, when 66% said the same.

Among the survey participants, 65% said they received a stimulus check. The majority (63%) of this subgroup plan to either save the extra income, use it to pay down debt or put it toward housing costs. In other words, it won’t get used on discretionary goods and services.

While spending expectations are up, comfort levels around returning to public places are down. On a scale of 1 to 10, with 1 indicating the lowest sense of safety and 10 indicating the highest, consumer sentiment toward most establishments has fallen into negative territory, if not already there.

“People feel less safe about reentering pretty much every category that we track,” said John Blackledge, a managing director and senior research analyst at Cowen.

Concert venues, for example, have decreased from 4.5 in mid-April to 3.5 in mid-May. Restaurants and bars have declined from 5.4 to 4.6. Gyms dropped from 4.8 to 3.8. Retail stores, however, have remained relatively flat, inching down slightly from 5.8 to 5.2—meaning shoppers are almost evenly split on whether they feel safe about returning to shops once they officially reopen.

The combination of more consumers willing to open their wallets with fewer showing confidence in entering brick-and-mortar locations seems to bode well for companies that offer shoppers the ability to buy through digital channels. In the current climate, Walmart reported that its Q1 ecommerce sales climbed 74%. Target saw its curbside pickup service increase nearly 1,000% in April.

A recent survey from McKinsey found that during the pandemic, about 1 in 5 shoppers have abandoned their primary grocer in favor of another. A top reason for leaving: poor ecommerce.

“Anything that caters to being at home has done well in this environment,” said Blackledge, who listed Peloton and Netflix as two examples.

According to Cowen, about half of U.S. consumers expect the Covid-19 outbreak to disrupt their lives for six months or longer—a number significantly higher than the 18% of respondents who said the same in late March, when schools and nonessential businesses began to shut down. Over 1 in 5 (22%) think the present disruption will last 12 months or longer, compared to just 6% in late March.