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Pent-up demand. Making up for lost time. Return to the “new normal.”
There will be revenge spend. Whatever we call the next phase of consumer behavior, we have to consider the interesting and exciting trends forged from the challenges of the past year as we shape our marketing strategies for the future.
What changed
In the spring of 2020, how we shopped, spent and paid transformed. Shopping moved from leisurely to essential. Supply chains broke. Spending turned from travel and dining to streaming and delivery. Cash and contact shifted to QR codes and tap-and-go.
According to management consulting firm McKinsey & Co., 75% of consumers surveyed have tried a new shopping behavior since the onset of Covid-19; 80% tried a new digital shopping method. The pandemic accelerated the shift away from physical stores to ecommerce by roughly five years. Click and collect (buy online, pick up in store) more than doubled in 2020 and is expected to continue double-digit growth rates through 2024.
How people pay has transformed. Pre-pandemic, contactless payments had never tipped the scales en masse. The pandemic drove adoption mainstream for a number of reasons—first and foremost, safety and security. Brands also found that touchless payments deepen the value proposition of digital wallets from tech-forward to essential—further encouraging consumer downloads.
And finally, we are witnessing unprecedented levels of personal savings for U.S. consumers. America hit a record 32.2% personal savings rate last April.
Revenge spend
With an estimated $1.7 trillion in excess savings during the pandemic, the expanded vaccine rollout and the return to some normalcy, Americans are eager to reclaim the experiences that were shut down. According to Blackhawk Network data, 69% of shoppers surveyed plan on returning to in-store shopping, and 58% plan on continuing their online shopping behaviors.
We also found consumers want to share experiences. They want to spend time traveling, getting together with friends and family, eating out and shopping. Also, they plan to spend more money on gifts. In fact, 76% surveyed anticipate giving more gifts, 70% plan to spend $100 or more on birthdays, 67% plan to spend $100 or more on holidays and 74% plan to spend $50 or more on graduations.
Market preparation
While consumers are eager to get out and shop and share experiences, they want to do so wisely. As consumers seek out their new normal, marketers should focus efforts on promotions and loyalty, which will be huge for brands looking to gain or grow mindshare. Our research found that 32% of Americans surveyed say they will seek out more promotions than before the Covid-19 crisis.
The explosion of digital payments and QR codes is another burgeoning trend that marketers can’t afford to ignore. In the past year, these tools and technologies were critical to creating a customer experience that is convenient and contactless. And a preference for these payments may persist. Shoppers report they will spend more money and have deeper affinity with retailers that offer more digital payment methods. Along with shopping more frequently (69%) and spending more (54%) at retailers where they can use digital payments, a majority of shoppers surveyed (85%) also reported that digital wallets have made shopping easier.
These payment developments are thrilling because they allow direct access to stored value in more convenient and accessible ways, and marketers can increase customer stickiness and generate more data to better target and personalize their efforts.
Smart marketers will take steps now to ensure they capitalize on consumers’ new expectations for promotions and digital payments options—which are likely to be front and center as shoppers revenge spend in the coming months.
