Photo: RetailWire
Will consumer behavior actually change this holiday season?
Barbara Conners is Vice President, Commercial Insights at 84.51˚, a retail data science, insights and media company helping The Kroger Co., and the consumer-packaged goods industry create more personalized and valuable experiences for shoppers across the path to purchase.
As we move further into the second holiday season during the pandemic, consumers are reevaluating priorities for the future amid both emerging and sustained stressors. That doesn’t mean that new habits developed over the past 20 months are suddenly going to disappear at Christmas.
We’ve recently conducted behavioral analytics and consumer research that reveal existing tension between attitudes and behavior and how it is playing out across three major trends that are top of mind for consumers: holiday plans, inflation and health.
Holiday plans
Many people say they are getting more comfortable making plans, and the top reason given is that they are “over” COVID-19. When asked about their specific holiday plans, however, it becomes clear most are not quite ready to return to pre-pandemic-level celebrations.
As many as 75 percent plan to attend only one or two gatherings this year, 62 percent plan to have similarly sized gatherings as last year and only 23 percent expect to travel. While customers may say they are comfortable making plans, the outlook for immediate high-stakes holidays appears to be very similar to 2020.
Inflation
The majority of customers say they have noticed the cost of their groceries rising. In fact, the cost of goods was rated the top customer frustration related to recent Thanksgiving shopping, even more than out-of-stock items, crowds and long checkout lines.
Even with this frustration, however, we have yet to see major migration away from categories hit by price increases, such as meat, dairy and produce. In a climate in which the cost of eating out is rising as well, it appears we have not yet reached the threshold at which frustration will turn into action.
Health
Many are setting New Year’s resolutions that focus on physical, financial and mental health. When asked this month what goals they have for the new year, exercising more and saving money (or spending less) topped customers’ lists, with more than half of respondents prioritizing each.
Additionally, 30 percent want to spend more time on hobbies and leisure. Twenty-two percent want to spend less time on social media. Interestingly, only eight percent have a goal to drink less alcohol in 2022, despite consumption being at an elevated level this past year. People have struggled to balance health-related goals since long before the pandemic. This may be one behavior shift that is realized in 2022 — beginning January 2, of course.
Discussion Questions
DISCUSSION QUESTIONS: Do you see consumer attitudes about group gatherings, high prices and health aligning with actual behavior in 2022? How should retailers use the insights found in this research to drive closer engagement and more sales with their customers?
Poll
Loading …BrainTrust
Dave Bruno
Director, Retail Market Insights, Aptos
Ryan Mathews
Founder, CEO, Black Monk Consulting
Living in the Southeast, I can attest that most people are “over” COVID-19. We’ve enjoyed large SEC/ACC football tailgates and packed stadiums throughout the entire fall and early winter season. We’ve enjoyed very crowded bars and restaurants. Shopping has seemingly been brisk. Interestingly, of all the stats mentioned, the one that stood out for me is the 22 percent drop in social media for 2022. That’s a fairly significant number saying, “I’m consciously not going to engage.” Retailers may want to take a hard look at this and bounce it against their ad plans, and potentially adjust spend appropriately.
I believe this study is on point. However I see and hear consumer sentiments change in the marketplace easily and quickly. Reports of growing infections of the virus push them to be more, and sometimes much more, vigilant about their actions and what they will expose themselves to. How many times do we hear “are you vaccinated,” or “will everybody gathering at the party have all their shots?” In today’s market we can change moods and opinions rapidly. And it will continue as the number of people infected again begins to grow. .
Consumer behavior changing how? What is our baseline now? There is a lot of commentary over changed vs. unchanged behavior but we’ve been in the pandemic long enough, it’s hard to parse out what that even means – changed vs. pre-pandemic which was now nearly two years ago anyway? Changed vs. a year ago?
Overall, consumer behavior has been unpredictable when it comes to gathering, spending, etc. because we have been living in a state of uncertainty and flux for a long time. People miss friends and family, but don’t want to put anyone at risk. People are concerned about their finances, but still aren’t spending in certain categories (e.g. hospitality) like they used to.
This will lead to great variance in how consumers act, rather than one massive shift or lack of shift in “consumer behavior.”
I have little faith that the majority of people will drastically modify their behaviors to mitigate COVID-19 risks. Pandemic fatigue is almost as pervasive as the virus itself, and I expect most people will still gather indoors with families and close friends, even if the number of gatherings they attend is down from pre-pandemic levels. And while food prices are definitely rising, I don’t expect them to significantly alter party menus. Rather, I fear that most of those family gatherings will proceed as planned, which will only add fuel to the convergence of the holidays and Omicron. I sincerely hope I am wrong, but fear we are in for a very challenging winter.
While consumers are clearly stating that they wish for life to return to a pre-pandemic cadence, at least to some extent, the pandemic remains the critical issue for 2022. Retailers should consider building and reinforcing omnichannel relationships so they can deal with consumers through e-commerce, BOPIS, curbside and other versions of digital commerce. In terms of retail focus, the trends seem consistent with New Year’s resolutions in the past: more time with family, more exercise, better diet. Only drinking seems to differ from the past.
Consumer behavior has already changed and, with safety concerns still very prevalent, retailers will need to continue to have a digital-first strategy.
Aligned with health being top-of-mind, the fear of getting sick will continue to push consumers to start their shopping journey online. This behavior will stick post-pandemic because it will be part of “normal” life.
Physical stores are busier than they have been and this is driven by shoppers being over COVID-19. But not totally. Mask and distancing mandates still help customers feel comfortable to leave the house and shop physical.
Everyone wants the pandemic to be over. Everyone hopes the pandemic is waning. The media reports numbers of COVID-19 cases going up. New variants are spreading. It is not surprising that attitudes and behaviors do not match when desires and reality do not match. Safety continues to be important to consumers so retailers need to keep protocols, products, and options in place.
Yes. If Omicron rates soar this winter, more consumers will minimize health risks by socializing less and shopping online. Fewer workers are returning to the office due to the variant, so home will still be our hub for at least part of 2022.
Ballooning prices will make us more price-conscious as we plan our grocery baskets. With more of us eating at home, our grocery shopping frequency is increasing to multiple shops per week.
Shrewd retailers’ merchandising strategies now move discounted items near the front of the store, so shoppers immediately see opportunities to save. Ensuring reliable availability, delivery and BOPIS options will also support engagement and sales.
Nice to know weight loss and fitness are still on the list of New Year’s resolutions. Some things don’t change. It doesn’t really matter if consumers are “over” COVID-19, since COVID-19 is obviously not over. So “consumer attitudes” are still subject to the reality of various regulations, restrictions applied by friends and family, economics and other external variables. As to alignment, people always think food is too expensive, but very few stop eating. Ditto with health. Most agree it’s a good thing and, by February, most have gone back to munching chips while binge watching their favorite shows. I guess the point is that, respectfully, I’m not sure I hear an insight here. We keep pretending there was a “normal” and predictable consumer pre-COVID-19 and fantasizing that one day they will all miraculously return to the stores. They didn’t exist to start with, except in the minds of marketers, and they ain’t going back.
I am particularly concerned that the mass press is making inflation a far bigger concern than it needs to be. Prices go up. Prices go down. Consumers only become hugely worried when everyone around them tells them to be.
In general I agree with Ms. Connors’ take that “we’re not yet over Covid” because … well, we aren’t! But I’m not sure how meaningful her metrics are without some before comps (“only” 23% will travel: how does this compare to 2019 or even 2015?).
Adjustments to higher prices usually take some time, and insofar as the much touted ~6% is annualized, we’re really only looking at a few percent right now … probably not enough to get people to change their buying habits (at least at the grocery store).
It’s amazing how consumer opinion changes based on how or when they have experienced something. It’s good to keep a pulse on consumer sentiment but the best thing companies can do now is not to assume anything. Everything is subject to change every day.
Yes, we are all experiencing pandemic burnout; yes we are all “over it” but few are throwing full caution to the wind. The virus is uncontrolled, inflation is rising and our health is under constant combat from stress. Consumers want their lives back but realize it’s not going back to pre-pandemic. Meanwhile, the new norm changes daily. It’s frustrating but there is no silver bullet. This season, brands and retailers have to hope for the best but prepare for the worst. Again.