U.S. consumers once again have proven themselves to be highly resilient and adaptive during the COVID-19 pandemic. Their buying behaviors have evolved quickly and dramatically to address new priorities and limitations, with consumer spending growing solidly in most categories, according to the “Gaining Lift from the Consumer Shift: Insights into Buying Behavior During Covid and Beyond” report recently published by the CMO Council.
“Consumers are going be consumers. Spending shifts, but it doesn’t stop,” says Nick Mangiapane, CMO of Verisk Financial company Commerce Signals, which partnered with the CMO Council to develop the report. “Our analyses of card spending throughout the pandemic makes it clear that U.S. consumers were able to pivot quickly and reshape their buying behaviors to meet new preferences. For example, clothing and department store purchases declined during the epidemic since there were fewer reasons to dress up. On the other hand, streaming media and home furnishing both grew significantly to fit with a stay-at-home lifestyle.”
The past 18 months have underscored the need for marketers to continuously monitor, predict, and respond to the fast-changing needs and behaviors of consumers. Going forward, marketing teams need to fine-tune their ability to track consumer purchasing patterns and pivot quickly when necessary. That includes the use of timely, granular and localized spending data for marketing planning, audience segmentation and personalization.
The Shift to Online Spending
One of the main ways the U.S. consumer adapted to the pandemic was to dramatically shift spending to online channels. Retail online sales skyrocketed in 2020, tripling its growth rate from the previous year. During the period from March 2020 to March 2021, online retail sales were up 56% compared to the previous 12 months.
Nevertheless, in-store shopping has rebounded in recent months. In fact, Commerce Signals projects that during the coming holiday season, in-store sales will be a major driver of growth for retail spending, growing 15 percent compared to the same period of 2020. Online retail sales will grow only 3% from the year-ago period, as online sales growth slows from its huge surge of 2020.
Retailers and other consumer products companies responded to the big uptake in ecommerce in 2020 by rapidly moving to improve online purchasing experiences. From ecommerce website upgrades and home delivery improvements, to buy-online/store-pickup models — retailers and other consumer-facing brands adapted to the new consumer mindset and behaviors.
Retailers will need to focus on upgrading both their online and instore experiences in the future, making it easier for customers to understand and see available inventory and make purchases and also build on new hybrid models such as the buy-online/store-pickup models.
Growth: Online vs In-Store
- Overall consumer card spending fully recovered to 2019 levels for the same period by June of 2020.
- Home furnishing and hardware grew by 29% during the 12 months beginning in March of 2020 compared to the previous 12 months. Online purchasing in these two categories were up 69%.
- Streaming video services, already a fast-growing sector, accelerated strongly during COVID. 2021 sales for Netflix and Hulu through mid-October 2021 were up 12% compared to the same period of 2020 and 36% over the same timeframe in 2019.
- One of the main ways the U.S. consumer adapted to the pandemic was to dramatically shift spending to online channels. Retail online sales skyrocketed in 2020, tripling its growth rate of the previous year. For the entire year of 2020, online retail spending rose 50% compared to 2019, while in-store card sales grew just 1%, despite the shift away from using cash.
- The shift to online purchasing is a phenomenon few expect will reverse itself. When comparing a 4-month period from late June to mid-October in 2021 versus 2019, online sales have risen 36% compared to 14% for in-store sales.
Dave Murray is executive vice president with the CMO Council and author of the “Gaining Lift from the Consumer Shift: Insights into Buying Behavior During Covid and Beyond” report.
The CMO (Chief Marketing Officer) Council is dedicated to high-level knowledge exchange, thought leadership and personal relationship building among senior corporate marketing leaders and brand decision-makers across a wide-range of global industries. The CMO Council’s 16,000-plus members control more than $1 trillion in aggregated annual marketing expenditures and run complex, distributed marketing and sales operations worldwide.
Did You Know: Online spending experienced massive growth due to the pandemic, increasing 50% in 2020 versus 2019. In-store retail spending during that period grew only 1%.