Don’t expect any predictions from us this week! With under seven days until the election, we’ll leave forecasting to the pundits and pollsters. What we can say with certainty is that uncertainty is a primary driver of consumer behavior right now.
A streak of consumer optimism is poking its head up, but these seven months of pandemic stress and lost income aren’t yet entirely in the rearview mirror for most Americans.
Pandemic Stress is Real
To quote from an infographic from VisualCapitalist.com, “For millions of people, economic disruptions associated with COVID-19 are beginning to take their toll.”
- 57% of Americans are experiencing COVID-related income reductions
- 75% of Americans are “very worried” about their financial future
- 70% of Americans delayed big purchases this year
- 35% report that their current savings can only cover one month of expenses if they lose their job
Which Leads to Changes in (Possibly Permanent) Consumer Behaviors
Results from McKinsey’s September consumer research poll were posted last week. The research recognizes these COVID-inspired changes in consumer behavior:
- 20-40% decrease in intent to spend on discretionary categories
- 20-40% increase in intent to shop online
- 73% of consumers have switched brands, stores or the way they shop (a.k.a. decreased loyalty)
- 64% have not returned to pre-COVID shopping behaviors
The big question is which of these will establish post-COVID permanence in consumer shopping behaviors?
Economic Indicators Say…Huh?
According to the team at NPR’s Planet Money, economic indicators are still sending mixed messages and are up for interpretation. The economy rebounded strongly in the third quarter, possibly up 8% (TBD when official numbers are released at the end of this week). The unemployment rate has fallen from 15% to 8%. Consumer confidence in September saw its biggest spike in 17 years.
All good news, right? Yet, some legitimate explanations expose a more guarded picture, which also deserves consideration for snowsports’ brands and retailers heading into the winter. Take consumer confidence, for example. Consumers are showing intent to buy goods, but remain bearish on services (like travel, restaurants, events). How this manifests in ski business operations remains to be seen.
Holidays Aren’t Cancelled, But Priorities are Shifted
Deloitte came out with holiday 2020 forecasts that emphasize what we’ve been reporting on consumer preferences: price, value and convenience are top priorities. The “2020 Deloitte Holiday Research Survey: Reimagining Traditions” confirms some results from similar research, and draws a few conclusions that we haven’t seen elsewhere. According to SGB Media, the Deloitte survey expects:
- 7% overall drop in holiday spending per household, compared to 2019 (McKinsey suggests this number may be as great as 25% decrease)
- 38% of consumer plan to spend less than they did in 2019
- 71% of consumer report a same or better financial situation compared to 2019; 29% a worse household financial situation
- 69% of consumers prefer to shop in-store close to home, but this year plan to spend 64% of their total holiday shopping budget online
- 51% of consumers are nervous about shopping in-store; 65% will shop online to avoid crowds
- 61% of consumer still say a “great deal” will persuade them to shop with a retailer
- 34% decline in holiday travel
It’s time to dig into our strengths: caring for our communities, sharing our passions for snowsports, and welcoming everyone to the joy of the mountains. Don’t worry. We haven’t secretly replaced your hard-hitting consumer behavior report with motivational platitudes. Our strengths can be the antidotes to the uncertainties we cannot control and the foundations for maintaining–and even building–our business through tumult.
Consumers are feeling vulnerable, due to their economic situation, their health concerns, and yes, even their buying decisions. Look for opportunities to provide strength and comfort. A few ideas: compassion, thorough product expertise and thoughtful recommendations, easy return policies, safe and contactless shopping experiences, clear pricing (especially for items at lower price points), and gratitude at every stage of the consumer shopping journey.