Future Consumer Index: four ways to make the most of consumers’ post-lockdown spending

Although nervous in the here and now, a combination of the roadmap announcement and the vaccine rollout means consumers are starting to envisage a more positive future. Although shopping behaviours have changed for good, the return to physical stores may well be more significant than retailers expect.

The latest EY Future Consumer Index shows that a feeling of optimism and anticipation about the future is emerging. There has been a fundamental shift to e-commerce, and consumer tolerance with the online experience is falling. A poor offering is no longer accepted as consumer expectations around delivery, functionality and other factors rise. And, as they yearn for human engagement, consumers miss the in-store experiences too, providing a golden opportunity for retailers to engage customers with store events and activities post-vaccination.

The desire for a return to normality will see consumers focus on three main needs as they look to reconnect with friends and family – they want a holiday, a haircut and a day out.

The consumer is hesitant now but optimistic for the future

A combination of a surge in cases, the emergence of new variants and the imposing of the latest lockdown – second in its severity only to the original – means that consumer anxiety has hit some of its highest levels.

The number of consumers who say they are unaffected and unconcerned by the pandemic has plummeted – down from 23% in October to 6% now. Meanwhile, those who say they are struggling and worried has risen, up from 36% in October to 43% now.

Consumers are worried about both their own health (33% are extremely concerned) and that of their family (43% are extremely concerned). Such concerns are at the highest level since June 2020, when the first lockdown was in place. Comfort in everyday activities, such as going to the grocery store, has dropped, falling back to June/July 2020 levels.

Vaccination provides hope, but the expected retail splurge may be delayed

Consumers want a return to normal life and see vaccinations as the best route, with 87% of consumers planning on having the vaccine, once they are able. One-third believe that once they have the vaccine, life will be better than before the pandemic; however, there is a note of caution, with more than half (55%) believing that the virus will only stop impacting their lives after most of the population is vaccinated.

This last point is crucial, as it suggests that the big change in consumer behaviour will come later in the summer when the majority of the vaccination programme is due to be completed and restrictions lifted, rather than as soon as lockdown begins to ease.

In the meantime, consumers want safety and hygiene factors to remain in place and for retailers to adopt whatever further precautionary measures may be introduced, such as vaccine passports. More than half (56%) say they are more likely to use retailers that make it mandatory to be vaccinated and 70% are happy to carry proof of vaccination.

A greater positivity around financial health

Although consumers are anxious about their health and surrounding environment, their willingness to indulge themselves in the longer term is high. In nearly half of categories (45%), more consumers are planning to increase their spending over pre-pandemic levels than are considering cutting back below pre-pandemic levels. This compares with 29% of categories in October.

This repressed demand is partly the result of greater positivity around finances. More than half (55%) are trying to save more than in the past, perhaps mindful of the initial impact the pandemic had. More than a third (38%) are in a better financial position because there is less to spend on.

What you must do

The latest EY Index holds much promise for retailers but it’s important to acknowledge that the challenges of the pandemic will continue. Anxiety about hygiene will remain, retailers must continue to practise and promote the in-store hygiene measures that have been were adopted during the height of the pandemic, as well as embraceing any new operational measures that might be suggested.

Online, they must continue to improve their offer, ensuring that all elements of the online experience satisfy increased customer expectations. Retailers must not underestimate the desire of consumers to re-engage in the social aspect of shopping too. Events and in-store experiences will be more important than ever to engage customers as restrictions ease and provide a great opportunity to encourage the customer back to store.

Consumers are ready to spend, and retailers must be prepared for the opportunities across several categories, but particularly those related to their social life, as they reconnect with loved ones in person.

Four ways to make the most of consumers’ increased desire to spend

1. Harness the power of the store and leverage the consumer desire to re-engage with the social aspect of shopping; design a post-lockdown programme of in-store experiences for customers.
2. Ensure the online experience and offer continues to evolve as  consumer expectations rise, competition intensifies and the economics of omnichannel shift.
3. Adapt the proposition to ensure you have the right range to anticipate consumer trends that translate into relevant ranges to take advantage of category growth.
4. Understand the importance of the value equation and critical roles played by brands, own brands and private label in giving consumers the right mix.