While consumer confidence is on the up, consumers are planning and choosing when and why to shop, doing it less often, but spending similar pre-Covid levels, writes Finian Murphy.
This week, as shops, hairdressers, and pubs began to re-open, the Department of Finance published an interesting paper titled ‘Real time economic and financial developments.’ Analysis indicates that “as of late June, total expenditure is close to its pre-pandemic level while the number of transactions remains 20% below.” Given the pandemic reduced the total expenditure by 40% in April, this could be good news story for domestic consumer behaviour.
Despite images of people queuing for shops, Google’s Mobility report shows that people remain pragmatic about returning to retail and recreation spaces. Irish customers are visiting these locations 50% less compared to pre-pandemic and are lagging behind our European neighbours in terms of rushing back to shops and restaurants. This week’s weather doesn’t encourage people from queuing outside but given a number of European cities are reporting a return of the virus, maybe the rain helps.
Core’s Roadmap to Recovery report, released last week, provides an understanding of how consumer confidence will build over the summer months, if businesses can reassure customers of safety. The report highlights how half of customers would be confident to return to places such as hairdressers, shopping centres and clothing shops in the month of July, but the remainder are not ready.
So, if Department of Finance analysis indicates that everyday consumer spending is returning, and Core’s research and Google data suggests people are not confident of visiting retail and recreation, what is happening?
Essentially there are two key consumer behaviours occurring:
- People are intentionally choosing when and where to shop – reducing the frequency of visits, but bringing their spend close to pre-Covid levels.
- People are making more online purchases – not as much as during the pandemic, but more than pre-Covid levels.
Intentional Shopping and Experiences
While consumers remain cautious, consumer confidence is increasing, and as a result, customers are planning when and why they visit shops and recreational spaces. These less frequent visits are more involved for the customer (e.g. queuing, time limits, etc) and therefore businesses need to set expectations about the experience.
Communications should be honest about wait times and customer requirements (e.g. wearing a mask), while showcasing the benefits which other customers have experienced from the visits.
Apple mobility data and Transport Infrastructure Ireland has shown an increase in traffic volume, but people are moving around with less impulse and more plans and direction.
Online is Covid-free, but maybe a risk to Irish business.
The Department of Finance report also highlighted how the proportion of spending in physical locations : online sites went from 71:29 pre-Covid to 50:50 in April but has only returned to 60:40 in favour of physical.
This could be the “new normal,” where consumers demand more opportunities to purchase and transact online with business. The risk for Irish business is that much of the ecommerce that has been happening in recent months are purchases that have been occurring with retailers abroad.
As the 2019 SME Digital Health Index from IEDR has pointed out, the majority of Irish consumers want their local high-street shops to offer a full online ordering service. As businesses reopen their shops, this does not mean they should be ignoring or pausing their online sales – if anything, their digital presence not only provides key marketing opportunities, but also acts as a key sales channel which consumers demand.
My colleague Ed Carbery wrote a helpful list of tips on SEO for businesses reopening.
In summary, it seems that the growing consumer confidence, as highlighted in the Consumer Sentiment Index is translating into consumer behaviour. People are planning and choosing when and why to shop, doing it less often, but spending similar pre-Covid levels.
In addition, quieter shops do not mean people are not purchasing, so ensure your business is set up to offer information online and acting as a sales channel.
The Core Roadmap to Recovery series will continue to provide updates on how consumers are responding to the reopening of Ireland.
Finian Murphy is Marketing Director of Core.