The Rise and Fall of Consumer Confidence as COVID Resurges

August 31 2021 by Gretchen Jezerc

As the Delta variant emerged as the biggest news story of the second half of the summer, First Insight wondered whether consumers had changed the way they had been thinking--from only last month--about shopping, spending, traveling, and essentially resuming their normal lives. First Insight has been tracking longitudinal consumer attitudes and shopping behavior data since the beginning of the pandemic, in February 2020. We decided to poll consumers again on August 5th, continuing the longitudinal consumer study. As recently as July, consumers had been buoyed by the diminishing number of cases, resulting in the relaxing of mandates and resumption of in-person activities. We thought perhaps we had wrapped up this study as consumer spending seemed to be returning to pre-pandemic levels.

Unfortunately, that’s not the case. With the Delta variant on the rise, many municipalities began re-implementing the very same mandates that had only weeks before been relaxed. Momentum for vaccine mandates has been building especially since all federal employees and on-site contractors are required to be vaccinated or submit to regular testing and mitigation requirements. Due to the spike in cases more U.S. cities are requiring proof of vaccination to teach, work at a hospital, see a concert or eat inside a restaurant and many businesses seem to be rethinking their post-Labor Day return to the office.

This renewal of conversation around COVID-19 caused by the Delta variant has made consumers rethink purchases—including apparel, restaurant meals, and travel. In a mere matter of weeks, First Insight consumer data found that consumer confidence had begun to wane. We saw a resurgence (25 percent) in consumers who admitted to being “very or somewhat worried” about the Coronavirus. This increase represents the highest one-month jump recorded since March, 2020. As you would expect, more than half (56 percent) of those surveyed stated they would be cutting back on their spending—an increase of 8 percent over the responses in July.

Perhaps of even greater impact than waning consumer confidence is the eye-popping discovery that, of the 25 percent of those surveyed who said that they were not vaccinated, nearly all (90 percent) said that vaccination mandates within restaurants and other gathering places would not induce them to get the shots. Overall, the majority of those surveyed (61 percent) had already been vaccinated, but it seems that we still need to continue to educate people with more factual information around the vaccinations. With the back-to-school shopping season in full swing, we expect that low vaccination rates among Millennials, and women could hamper back-to-school sales.

Safety concerns around in-store shopping have begun to increase after the lows we saw in July. Working with sales associates, trying on clothing, trying on shoes, and testing beauty products and makeup have all seen significant increases in the number of consumers feeling unsafe engaging in these activities. In fact, the resurgence in Coronavirus cases continues to negatively impact going out, whether it’s to the mall, to restaurants, or traveling. Nearly half (44 percent) of respondents said that they have cancelled trips because of the recent COVID-19 changes. These factors should, however, fuel a continuation of ecommerce’s higher-than-usual penetration of overall retail sales.

It remains to be seen how long the Delta variant will continue to be troublesome, but clearly we are not out of the woods yet. Indicators strongly suggest that we will be living with COVID-19 and its variants for the foreseeable future, despite vaccinations being widely available. Shopping malls, retailers, restaurants, and the travel industry especially will need to plan for a future in which COVID disruptions are the norm.

Supply chains will continue to be disrupted through the rest of 2021 and likely into the new year. As consumer demand outpaces supply, inflation is gaining a foothold. Companies across many sectors are turning to First Insight for decision support in identifying substitute products and optimizing pricing based on real-time consumer price elasticity data. Leading firms recognize the need to be proactive in adjusting assortments and pricing to maximize their business outcomes in these fast-changing times.

To support the retail industry through COVID-19, First Insight has been tracking consumer purchase behavior and spending within retail since February 2020. We will continue to monitor consumer behavior and spending and share our findings to benefit the retail industry. First Insight is committed to customer understanding and offers customer-driven predictive analytics solutions for today’s toughest, constantly changing business challenges.

consumer preference  online survey  Survey Results  apparel  consumer spending  Coronavirus  COVID-19  Consumer Purchase Behavior  Consumer Survey  Safety  spending habits

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