Covid-19 not only changed the way people shopped and what they bought during lockdowns in 2020 and 2021, but it has continued to shape consumer behaviour in the months since pandemic restrictions have been lifted and borders have reopened in much of the world.
This was the topic of a recent webinar from Mastercard, which provided fascinating insights into post-pandemic consumer spending trends in the Asia-Pacific region, and what they mean for retailers.
“The rebound in demand was like lifting a lid off a pressure cooker, and this came a lot faster than supply could catch up, which pushed prices up across the board,” said Jason Yek, an economist focusing on the Asia-Pacific region at Mastercard.
So far, high levels of excess savings and pent-up demand for activities that were forbidden during Covid, such as eating out and international travel, have helped sustain strong consumer spending momentum amid higher prices.
“Across the world, we are seeing travel bookings rebound even with the cost of travel being a lot more expensive relative to before the pandemic,” Yek said.
A deep dive into the data shows that across markets, inbound tourists are scaling back their spending on accommodation in order to splurge more on meals and shopping. This reflects consumers’ strong desire to get out and explore while on holiday. Broadly, the spending recovery on experiences has also outpaced spending on things.
“Consumers are replicating the experiences that they couldn’t have under lockdown,” he said.
Unsurprisingly, Mastercard anonymised and aggregated data shows that consumers are spending a lot more online than they did pre-Covid. When it comes to shopping in-store, however, there’s an interesting impact of working from home.
In Australia, a country that has embraced working from home, the share of spend during the week on apparel has shifted from weekdays to weekends post-Covid. The same is true for eating places.
So, what do these changes in consumer behaviour mean for retailers?
Emilie Kroner, senior vice president of retail and commerce at Mastercard, believes there are three key trends that should be on businesses’ radar if they want to succeed in this changing retail landscape.
The first is reaching and engaging consumers. Kroner noted that the shift to a more digital environment has created an incredibly cluttered environment, with consumers now receiving 6 billion text messages and 306 billion emails on a daily basis.
Using data to personalise marketing communications to ensure they’re relevant and will cut through the noise is key.
“What that requires on the merchant side is a focus on creative and new ways to connect with consumers in the right digital channels, at the right time, with the right messaging,” Kroner said.
“Brands are tapping into in-depth data and analytics to make smarter decisions for better outcomes.”
Another trend she identified is the need to improve the buying experience. Kroner noted that 70 per cent of consumers are more likely to buy from brands that provide a great customer experience. For her, this means flexible payment options, connected experiences and hyper-personalisation.
“When we think about how much data flows through the system, it’s really critical to leverage that data in a way where the consumer is feeling value,” she said.
“It’s critical to think about what personalisation looks like at every point of interaction a consumer has with your brand. If they’re engaging with your app, what does personalisation mean? How do we make sure that level of personalisation extends when they’re in-store? When they log on to a website for the first time, how do we make sure that they feel known?”
The third trend is optimising business operations. With 26 per cent of retailers viewing insufficient data and lack of actionable insights as one of their biggest challenges – a higher percentage than other industries – there’s a lot of room for improvement here.
“What’s going to become incredibly important as we go into 2023 is effectively leveraging the data and insights to adjust operations,” Kroner said, citing examples such as deciding which stores to reopen after lockdowns, what merchandise to stock given the shift to online shopping and how to manage inventory amidst supply chain crises.
“It’s not easy to make those decisions at scale as the world continues to change, so it’s really important to look at the data and adjust those operations in a way that is optimised.”
These are just a few of the key takeaways from Mastercard’s recent webinar on consumer spending trends post-Covid and what they mean for retail. You can watch the full video on demand here for even more insights and examples.
