Photo: @tasyatwin via Twenty20
Socially distant Americans find comfort in retail therapy
While the novel coronavirus pandemic has changed a lot of shopping habits, one that has remained consistent is people reaching for online retail to comfort themselves when things get stressful. A new study, in fact, indicates that, with plenty of stress to go around during lockdown, therapeutic online shopping has been booming.
Fifty-eight million Americans are spending more money than normal under social distancing restrictions and 43 percent admit to having made “comfort buys” during this time to ease stress and the sense of social isolation, according to a survey by Wallethub. Entertainment (29 percent) and alcohol (23 percent) represent the largest portion of comfort purchases, but consumers are also buying clothing (15 percent), beauty products (13 percent) and electronics (12 percent) to feel better during the lockdown.
Toys (five percent) and exercise equipment (three percent) represent the least purchased comfort buys). In terms of dollar amounts, 35 percent reported spending between $51 and $150 on comfort buys, 22 percent spent between $151 and $300 and 15 percent spent more than $300. Only 18 percent, however, characterized their spending on non-essentials as “over-spending.”
How long people will continue to spend on entertainment and other non-essentials, though, could depend on the duration of the economic ripples of the COVID-19 outbreak. Ongoing mass unemployment could add to the numbers of consumers already being more careful about discretionary spending.
The current real unemployment rate is “north of 20 percent,” according to senior White House economic advisor Kevin Hassett, who spoke to CNN. The numbers of those who will be unemployed is projected to be higher in June before it begins trending downward, although there is a possibility that the U.S. will continue with double-digit unemployment numbers through November.
Credit experts have been warning customers about going too far with indulging the impulse to comfort shop during the pandemic. Paul Oster, CEO of Better Qualified Credit Management, told CBS2 New York that people should be trying to save rather than spend right now, especially given the number of people who may be experiencing reduced wages or are out of work.
- Coronavirus Shopping Survey: 58 Million Americans Are Spending More Money While Social Distancing – Wallethub
- Hassett says unemployment rate could be ‘north of 20%’ in May with possible double-digits in November – CNN
- Consumer Credit Expert Warns Of Pitfalls Of Comfort Spending While Home During Coronavirus Pandemic – CBS2 New York
Discussion Questions
DISCUSSION QUESTIONS: In what ways, if any, have you seen consumers change how they use retail therapy since the outbreak of the novel coronavirus? Do you expect the practice of buying things to feel better to increase, decrease or remain the same over the next six months?
Poll
BrainTrust
Before COVID-19, buying trends favored experiences. With experiences limited, it’s natural that the consumer experience shifted to nesting. Houses fill up quickly. Experiences will make a comeback, but they’ll look different – and this is an opportunity where retailers can capitalize. Goods packaged together to provide experiences will see growth for the foreseeable future.
While there are many people that resort to online buying as “comfort” or to feel better during the pandemic, I think most of the increases in online spending have been to adapt to new ways of living and working. A lot of entertainment buying has been a means to help parents keep their kids occupied or happy. Employees that are adjusting to working at home had to buy things to make their home office comfortable and productive. A lot of the “comfort buying” is probably more about adapting to new lifestyle changes than feeling better about themselves (IMHO).
Our clients are not reporting dramatic shifts in online purchase patterns (other than significantly more people shopping online than before the crisis, of course). What we are seeing, however, is a shift in online behaviors and expectations. People are now seeking therapy through online communities. Retailers have a real opportunity to bring people together to engage and interact around a common interest, and those that have delivered authentic digital community-building programs have seen big leaps in brand engagement that will last far beyond the crisis.
Dollars have shifted from restaurants and vacations to products that can be found online. On Amazon we have seen a dramatic shift in the top trending search results. In the past Amazon searches have been dominated by electronics; earbuds, iPhone cases, etc, now we are seeing “puzzles for adults” and even “sewing machines” in the top 50 list. People are looking for products to use at home while stay-at-home orders are in place. As restrictions relax we will see those dollars shift back to other activities.
It’s too easy — you are working from home or at home, and you take a break and you see an advertisement for an item online you like (and magically there is a 25 percent discount if you order now). It’s hard to pass that up. I think that will continue post-pandemic as people are opting to work at home (if applicable). It’s hard to pass up.
We are not going out to restaurants, bars, music or theater events, which in NYC can be quite expensive. That we are treating ourselves with very good ingredients to make delicious meals, making some good cocktails and spending time with our loved ones, at least via FaceTime or Zoom, is not a bad thing to make us feel more comfortable and less lonely. Buying clothes for our granddaughter who we have not been able to see in person in months also makes us feel better!
There going to be a lot of wishful shopping online, but with 25 percent of the country out of work, it’s likely that most of it is window shopping only.
Not to quibble, but do we really know to what degree longer term “habits” have changed? Certainly short-term behaviors have changed. But behaviors driven by compulsory “have to” reasons are different from evolving “want to” reasons. There’s no question that the shift to e-commerce, BOPIS, and BOPAC have accelerated. And there’s no question that money not spent on dining out and sporting events is being spent in other ways. But I don’t think we yet know what is a new habit versus what is a creative short-term, feel-good, behavior change.
This may just be me, but I think there is another element of online shopping that has accelerated during the lockdown and that’s aspiration and improvement. One example is the growth in DIY sales. With the safety and convenience of home delivery, much of that has moved online. And retailers beyond Amazon are benefiting. In my case, I have dreamed for years of having a “showroom garage.” Perfectly organized with the cool “dealership floor” and functional work spaces. Quarantine turned into opportunity — but online at Amazon and the DIY big box sites didn’t do it. So I went exploring, and discovered something called “ELFA” — at The Container Store of all places! The fact that there is no Container Store within 100 miles is a non-issue. Through online ordering and home delivery, my showroom garage is almost done. And using a brand and a retailer I had never considered in all those years of wishful window shopping.
As we move through the pandemic lifecycle consumers’ needs, wants and aspirations are reflected in online shopping. Acquiring essentials like food and paper products (needs) have given way to entertainment and educational products (wants) and now consumers are looking for little luxuries like home improvements, beauty and apparel (aspirations) based on what budget they have available. Patterns and product categories will continue to change as the pandemic lifecycle moves forward.
I believe we are conflating two issues in this discussion. One relates to the change of environment and lifestyle that we are experiencing, the other to comfort buying.
I see retail therapy buying as going online, perhaps out of boredom, and buying things one doesn’t really need. Toys, puzzles, books, exercise equipment, upgraded electronics, and DIY projects have everything to do with the new environment. They’re not just about feeling better, they’re about dealing with this situation where we are stuck at home — it’s a change in lifestyle. Will that change continue? Maybe the toys and puzzles will go away, but the of the other activities will be new discoveries.
Maritz saw a pretty significant spike in redemption of exercise equipment and related “home health” categories in March and April. This has slowed a bit, but I was surprised to see that this category was the least purchased at 3 percent. Perhaps customers don’t consider items that push them into the realm of physical pain as a “comfort buy.” With that in mind I would be careful not to interpret this data as “COVID-19 consumer spending habits,” but just a SPECIFIC type of purchasing behavior (which is more interesting anyhow!).
Certain retail industries, such as beauty (the less obvious category), have hung on surprisingly well in the face of social distancing. Some of this is in part as consumers are ordering mood boosters; they need something to look forward to and get excited about. In a long stretch that feels increasingly like Groundhog Day, in the unchanging landscape your home, sometimes receiving a package can actually be the most exciting part of your day. I know it is for me.
As long as people have expendable income, there’s little cause for this to change, unless restrictions continue to ease and people can fill that “hole” with social gatherings again. Conversely, the longer the crisis lasts, the more people will be under- or un-employed. The amount of discretionary spending we see over the next 6 months is strongly dependent on the “state of the union,” which few can predict.
I think reality will catch up with this practice when the bill comes due — literally. Those who are back at work won’t need it, and those who aren’t will realize they can’t afford it.
I think phase two of the retail recovery is going to be a battle between the micro and the macro good: those who advocate — or have learned by experience — the personal value of having an extra cushion of savings vs. the desire to get the “C”(onsumption) part of the economy up and running as fast as possible.
I think it is fully dependent on the situation they are in. If you are still in your job and now working from home, of course you will shop as nothing really changed other than you have now moved your office to your living room. And this means they may look for desks, chairs, sportswear (the new office uniform) in replacement of other items they would have purchased previously.