The majority of households have experienced falls in their income as a result of the economic and health policy responses to the coronavirus crisis.
Does this necessarily mean that consumers are spending less?
At the beginning of March, it’s likely the first week of your bank statement showed the usual mix of spending on eating out, public transport, Ubers, lunches and online deliveries.
Now, there is no public transport, no coffees and no eating out. Which suggests spending may have plummeted.
In a new Future Consumer Index published by Ernst & Young, they identified four profiles that have formed during the pandemic.
- 27% of people have fallen into a “Cut Deep” segment that’s pending less across the board as they’re furloughed or laid off.
- 26% comprising a “Stay calm, carry on” category that’s largely unaffected by the pandemic
- 35% landing in a more pessimistic, family-oriented “Save and stockpile” group
- Only 11% making up a “Hibernate and spend” category that’s spending more during the crisis
Harriet Johnson, Online Trading Manager for womenswear at Marks and Spencer said: “At the beginning of the pandemic consumers stopped buying unnecessary purchases as people did not know how long this would go on for”.
The multinational retailer, which has a headquarters in London, specialises in selling clothing, home products and food products.
For M&S, food sales have understandably seen the biggest year on year growth. Harriet found that other categories consumers are big on during lockdown are homeware, beauty, loungewear, activewear and baby sales.
Whilst the retailer found a large decrease in clothing sales in the first few weeks of lockdown, sales have since slowly risen.
Last week, it saw a 0.8% YoY (year on year) growth compared to 0.1% the week previous.
The other big area of increased spending is grocery shopping. In an interview with the BBC, Chief executive of Tesco, Dave Lewis, said that whilst the number of transactions in April nearly halved, the size of the standard basket had doubled.
Tesco is the fourth leading supermarket chain, according to data collected by YouGov between February 2019 and February 2020.
Data provided to This is Money by digital banks Revolut and Starling revealed that the average spend per shop was 6 percent higher. Suggesting people are shopping less but buying more.
Lewis told the BBC he had doubled its online capacity since the outbreak began to one million orders a week. Other supermarkets are set to follow.
The financial impact of the pandemic has meant people are being more cautious about how often they buy. As the weeks go by, however, it seems spending is slowly increasing.