Over the past ten months, life as we know it has undergone significant transformation. Many people are now working from home, while unemployment has escalated, leaving over 10 million Americans without jobs. Children are engaged in virtual learning or homeschooling, and numerous regions are still under lockdown. In my area, bars, restaurants, movie theaters, and various entertainment venues continue to remain closed.
However, amid these drastic changes, our spending habits have also shifted. The pandemic has altered how we manage our finances, and a study by Ibotta, a cash-back app that assists consumers in saving money on everyday purchases, has revealed some noteworthy trends, especially during the initial phase of the pandemic.
Spending Changes Overview
Here’s a concise overview of the spending changes:
- Sales of spirits have surged by 33%
- Bakery items have experienced a 17% increase
- Purchases of meat, poultry, and seafood rose by 16%
- Condiments, sauces, and seasonings have gone up by 15%
- Deli products also saw a 15% boost
- Beauty and grooming items are up 14%
- Canned goods and soup have seen a 13% uptick in sales
- Wine purchases increased by 12%
- Frozen foods have also risen by 12%
- Health and wellness products saw a 10% increase
Other notable increases were seen in household essentials, the beverage sector, and candy—because who can resist an extra chocolate bar or two?
Conversely, certain industries faced significant downturns, with the apparel sector suffering a staggering 37% decline in sales. Spending on travel, entertainment, and transportation has also dropped sharply. With more individuals working from home, the demand for oil and gas has fallen, leading many retailers to declare bankruptcy in 2020, including well-known names like Brooks Brothers and Ann Taylor.
This pattern of spending doesn’t come as a surprise; I, too, have found comfort in baked goods and alcohol. I’ve been purchasing toilet paper in bulk, and food delivery expenses have noticeably increased in my household. Ordering out has become a regular occurrence, while other expenses have diminished. My daily attire has shifted to athletic wear, leggings, and sweatpants, making shopping for new clothing a low priority. Entertainment expenses have plummeted, though I did rent “Trolls: World Tour” last spring. Additionally, my spending on toys has decreased, as I’ve realized I was prone to spontaneous purchases at Target. Many others are echoing these experiences, including Mia Johnson and Tara Simmons.
“Expenses on gas and activities like movies have significantly decreased,” Mia states. “However, we’ve added another streaming service and increased our internet speed, which has raised our costs.”
Tara shares, “My clothing purchases have nearly halted, and I’ve stopped going to the salon for root touch-ups every few weeks. I’ve also avoided impulse buys, but I did invest in technology. We upgraded our phones, and my child needed a laptop for online learning.”
It seems that many are experiencing similar shifts in their financial behaviors. After all, most of us are now living, learning, and working from home.
It’s crucial to acknowledge that not all spending changes are logical or expected. Nicole Parker, a mom of three, mentioned she’s been buying pre-made croutons in bulk. Amanda Cruz disclosed that she has been purchasing items spotted on TikTok, from makeup to vacuum cleaners. “If I see a TikTok where people rave about something, I buy it,” she explained. Countless individuals have admitted to stockpiling various items like crafting materials, organizing supplies, and baking essentials. Who would have thought that cupcake liners and vanilla extract would become coveted commodities?
“With all the changes we encountered in 2020, it’s only natural for consumer shopping behaviors to evolve,” Bryan Leach, the CEO of Ibotta, suggests. “The uptick in purchases of bakery goods, beverages, and spirits aligns with the amount of time we’re spending at home instead of frequenting our local coffee shops or bars.”
When asked about potential changes in spending habits for 2021, Leach admitted uncertainty. However, he anticipates that some new trends will likely continue. “While we expect certain shopping behaviors to revert to normal, many of the changes we’ve seen will probably persist,” Leach remarked. “For instance, more people will continue to shop for groceries online, and the trend of buying online with in-store or curbside pickup is likely here to stay.”
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Summary:
The COVID-19 pandemic has significantly altered consumer spending habits, with notable increases in the purchase of bakery goods, spirits, and household essentials. Contrarily, sectors like apparel and travel have seen reduced spending. These shifts reflect the lifestyle changes brought on by lockdowns and remote work. As we move into 2021, some of these changes are likely to persist, with online shopping becoming more commonplace.
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