Today, we still aren't sure whether we will be safe in the post-COVID world, and the virus itself is far not the primary reason. According to McKinsey's recent study, four out of ten Americans believe that their finances will not return to normal in 2021 or even in 2022 and beyond. Coronavirus has become not only the object of fear towards public health but also towards our financial future and welfare. Many people have appeared financially vulnerable and unprotected in the modern world.
The study reveals that to 40% of consumers say they plan to reduce expenses on discretionary categories and be more mindful of their spending habits. While it might seem a sign of more conscious financial behavior, it also means that the COVID situation is feeding the trend of money anxiety among consumers.
Financial companies should take urgent actions toward optimizing their products, services and strategies for new consumer sentiments, empowering people and giving them more confidence in the future. Here we provide the overview of consumer sentiments impacted by COVID-19, including the most impactful social trends that can help companies get a more comprehensive understanding of new consumer behavior.
Re-estimation of personal values
Although it may sound controversial, a significant part of consumers believes the pandemic has changed their life for the better. This shift is related rather to social values than material well-being. Social distance and isolation gave them the opportunity to refocus on personal values and prioritize what is really important. They have started spending more time with their families and friends.
For many, it was a good time to re-estimate life goals and set them right. A lot of people feel a kind of resurrection and inspiration to build a new, better life in the post-pandemic world. Some of them have already started doing it directly from their homes. More and more people start learning new professions that allow them to work remotely. Others adjust existing occupations for a stay-at-home style.
The shift to mindful “discretionary” spending
The consumer sentiment greatly varies depending on the industry and the country. However, the main tendency is about shifting to essentials. Most customers in the Americas, Europe, Japan and Australia plan to cut off on many discretionary categories and prioritize vitally important purchases for comfortable life during the possible lockdown. They are less optimistic as these countries still have new confirmed cases.
At the same time, China, India and Indonesia feel more optimistic about their future. The late 2020 survey says that Chinese citizens believe their homeland is going to recover faster than other countries. So, they plan to increase spending on travel, apparel and household purchases. Meanwhile, India has started preparing for the next holiday and wedding seasons running from October to December, which means increased spending on traditional celebrations.
Trust-based purchasing decisions
The pandemic made people push their boundaries in different aspects of their lives, including shopping. Regardless of the pressure of lower household income, most people try new consumer behaviors and plan to continue exploring new shopping experiences after coronavirus. Value, convenience and trust have become new drivers of purchasing decisions.
The material aspect of consumer choices of products and services is complemented by brand trust, the feeling of belonging to a like-minded community, and a human touch in everything the company does for its consumers.
The digitization flight continues
Digitization has become a necessary disruption during the coronavirus lockdown. While only some businesses and individuals have been adopting digital transformation before, it has become vital for all today. Consumers in most parts of the world continue to shift to online shopping across different categories and industries.
The new homebody economy persists essential for the majority now, and most people plan to shift almost entirely online, even in the post-pandemic reality. Consumers continue building new digital habits and incorporating digital behaviors into their daily life. The popularity of online shopping, restaurant and grocery delivery and telehealth services is increasing.
The fear and anger are going behind
During the pandemic, society experienced growing fear, anger, and racism in many cases. A sense of individualism is raised instead of so necessary consolidation in times of stress and uncertainty. Companies and authorities started building awareness of this problem and incorporating new anti-discrimination programs to avoid further social division into communities.
Social diversity, equity, and inclusiveness have become new anthems of modern society. As a part of sustainable development, these values are new priorities quickly diffusing across different industries and countries. On the path to consolidation, people are becoming more conscious regarding their actions, decisions, and treatment of other people.
Racism and diversification are being replaced by the idea of social holism — the theory that each individual part plays its own important role, but it also works within an integrated system where all parts are interconnected and harmoniously coexist. Thus, a whole is regarded as greater than a sum of different parts.
Cognitive overload by different stressors
Even though people have experienced many changes for the better in terms of quick innovation, digitization and social integration, it has happened under the pressure of high stress, pandemic restrictions and financial challenges. Consumers are experiencing real cognitive overload as stressors impact their minds from almost every aspect of their lives.
As a result, we see amplified responses to situations and decisions and extreme reactions to negative experiences. They may feel a lack of understanding from organizations, especially in the government and financial sectors. Thus, building customer-facing communications and mitigation programs is necessary for companies that aim to retain consumer trust and loyalty in the current environment.
The vision of the post-COVID future
Today, the majority speaks out concerns about the repeating and possibly upcoming pandemic waves and possible economic challenges. But only a few speak out about the deepening financial insecurity that accompanies the coronavirus crisis. The pandemic should motivate financial companies to reconsider many processes and develop meaningful, adaptive online experiences, taking into account new consumer sentiments.
While the financial industry has already made some steps toward digitization in banking and mobile finance management, it has lacked a more inclusive, encompassing and innovative approach. We witness the growing demand for interconnected digital products and services that are more adaptive to changes in the modern environment and can build new-age personal finance.
Members of all generations, particularly Gen Z and millennials as the primary future-building force, need a holistic financial platform that will meet their urgent money concerns and help them organize personal finances. To address this need, we at Hennii built a personal financial assistant powered by conversational AI. A better, sustainable future requires us to create innovations that will empower individuals to build their wealth and become financially independent regardless of the pandemic challenges.