COVID-19 is having a significant impact on many industries around the world, including the retail sector and the fashion industry as a whole. One of the aspects of this is the way consumers are adjusting their behavior during this time. And while some parts of the world are reopening their economies, the effects of unemployment and lost income might be felt for a long time to come. Economic uncertainty, in whatever guise it takes, leads consumers to adapt their behavior.
This pandemic is unlike anything we have experienced in living memory, so consumer reaction is varying across the globe, and changing throughout the crisis.
The psychological drivers of consumer behavior in a situation like the pandemic often includes more emotional reactions to purchasing than at other times. This helped to fuel the panic buying, for example, that was prevalent in the early stages of the pandemic. Consumers are also likely to purchase items that bring comfort – so long as they are able to afford it, of course – to get that dopamine hit that comes from treating themselves, which is a definite factor in some of the customer behavior that exists right now. And as the pandemic and other global issues intensify, consumers are increasingly looking to spend money with brands that align with their own values. Fashion companies that have shifted their production to making masks and gowns for frontline workers, for example, gain goodwill with socially conscious customers who want to spend their dollars in an ethical manner during this time.
A June 2020 report by McKinsey and company has found that many consumers are spending on essentials and not on discretionary categories as they’ve seen COVID-19 affect their income. However, the report found that there is a reduced pessimism by consumers about their future spending on apparel and footwear today versus a previous survey in mid-March, which is a great sign that the sentiment of consumers is lifting. McKinsey also found that as a result of COVID-19, consumers have moved increasingly towards making purchases online and are using digital solutions and reduced contact channels to purchase goods. The trend is particularly magnified among the Gen Z and millennial age cohorts as well as higher income earners.
The report found that there is a reduced pessimism by consumers about their future spending on apparel and footwear today versus a previous survey in mid-March, which is a great sign that the sentiment of consumers is lifting.
Many people who have adopted these methods of purchasing have indicated that they would be likely to continue to do so after COVID-19, which means online retailers can expect to see their market share increasing over time, while traditional bricks-and-mortar stores may never see a return to the way business was before the pandemic. Understanding what customers want, and the psychological reasons for their decision making can help your brand to pivot during this time and remain successful and viable in the longer term. And as the effects of COVID-19 will shape our world well into the future, putting appropriate strategies in place to manage this will be essential.