Consume spending can serve as a proxy for economic health; coronavirus pandemic has changed consumer spending around the world over the course of last four to five months. Erratic spending patterns appeared largely because of fear and uncertainty as countries across the world started going into lockdowns. But along the temporary stockpiling of essentials, emerged some consistent behaviors that are expected to last at least till the world is back to normal – or at least till the pandemic is over.
Global research and data show that changes in spending patterns have occurred around the first lockdown for any country; during the extended lockdowns; and, finally once the lockdowns were lifted. Spending patterns and consumer sentiments both during the lockdown period and once the lockdowns and restrictions were lifted are likely to be more long term than those that erupted just at the beginning. Spending was down across all categories as lockdowns limited what could be otherwise spent. Later, some of these rationing became semi-permanent for consumers due to job losses, decline in earnings or simply due to the uncertainty of the future. Spending on restaurants, clothes, travel plummeted because of restrictions and suspensions, while online retail and expenditure of groceries and home entertainment increased as people started spending more time indoors.
Similar trends can also be observed in Pakistan. Insights from Hysab Kytab - a mobile app that offers a platform to manage an individuals’ spending, saving and budgeting and has 450,000+ users from over 160 countries - there was an increase in spending in grocery, medicines, committees, and donation/charity post-COVID19 versus pre-COVID19. According to Hysab Kytab Pakistan’s internal data, the number of grocery-related transactions declined, but the total amount spent on groceries increased by 70 percent after the announcement of a lockdown. On the other hand, the amount spent on eating out declined by 66 percent. Another category that showed a significant fall has been mobility and fuel consumption; amount spent on fuel and transport declined by 35 percent.
An interesting behavior that has emerged is the rise in the subscription to Netflix and other online video streaming websites as people are spending more time at home – a trend that mirrors the global increase in home entertainment expenditure. Also, donations and charities increased staggeringly during lockdown – 331 percent, and continues to remain high.
The analysis above covers the period from March till April 2020. As economies reopen, some of these spending behaviors might linger even after the pandemic is over, while others might be fleeting. Some changes are being observed globally. For one, consumer sentiment has not sprung back as incomes have declined and spending is still largely on essentials. Of the most enduring changes will be the move of consumers to online and digital solutions with minimum human contact.