The coronavirus pandemic has changed almost every aspect of people’s daily lives, and consumer spending is no exception. The uncertainty of the Covid-19 crisis caused considerable changes in consumer habits, forcing them to cut down their budgets and prioritize spending.
According to data recently presented by StockApps.com, the coronavirus outbreak is expected to cut global consumer spending to $44.3 trillion in 2020, an 8.6% plunge year-over-year.
Drop in spending
Falling consumer spending has significant effects on overall Gross domestic product (GDP) growth, considering it accounts for almost 70% of GDP. Before the Covid-19 crisis, global consumer spending had witnessed steady growth for five years in a row, revealed Statista, IMF, United Nations, World Bank, and Eurostat data. In 2015, it amounted to over $41.5 trillion. Over the next twelve months, this figure rose to $42.5 trillion and continued growing. Statistics show that in 2019, consumers worldwide spent a total of $48.5trn, the highest amount in a decade.
However, the coronavirus crisis triggered a sharp fall in 2020, with global consumer spending expected to plunge by $4.2 trillion year-over-year. Nevertheless, statistics show the following years are set to witness a recovery, with consumer spending growing by twenty per cent to $53.5 billion in 2022.
Statists data also revealed that Switzerland represents the leading country globally, with over $40,000 in consumer spending per capita in 2020. Luxembourg ranked second with around $5,000 less than that. Iceland, Denmark, and Norway follow, with $34,300, $25,800, and $25,600, respectively.
The McKinsey&Company survey showed consumers have become increasingly cautious with their spending in 2020. Even after countries lifted lockdowns, many consumers have seen their incomes fall, forcing them to reduce budgets and change shopping habits.
Statistics show that increased time spent indoors led to significant growth in consumer spending on groceries, household and home entertainment. Brazil, South Africa and India lead in this category, with up to thirty per cent consumer spending growth. Major consumer markets like the United States, United Kingdom, Germany and China witnessed around fifteen per cent grocery shopping growth in the first half of the year.
However, with consumers being mindful of their spending and turning to less expensive products, 2020 has witnessed a plunge in clothes and accessories, outside entertainment, services, travel and transportation spending. Respondents in all countries said they cut down spending in these categories between twenty and fifty per cent.
The McKinsey survey also revealed the Covid-19 outbreak triggered a significant change in the shopping mindset. More than sixty per cent of the consumers globally have tried a different brand or shopped at another retailer during the crisis, mostly for convenience, value, and quality.
In China and the United States, over seventy five per cent of the consumers reported trying a new shopping method, while sixty per cent plan to stick with it post-crisis. The United Kingdom and Germany follow with seventy one per cent and fifty four per cent of the consumers who practised new shopping behaviour. In Japan, where lockdowns weren’t imposed, only thirty three per cent of the consumers changed their shopping mindset.