OCTOBER 2020 IN
RICK ASTER’S WORLD
The drop-off in retail spending is far greater than the decline in consumer income during the current crisis. Consumers are spending less because they have been forced to spend more thoughtfully. Before we saw the size of this effect this year, we never realized how much of the economy was dependent on impulse and convenience purchases.
Previously, shoppers were prompted by the design of retail spaces into making purchases that they never would have arrived at on their own. Whether you see this effect as unconscious shopping habits or the manipulative influence of retailers, it appears it accounted for nearly half of the money spent on in-store purchases.
Now that consumers are second-guessing every retail visit, many of these purchases have vanished. As consumers adjust to making more purchases online or in new places, the unfamiliarity of the process automatically makes them more conscious of what they are doing. The general feeling of uncertainty about the future is another factor leading shoppers to second-guess and postpone.
This effect was observed first in China but now is seen in the same manner and on a comparable scale in North America and Europe.
“If I catch a deadly virus making this purchase, will it have been worth it?” That is one way I have heard the current dilemma facing shoppers stated.
For my part, I have adopted a pattern of staying home for two weeks in a row, then going out to one, two, or three stores in a period of a day or two. My store visits are a fraction of what they were before.
The biggest surprise in this pattern is how little I am missing. I think many shoppers had never stopped to consider that they could postpone all clothing purchases, for example, for several years with little or no practical consequence.
I want to buy more books, but it is okay if I wait until I have read the books I have already purchased — and that could take another year.
For retailers and manufacturers, the biggest mistake would be to assume that shoppers will return to their previous patterns as soon as the crisis has passed.
The essence of what is happening is that shoppers are becoming more conscious about their shopping behavior. Consciousness, once created, is not easily reversed.
Shoppers are also gaining new skills. The sudden increase in cooking skills allow meals to be assembled from less expensive commodity food items, but it is more than just cooking. Shopping skills in general have increased. Forced to discover new places to purchase essential items, often in other firms and at lower prices, shoppers will not forget that those choices exist.
This is all good for consumers but will force the rest of the economy to adjust and keep up.
In evolutionary theory, most big changes happen not gradually over time, but quickly in times of crisis. This is one of those moments that will permanently reshape shopper behavior.
There is a lesson here about how far removed the current consumer economy is from its ideal form. If many consumers can cut back their purchases by half and not be missing anything, that means a large part of the economy is not providing any net benefit to consumers. With adjustments in the areas that aren’t working for us, we could all be a lot wealthier than we are.
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