How is the Coronavirus changing money habits?

It’s no secret that the coronavirus pandemic has altered almost every aspect of our daily lives, including spending habits. As you would expect in these times of uncertainty, spending is down across most industries. Lockdown measures resulted in borders closing and air travel restrictions. Restaurants, shops and gyms also had to close, which left us with fewer things to spend our money on. The economic impact of the outbreak made consumers wearier of over-spending since they were faced with the possibility of losing their income in the coming months.

Over the last few decades, we, as a society had developed an acquisitive mentality. We’re always looking for something new to buy. The more, the better. But when dealing with real challenges, our instincts push us to revert our purchases to the bottom of Maslow’s hierarchy. We need food, shelter and safety. We start reevaluating what really matters and what we can live without.

It the United States, consumer spending accounts for 70% of the GDP. Our purchases, whether big or small, are what drive the economy and the markets. Right now, the quarantine, income instability and unemployment have made us less inclined to spend. Even those who are lucky enough to still have a salary have changed their money habits.

Travel & Transportation

Tightening travel restrictions and social distancing measures have, unsurprisingly, led to a considerable decline in the travel and transportation industry. The International Air Transport Association (IATA) estimates total revenue losses for 2020 at $84.3 billion – the worst year in the history of aviation. According to data from the World Travel and Tourism Council, this puts more than 50 million jobs at risk. If we consider that the travel and tourism sector makes up 10.4% of global GDP, we begin to understand the serious ramifications of these losses.

Even though at the beginning of the pandemic, millennials were taking advantage of cancellations to buy cheap flight tickets and explore new destinations, as things progressed, they too started channelling their financial resources elsewhere.

Since fewer people are travelling to work, we can also see a decline in spending on commuting. Companies are developing better teleworking infrastructure but, once restrictions are lifted, and we can gradually go back to our normal lives, we will see spending start to increase in this area. With that being said, many analysts speculate that this might result in long-term changes as both employers and employees are becoming less reticent regarding remote work.

Attitudes toward public transportation have also changed. About a fifth of people who regularly relied on trains, subways and busses say they will no longer use them while 30% are trying to use them as little as possible. Ride-sharing apps and taxis have also seen a drop in demand. Many people prefer to use their personal vehicles as their exclusive mode of transportation for fear of contracting the coronavirus.

Cash Is Becoming Even Less Popular

The use of physical money was on the decline even before the coronavirus outbreak, but it did speed things up. Currently, we’re mostly shopping online, and even if we go to a physical store, we’re asked to pay by card to help contain the spread of the virus. Moreover, contactless payment limits have been raised. ATM withdrawal frequency is down by 70%, and it’s not because of tightening budgets because the amounts we withdraw are up by 16%.

Most bank branches have reduced hours, but they’re still open. Even so, most people try to avoid going and prefer online banking. Registrations for online banking services have doubled in the past few months, which would suggest that people want to solve most of their banking issues digitally, whether they’re paying bills or applying for a loan to help them get through the crisis.

Customer expectations regarding banks have also changed. We now want the financial institutions we choose to support to also support us. To advocate for us. To give us advice and help us delay obligations when we are not able to meet them as well as process loans quickly to save small businesses.

Online Shopping

E-commerce was on the rise before the pandemic. Since physical stores have had to close and people try to avoid getting exposed to the virus, they’ll be more inclined to do their shopping online. We all saw on the news that Amazon had to hire 175,000 new employees to keep up with the increased demand. This might turn into a long-term habit, which can make it even harder for physical stores to recover after the pandemic.

One of the main reasons why we see a dramatic increase in sales is that people have started doing their grocery shopping online, and they eat more at home since they can’t go to restaurants. We’ve also seen an increase in demand for no-contact food delivery, so companies have quickly adapted. Now the delivery driver simply leaves the food on the doorstep. Most popular delivery apps have made this option possible, and customers can even send a picture with instructions on where they want their food to be dropped off.

Online vendors rely on CRM software to personalise marketing. CRM made for ecommerce specifically is amazing because it has the right metrics businesses needs for checking orders, sessions, product interactions, acquisition source, last activity and LTV. This tool shows customer behaviour, what people are looking for when they visit a website and how long it takes them to make a purchase. During the pandemic, the businesses that use CRM can easily customise their services to meet their public’s needs.

Health, Fitness & Beauty

Health care spending has decreased. This may seem paradoxical, but it’s because people are trying to avoid exposure to the virus, so they’re cancelling elective procedures. This means that dentists and other specialists not involved in the coronavirus response are facing a decline in revenue. Hospitals have also lost revenue because of cancellations of non-emergency work have had to adjust their budget and cut pay for physicians, nurses and other staff members.

Nobody’s going to the gym anymore, but many people are using the lockdown as an opportunity to get into better shape at home. Searches for purchasing or renting gym equipment have risen by a staggering 3,600%. Platforms like YouTube report an increase in searches and views for videos of yoga classes and home workouts. Personal trainers are trying to adapt to the current circumstances, so they’re offering their services online as well as releasing fitness-related content.

Regarding beauty and wellness, there is an increase in skincare products but a decline in make-up products. Most likely, that’s because people are not leaving the house as much and working from home. This also explains why the apparel industry is experiencing a similar slump in sales both online and offline.

 

By News784

News784 posted this article. You can send press releases and news ideas to news784svg@gmail.com

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