Most consumers expect their spending to remain the same in the coming months even as concerns about the coronavirus crisis, the economy and job market persist, according to a new survey by 451 Research, an offering of S&P Global Market Intelligence.
Nearly 52% of survey respondents said their spending will remain the same over the next 90 days compared to the previous 90 days, while 20.4% said they would spend less over the next three months, according to the latest edition of the “Voice of the Customer: Macroeconomic Outlook, Consumer Spending” survey. That is an improvement from the previous edition of the survey when responses collected between Aug. 31 and Sept. 21 indicated that 47% of respondents anticipated their overall spending over the next 90 days to be less than what they spent last year.
The survey, completed between Oct. 2 to Oct. 19, is based on about 1,000 responses from consumers primarily in North America. Survey respondents tended to have higher incomes, with about half reporting they made more than $125,000 annually.
Any continuation of spending will factor into the crucial fourth quarter for retailers, said Sheryl Kingstone, head of Customer Experience & Commerce at 451 Research, in an interview. Consumers are planning to spend on pandemic-related essentials as well as holiday gifts, she said.
“This is where retailers make or break their year from a revenue standpoint,” she said. “These next few months are absolutely essential to the economy, to a lot of the small businesses that are still out there, and large retailers that have already struggled and filed for bankruptcy.”
Shoppers will be focusing their spending largely on essentials and home improvement over the next three months. Nearly 40% of respondents said they plan to spend more money on household repairs and improvements over the next 90 days compared to the previous 90 days, while 23.9% plan to spend more on groceries over the next three months. About 21% plan to spend more on consumer electronics such as TVs and computers while 18.8% plan to spend more on healthcare expenses. More than 15% plan to spend more on travel and vacation over the next 90 days than the previous 90 days while just 13.7% plan to spend more on restaurants.
The coronavirus continues to be a top financial concern among consumers as they pull back on travel, restaurants and other discretionary spending. “We’ve got a trifecta of: attitudes are down, we’re not out partying due to social distancing, and we’re putting all our money into groceries and our house,” Kingstone said.
Nearly 60% of survey respondents cited COVID-19 as the greatest threat to their personal finances, while just over 40% said the stock market’s performance was the greatest threat. Nearly 16% cited the trade war and tariffs, while 14.8% noted the overall job market.
Consumers are also wary of future economic conditions. Over 43% of survey respondents said they expect the economy to worsen over the next three months. About 28% expect the economy to remain the same over the next 90 days while 29% stated the economy will improve within the next three months.
Consumers are also concerned about potential job loss. More than 67% are at least a little concerned that they or someone in their family may lose their job because of layoffs, closings, downsizing or other company cutbacks.
Nearly 75% of respondents plan to spend less money on holiday shopping than a year ago, while 17.4% plan to spend the same amount, according to responses from 219 consumers. Only 8.2% said they plan to spend more money on holiday shopping than a year ago.
More than 72% of survey respondents will be buying gift items for the same number of people as a year ago, while nearly 23% plan to purchase gifts for fewer recipients than a year ago, according to responses from 496 consumers. About 5% plan to buy gifts for more people than a year ago.
Nearly 68% of survey respondents stated that they plan to complete most of their holiday shopping online in a move that would be advantageous to companies like Amazon.com Inc., Walmart Inc. and Target Corp., all of which have benefited from the surge in e-commerce shopping amid the pandemic.
Meanwhile, 9.6% of respondents plan to do most of their holiday shopping in store and about 23% of respondents indicated they did not know.
Those that do not know “are going to be your last-minute shoppers,” Kingstone said. “They are going to be concerned [about the coronavirus] but if they are forced to, they are going to wind up going into the store.”
More than 40% of survey respondents said they planned to spend about the same amount of money online this holiday season compared with last year’s season, while 31% said they plan to spend somewhat more and 9.8% said they would spend significantly more.
Those who decide to shop for gifts in store will want to feel comfortable inside, Kingstone said, adding that retailers must train sales associates on answering shoppers’ questions from a distance. More than 55% of respondents said the most important attribute for in-store shopping was knowledgeable sales associates, while 51.3% cited overall speed when checking out.
“It’s not a luxury to go in-store; you’re going in to get your thing and get out,” she said.