There’s no doubt that Covid-19 has changed the way people shop. Out of necessity and convenience new trends have emerged which may just continue regardless of the state of the pandemic. In an analysis of consumer sentiment across 45 countries globally, McKinsey reported that, apart from a few exceptions, consumers have shifted their shopping habits towards essential and value products. They’ve also found that brand loyalty has wavered as consumers look for more affordable versions of the products they want and need. In another global survey J.P. Morgan reports that an initial phase of panic-buying was followed by a more balanced approach but with an overall increase in purchases of health, personal care, food and beverage products. This makes sense considering that salons and restaurants were closed in many regions, not-to-mention the fact that redundancies, decreases in household income and job uncertainties meant that a lot consumers had to be more cautious in their spending than usual.
J.P. Morgan also found large declines in cosmetic and sun care purchases, probably due to people working from home, socialising less and being unable to travel. Both reports discuss a huge shift towards online shopping which is to be expected. Vulnerable people and those in quarantine have had little option but to make purchases online. Periods of lockdown have also driven people online since brick-and-mortar stores were closed. Many others chose to self-isolate or socially distance themselves, so found the digital world suitable for their needs. This digital shift will probably continue for a number of reasons. Firstly, the sheer convenience of the online world has won people over who may have been less inclined towards it before. Secondly, the world isn’t post-Covid-19 yet so people are still cautious. Thirdly, many shops who were not online before the pandemic, now are since it’s their only option to stay in business.
Online purchases need to be paid for so what do the trends mentioned above mean for the payments sector? Well, open banking may not be at a stage of mass adoption yet but the pandemic has certainly helped it to increase in popularity. Many shops with brick-and-mortar stores are going online to cater to their customers at this difficult time, and for some this means shutting down their physical outlet to save money. Open banking gives shops of all sizes the option to accept payments via their website with much lower transaction fees than those associated with cards making the switch to online a less risky process. It also gives consumers a much faster and straightforward way of making their purchases. With essential products increasing in popularity as others decline, many brands also benefit from better margins by adopting open banking as a payment option. Open banking also gives companies access to enormous datasets that can help them modify their products, services and advertising to better accommodate the market’s needs. As shoppers become more cautious and the economy continues to change in response to the pandemic, this data is a valuable resource.