COVID-19: How the pandemic shaped consumer spending habits in 2020

Consumer spending has been heavily impacted by the COVID-19 pandemic in 2020, with job losses and a significant shift to online shopping. As the year comes to a close and the holiday season approaches, experts are analyzing the key trends that have emerged and how they compare to previous years. In a recent discussion on CNBC Africa, Bryan Smith, Content Manager at Wonga; Isana Cordier, Sector Head for Consumer Goods & Services at ABSA CIB; and Esther Ochse, Product Head at FNB Money, shared their insights on the changing landscape of consumer spending. One of the most noticeable trends in consumer behavior this year has been the surge in online shopping. With lockdowns and restrictions in place, many consumers turned to e-commerce platforms to fulfill their shopping needs. Esther Ochse highlighted this shift, noting that there has been a significant increase in online shopping for essentials like groceries, as well as a decrease in discretionary spending such as dining out and luxury items. Isana Cordier echoed this sentiment, pointing out that there has been a reduction in spending on categories like tourism and clothing, while home improvement expenditures have seen an uptick. The move to online shopping was particularly evident during Black Friday, with online spending accounting for 22% of total spending for the day. According to Bryan Smith, the overall outlook for consumer spending in 2020 is expected to reflect a 15% decline year-on-year compared to 2019. Wonga's annual spending survey, which included 8,000 South African respondents, projected a total festive season spending of 210 billion rand. The survey also revealed a notable increase in online Christmas shopping, with 21% of respondents indicating their willingness to do all of their holiday shopping online. Despite the shift to online shopping, a majority of South Africans still prefer physical shopping for Christmas gifts, with 68% opting for in-store purchases. However, the impact of new lockdown restrictions and changing consumer behaviors remains to be seen. The economic challenges of 2020, including job losses and income constraints, have significantly affected consumer spending habits. Esther Ochse highlighted the importance of responsible spending and budgeting, especially as many households have experienced salary cuts and financial strain. Looking ahead to 2021, experts anticipate a continued impact on consumer spending, particularly as job losses and economic uncertainties persist. Isana Cordier emphasized that the true extent of the damage to the economy may become more visible in the coming year, as households grapple with the aftermath of reduced spending and financial support. As the holiday season approaches, South Africans are expected to prioritize essential expenses like gifting and travel, relying on bonuses and savings to navigate their festive spending. Travel plans have been significantly scaled back, with a large majority of respondents indicating that they do not plan to venture outside their home province. In conclusion, 2020 has been a transformative year for consumer spending habits, driven by the unprecedented challenges brought about by the COVID-19 pandemic. As South Africans prepare for the holiday season and look towards 2021, the need for cautious spending and financial planning remains paramount to weather the ongoing economic storm.