While it may appear that life has resumed its usual rhythm, the question remains: what transformations did consumer habits undergo during the pandemic, and do any aftershocks persist today?
Also by Graham Cooke:
Finder’s Consumer Sentiment Tracker (CST), a comprehensive study of the Aussie public initiated in 2019, provides a unique lens to examine consumer attitudes and behaviours before, during, and after the pandemic.
Savings were higher than ever…
At the height of the disruptions in 2020, Australians displayed marked financial prudence. According to the CST, the average monthly savings for Aussies escalated by 45 per cent - from $636 in February 2020 to a peak of $925 in March 2021. Notably, this increased thrift meant Aussies leaned less on credit - the percentage of consumers relying on credit cards for financial management plummeted from 30 per cent to a low of 18 per cent between May 2020 and May 2021.
But then, spending surged…
Interestingly, once the pandemic's grip loosened, the pendulum of consumer behaviour swung the other way. Average monthly savings returned to pre-pandemic levels ($623 by May 2023), and consumer spending surged post-lockdown. Monthly retail turnover through the year was at or above 9 per cent between February and May 2022, rocketing to an extraordinary 19.3 per cent in August 2022.
And then, financial stress set in…
However, the sting of rising inflation and interest rates, coupled with this spending spree, led to a notable uptick in consumer stress, especially around grocery expenses. This has been mirrored by a renewed dependence on credit, which hit the 30 per cent mark in June 2023.
The housing market, too, underwent a rollercoaster of consumer sentiment. When the first COVID-19 lockdowns were announced, confidence in property investment took a nosedive - belief in it being a good time to buy property fell from 52 per cent to 42 per cent between March and April 2020. However, this downturn was short-lived, with confidence rebounding to a high of 67 per cent by year's end as fears subsided of a negative pandemic impact on the housing market.
Sentiment eventually turned…
This optimism waned once more in the post-pandemic era, with only 25 per cent of Australians considering it a good time to buy property by May 2023. Inflation and higher interest rates rekindled apprehensions about the housing market's stability.
The emotional toll of the pandemic was also evident. The number of Australians who reported being happy at the time of taking part in the research dipped from 80 per cent in February 2020 to 69 per cent in April of the same year, falling below the survey average of 77 per cent. Despite this initial setback, happiness levels recovered impressively, standing at 79 per cent by July 2020. Yet, recent data (July, 2023) indicates a slight dip to 74 per cent, potentially reflecting ongoing concerns about the cost of living.
But there is one thing we were less stressed about…
An interesting sidebar to these findings was the reduction in stress about petrol costs during the lockdown. With Aussies commuting less, only 8 per cent listed petrol as one of their top three stressors in April 2020, down from 15 per cent in March. However, the end of lockdowns and growing geopolitical tensions - specifically Russia's invasion of Ukraine - saw this stress factor rise to a record 34 per cent in July 2022. It has hardly abated since.
The COVID-19 pandemic has ushered in significant swings in consumer behaviour in Australia, some of which are still being felt. As we move forward, observing these trends will be essential to understanding the new normal of consumer sentiment and behaviour in a post-pandemic world.
It must be said, though, market forces changed so dramatically following COVID that it would be inaccurate to say we have returned to “normal”, whatever that is. We are still living in a post-COVID world, and it may never quite be the same as it was before.