Four ways consumer spending will change once people are vaccinated

As more people receive the Covid-19 vaccine, corporate leaders and investors are asking themselves a new question: what will consumer spending look like?

About a third of the U.S. population has received at least one dose of Covid-19 vaccine. Airport and shopping traffic is increasing. And some economists predict a major boom that could take years.

Nevertheless, the global health crisis will continue to shape consumers’ attitudes and purchases.

Here are four predictions of trends toward pandemics, based on surveys and reports by experts:

Even after a while, Americans’ health and safety concerns are likely to remain. According to the January survey and analysis of more than 7,000 consumers in nine countries by consulting firm AlixPartners, the U.S. has the highest level of consumers who are “most anxious” about their health and finances.

In the U.S., nearly one in three consumers said they were extremely or very concerned about physical health, and about one in four said they were extremely or very concerned about mental health, according to the report, published in early April.

For retailers, these concerns may increase the importance of maintaining safety protocols, such as more stringent cleaning.

Target said it will affect safety in its future store design. Chief Operating Officer John Mulligan said at an investor day in March that the retailer would include more contactless functions in restrooms and other locations and provide more space for people to space between merchandise and toll roads.

Home offices, picking up from home and lots of cooking exercises – everything will play a role in food habits in the future.

According to AlixPartner’s survey, restaurant meals and travel will be the slowest to return. Among U.S. consumers who have changed habits, 30% said they want to spend more on groceries, and 44% said they will spend less after vaccination compared to what they spent in the areas before the pandemic.

General Mills CEO Jeff Harmening said many Americans ate at restaurants or went to work in the cafeteria on business trips. That dynamic of regular jets, insane commuters and lunches at the table of colleagues has disappeared.

“People want flexible schedules,” he told investors during an income call last week. “While consumers may now be making more vacation plans than they have, business people are not going to travel as much because technology has caught up and we realize we can do a lot of things remotely.”

The way people present their pantry also looks different. Before a health crisis, about 7% of shopping was done online, according to a report by the Mastercard Economics Institute. This share is expected to rise to about 9% of grocery sales in the future. If it plays out, the grocery industry will retain 70% to 80% of the digital profits it saw during the peak of the pandemic.

Grocers and discount stores, such as wholesale clubs and dollar stores, are predicted to show the most dramatic and permanent e-commerce gains from the pandemic, according to a report by the Mastercard Economics Institute.

Customers are excited about the approach, although there may be a breach of trust, Bricklin Dwyer, chief economist at Mastercard, said in a Tuesday interview on CNBC’s “Worldwide Exchange”.

“You have to trust someone else to pick your peaches,” he said. “You have to trust that someone else can deliver your goods and still have it good when it arrives. So these are some of the obstacles we overcome.”

Young consumers want to go out again – and they start spending and dressing accordingly.

Similar to the Great Recession, teenage girls are taking the lead in opening their wallets after the most recent recession with pandemic, according to a poll of teens and twenty by Piper Sandler’s 41st Biennial “Study with Teens.” Nearly 30% of higher-income female teen wallets go to clothing – a high not seen since 2013, according to the report. Handbag spending has risen to $ 93 per teen, an increase of 4% year-on-year.

Chip Bergh, CEO of Levi Strauss & Co., told CNBC on Thursday that the pandemic has inspired the fashion that young customers are embracing as well. Instead of squeezing into skinny jeans, he said they want a wide leg and a thicker denim.

“This is not the first time we’re seeing this resonate with consumers,” Bergh said. “Bicycles come and go. And I think the pandemic has certainly played a contributing role to consumers looking for a more comfortable, more relaxing denim.”

Nearly half of the young buyers surveyed by Piper Sandler said they plan to fly a plane over the next six months, up from 33% in the fall.

Among the generations, Gen Z is also the most enthusiastic about spending time with people outside their households once they have been vaccinated, according to a survey of more than 15,000 people in nine countries by the IBM Institute for Business Value. Nearly 30% of Gen Z respondents said they had more interaction with other people than before the pandemic, compared to Gen X and those over 55 who plan to return to pre-pandemic interaction.

Buyer may have opted for drive-thrus and curbside pickups over the past year for safety. Yet they have discovered the ease of the approach and it will make them come back as they again juggle full of children’s calendars, shuttles and rides.

Retailers have increased their investments to tailor their e-commerce businesses. Best Buy tests stores where they spend more square footage on placing online orders than on flat-screen TVs and smartphones. Walmart and Kroger have both announced plans to invest in automation to keep up with the amount of online grocery orders. Walmart is adding high-tech automated systems to dozens of stores, and Kroger plans to open at least 11 giant facilities with Ocado. The first two of Kroger’s sheds will open in the next few weeks.

“As society has jumped into a new digital age, so has Kroger,” CEO Rodney McMullen said at an investor day last week. He said the company will double its digital sales by the end of 2023.

Restaurant chains also decided. McDonald’s closes hundreds of restaurants within Walmart stores and chains such as Sweetgreen and Shake Shack have announced plans to replenish driveways as diners prefer to order inside their cars. Chipotle Mexican Grill said it is accelerating plans to add more “Chipotlanes” to its footprint as well.

Even though the dining rooms reopened, Chipotle chief financial officer Jack Hartung said online sales remained strong.

‘The pandemic has, of course, put some turbo-delivery behind our digital business, but since Covid started moving behind us – and we have another way to go – we retain most of the digital business, around 80 %, “Hartung said in an interview on CNBC’s” Closing Bell “on Friday.