Shifting consumer spending habits in 2021
In 2020, we saw significant changes in consumer spending behavior, particularly as it relates to household savings and online shopping, that could carry on in the post-pandemic environment.
Households typically build more savings in times of economic uncertainty to be prepared for any loss in income during a recession. This historical trend was intensified by COVID-19 as many consumers pocketed their stimulus checks from the federal government and any savings from reduced spending during the pandemic. The personal saving rate (as measured as a share of disposable personal income) averaged nearly 20 percent during the first quarter of 2021 – far higher than the seven percent average from 2010 through 2019. In fact, saving rates haven’t been this high since the early 1970s. This is paired with consumer concerns around price increases.1
Opportunity: With the consumer trends of saving, convenience, and price consciousness, more may be interested in bundling their policies.
The most recent Agency Forward Survey found consumers believe bundling saves them money (69%), time (57%), and consolidates bills into a single payment (52%).
- 51% of agents see bundling as a way to retain customers. However, there are some misperceptions agents may need to address:
- 33% of consumers don’t want to bundle because they think they already have the best rates, 25% don’t want to change their current set-up
- 46% of agents think customers are wary of added costs
- When it comes to Nationwide products, consumers can save an average of 20% when bundling home and auto
Additional considerations around bundling include:
- 71% of consumers bundle policies under the same carrier, and 7-in-10 prefer to have their policies with the same carrier
- 59% of consumers expect insurance agents to bundle policies with larger or well-known insurance carriers (62% of Black American consumers and 69% of Hispanic consumers think this)
While online shopping was becoming more common before the pandemic, COVID-19 forced consumers to shop differently. In the beginning of 2020, many shoppers remained at home for their personal safety and as a result of stay-at-home orders. Consumers were purchasing essential items (e.g., hand sanitizer, groceries and cleaning supplies) all from the comfort of their own home.
Put simply, COVID-19 has pushed more shoppers online. In fact, in the second quarter of 2020, e-commerce accounted for 16.1% of all U.S. sales, up from 11.8%.2 Some experts expect this trend to continue even after the pandemic has subsided.
Opportunity: With more consumers shopping online for their everyday needs, make sure your website is sharing your story, services and value.
This article offers a glimpse of the potential economic challenges with changing consumer trends and opportunities in 2021. To ensure your business is doing all it can, it’s critical to work with industry experts who have the necessary knowledge and experience.