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PwC has released the data from its Consumer Sentiment Survey – Spring 2021*, which shows significant changes in the public attitude towards business, spending, and the economy.
In 2020, the global economy shrank by 4.4%**. In the UK, retail and consumer services were particularly impacted, as people couldn’t go out to eat, shop, or drink. Whilst it has been a long, challenging winter, there’s an attitude of optimism, and plenty of sunshine around the corner. With the coronavirus vaccine rollout, longer days and warmer weather, alongside the reopening of shops and pubs, customers are looking forward to spending their money in new ways.
The retail and hospitality sector has been hit hard during the pandemic, but many people have saved their money, and now have a disposable income. The data shows that people are willing to shop and spend, which is excellent news for the economy, and businesses. The PWC surveys show that people are looking to spend money on the areas that have been hard hit in retail and hospitality, with a keen interest on social spending, such as dining out, going to pubs, and outfits for summer get-togethers.
The most recent Consumer Sentiment survey, conducted in March 2021, suggests that the public’s confidence is now at its highest level, since the Sentiment Index began back in 2008. This is the first time that the ratings have been back in positive territory since before the pandemic. We’re delighted to see net positive sentiment across all regions, suggested to be driven by older consumers’ growing confidence in the vaccine rollout. Positive changes in the handling of the pandemic, have resulted in positive changes for the economy. This is excellent news for consumer-facing businesses, and those in the leisure industry.
The majority of CEOs that PwC interviewed, said they believed the crisis has bottomed out. 51% expected the global economy to improve moderately, and 26% were hopeful of a great improvement. As consumers look to a pandemic-free future, hospitality, leisure, and non-essential retail are going to see positive economic change across the UK. There are many reasons for this good news, as the data reveals why.
Positive Spending Reports
PwC have been tracking consumer sentiment since 2008, before the global financial crisis. There are always fluctuations, however, it is now the most positive it has ever been. The index reading shows +8, which is higher than the previous record of +5 in December 2015, and significantly higher than the start of the pandemic, by 34 points.
The economy has seen a steady recovery since the pandemic drop, but it’s good news for retail and leisure, as consumers now have more disposable income as lockdown ends. There will be a pent-up spending surge across ages, regions and categories, as more areas of the economy open during the summer. This is excellent news for consumer-based businesses, as their customers are keen to return to frivolities.
Age-Related Trends
Whilst there is a significant improvement in consumer confidence across all demographic groups, overall, the UK regions agree, aligning on a net positive sentiment. The population of the UK seems keen to enjoy the summer luxuries.
The most notable change in the data can be seen within the age groups. In the past, the younger age groups have been more positive, due to their optimism surrounding entering the workforce. However, older groups are usually more negative or suspicious, as earnings stop increasing. Since last September, this trend has shifted, as over 65s are now more positive than 35–44-year-olds. The under 35s are the least hopeful in the current economy.
PwC’s November 2020 report noted that the over 65s have been the least affected by lockdown, therefore making them able to save and continue their economic success.
The data suggests the economy is seeing a positive ‘vaccine effect’, as at the time of the survey, the over 65s had been offered their first vaccine, in mid-March. The effect is further supported as the positive data ripples down the age groups. As people begin to feel safer, they’re keen to enjoy seeing people and spending the money they’ve saved.
What Do Consumers Want?
Whilst there are significant advances in the public’s positivity towards spending, it’s also noteworthy how these spending habits and priorities have changed. The main areas in which consumers are spending has been completely upturned.
Before the pandemic, people expected to spend more on holidays, with other categories at a net negative. The categories have changed now, as people spend more on groceries, and categories such as eating out, holidays and going out, noting a significant rise in priority spending. The largest increase has been seen within leisure and fashion, as everyone is ready to wear nice clothes and see friends again. These trends can be explained by a pent-up willingness to socialise.
The most volatile industry will be travel, as it is one of the top 3 industries people are hoping to spend in, yet there is uncertainty about when and what will be open, and how restrictions allow consumers to go on holiday.
Consumers Support Independent and Local Businesses
There was growth in conscientious consumerism last May, which has continued to grow after lockdown. Customers have become more aware of brand-ethics in a time of unstable economy – therefore affecting small businesses.
1 in 5 people say they’ve been shopping with local businesses more, and a similar proportion shopping with small businesses. Fewer shops closed in small towns, helped by people working from home and spending locally. Local economies are increasingly protected by consumer awareness.
What About Vaccine Passports?
PwC looked into what customers thought about vaccine passports, in order to get market insight into how this may affect their spending. The majority of people believed passports should be required for holidays and large spectator events, but public opinion varies based on the activity in question. A small minority also believe a passport should be needed for day-to-day activities.
The data shows more support for the vaccine passports amongst older consumers, who are more likely to have the vaccine, as over half of over-55s support the idea. The younger generation may be frustrated with the idea.
How Will This Affect Consumer-Facing Businesses?
So, how will these findings affect your consumer-facing business? It is important to be aware of the customer attitude of ease and positivity surrounding future spending in summer 2021, as the results bring excellent news for retail and leisure. We recommend PwC’s Retail Outlook 2021, as it offers advice on how consumer-facing businesses need to prepare for the year ahead.
Businesses should be wary, watch key trends, and proactively respond to any changes. Ensure to capitalise on key behaviours, but remain wary of upcoming challenges. Consider the possibility of new variants, a third wave and tightened restrictions, yet remain diligent as a result of positive report findings.
Overcapacity in sectors such as hospitality may prove difficult, but there are new opportunities appearing for entrants into the market. Thankfully, 2021 is about to see a rise in consumer demand.
*Source: PWC 2021
**Source: BBC 2021
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