Consumer Behaviour Shifts You Need to Know for 2021

At the risk of getting ahead of ourselves, it seems the days of record-low consumer sentiment are well and truly behind us. The ANZ-Roy Morgan consumer confidence index has almost returned to the level it was at this time last year, and experts are predicting a slight increase in holiday spending over 2019. Finally, some good news!

But before you dust off all those 2020 plans you put on hold, remember that consumer behaviour changed significantly during COVID-19, and some of these new habits are likely to stick around for several months, if not longer. Here are some of the key consumer behaviour shifts you need to be aware of in 2021. 

2020 trend: Brand loyalty went out the window as stock shortages and price considerations forced many consumers to try new brands

According to a recent deep dive into Australian consumer sentiment and behaviour conducted by McKinsey, 32% of consumers have tried a different brand and 26% have tried a different retailer, store, or website since the start of COVID-19, and the vast majority (over 80%) said they plan to continue this new behaviour. A smaller share of consumers have tried a new shopping method such as click & collect (15%), private label or store brand (15%), or new digital shopping method (11%) since the start of COVID-19, but they also plan to continue this behaviour. 

The top two reasons for trying a new retailer, store, or website was that it offered better prices and promotions, or better value. These were also the top reasons for trying a new brand, alongside products being in stock.

2021 tip: Value for money will be a crucial factor in customer acquisition and retention.

You should take advantage of the fact that COVID-19 disrupted customer loyalty by focusing on value for money in your marketing and messages in 2021. While it’s true that discretionary spending has started to rebound, and more people think they’ll be better off financially this time next year than at any point since March, 43% of Australian consumers are still very cautious about how they spend their money, according to McKinsey. Even if you can’t compete on price, highlighting the unique origin or high quality of your products will appeal to customers making more considered purchase decisions. 

2020 trend: Concerns about store cleanliness and crowds as well as stock shortages drove more people to shop online.

With many non-essential stores closed to the public for some amount of time this year, it’s not surprising that 2020 saw record numbers of people shopping online. Even after the lockdowns lifted, some consumers continued to avoid stores due to crowds. According to the McKinsey survey, 34% of Aussies changed where they shopped for groceries to a less crowded store. Physical distancing and cleaning and sanitisation were the most important factors for people when deciding where to shop in-store. 

At the same time, consumers picked up new digital habits during COVID-19, with more people using online streaming, online fitness, grocery and restaurant delivery, click & collect and video chat than before the pandemic. Overall, McKinsey found a 20-35% increase in the number of people who shop online for most categories. 

2021 tip: A great user experience will be necessary to meet higher online shopping expectations. 

A burst of demand for in-store shopping and outdoor dining followed the end of each lockdown in 2020 – that’s understandable. But as we move into 2021, many Aussies will be keeping up their new online shopping habits, and you’ll need to provide a great online shopping experience to attract and retain these customers. 

It goes without saying that you need a fast, personalised and easy-to-navigate website, smooth checkout process and supportive customer service, but don’t forget to take into account new demand for features like video chat, virtual styling and click & collect. COVID-19 may have accelerated their uptake, but they remain relevant and useful. And even though stock shortages are no longer an issue, providing live updates about stock levels online is the kind of thing that will set you apart in the eyes of the post-pandemic consumer. 

2020 trend: Impact of bushfires and lockdowns sparked a wave of support for small businesses and locally made products.

Between catastrophic bushfires at the start of the year and COVID-19 restrictions in the middle, small businesses did it tough in 2020. But grassroots and government campaigns to raise awareness about the challenges facing small businesses – including Buy from the Bush, Empty Eskies and Click for Vic – sparked a wave of support. 

More than a quarter (26%) of the Aussies surveyed by McKinsey said they had started shopping at a new retailer, store, or website in the past three months in order to support a local business, and 16% said they bought a new brand for the same reason. In addition, 45% strongly agreed that COVID-19 made them more mindful of where they spent their money.

2021 tip: Storytelling will be an important part of marketing to mindful consumers.  

If you manufacture locally or source products from Australian makers, you’re already well-positioned to benefit from the shift to more mindful consumption. But even if that’s not the case, you can still highlight the local aspects of your business. Do you have a unique origin story, or employ anyone with strong ties to the area? Do you support local organisations, or charities? Consider making these topics a bigger part of your communication with customers.