: Splurging on luxury products instead of vacations and haircuts at home — what consumer behavior looks like 5 months into the pandemic

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Consumers are embracing “DIY” hairstyling and splurging on luxury products such as wine with unused vacation funds.

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Among many facets of daily life, the pandemic has not only changed how Americans shop, but what they’re shopping for — and those trends have shifted with each new phase of the pandemic.

In the early days of the pandemic, anxious and fearful consumers reacted to shelter-in-place orders and the spread of coronavirus in their area by stocking up on cleaning supplies, frozen foods and paper goods in the event that they would have to quarantine for two weeks.

But as the pandemic has progressed, “consumers have, in many cases, stopped responding to the news cycle with their wallets,” a recent Nielsen NLSN, +3.96% report said.

When Americans started to receive stimulus checks in April, amounting to $1,200 for individuals who earn up to $75,000 and $2,400 for married couples earning under $150,000, many bought electronics, gaming equipment and apparel from stores like Walmart WMT, -0.52%, Costco COST, -0.24%, Best Buy BBY, +2.76% and Target TGT, -0.43%.

That trend started to fade as many Americans exhausted those funds.

Also see: Amazon Prime Day delay, back-to-school uncertainty is changing the shopping calendar 

With back-to-school plans still in the limbo in many parts of the country and summer coming to close, here are five consumer trends that are shaping this phase of the pandemic.

People are shopping more locally

More than half of consumers around the world have started to buy more locally-sourced products, according to an Accenture ACN, -0.30% survey of 8,800 people across 20 countries conducted June 22 to June 26. 

That trend has been driven partly by the many people who have continued to work from home, said Oliver Wright, managing director and head of Accenture’s global consumer goods practice. 

‘Even before the pandemic, people wanted more distinctiveness and were starting to seek out locally-sourced products, the pandemic has just accelerated that trend.’

— Oliver Wright, managing director and head of Accenture’s global consumer goods practice

Consumers’ growing preference for toward locally-sourced goods is also fueled partly by the toll the pandemic has taken on small neighborhood businesses, especially bars and local restaurants. “More people are seeing that and are collectively rallying together to show support for them with their pocketbooks,” Wright said.

Survey data indicates that shopping local is a trend that will probably stick around beyond the pandemic, Wright added. “Even before the pandemic, people wanted more distinctiveness and were starting to seek out locally sourced products; the pandemic has just accelerated that trend.”

Splurging on luxury products with money set aside for a vacation 

Since the pandemic has brought summer vacations to a near halt compared to prior years, people who saved up for a summer vacation and find themselves unable to safely travel are using that money to splurge on luxury products instead, Nielsen found. 

“Consumers who can afford it are opting for products like nicer bottles of wine, nicer cuts of meat, artisan bread, sushi and facial skin care to compensate for the travel and entertainment experiences they can no longer safely enjoy,” Scott McKenzie, Nielsen Intelligence Unit Leader, told MarketWatch. 

A reduction in ‘bulk purchasing mentality’ 

Back in March and early April, consumers flocked to wholesale stores including Costco COST, -0.24% and BJ’s BJ, +1.74% to stockpile pantry items, cleaning supplies and first-aid supplies such as Band-Aids JNJ, +0.18% and pain relievers. 

That scarcity mindset has calmed down significantly, according to Nielsen.

‘Consumers who would normally be able to save money by buying larger, more economical pack sizes may be forced to actually buy smaller pack sizes as and when they can afford them’

— Scott McKenzie, Nielsen Intelligence Unit Leader

“While still at least 11% above the average weekly basket size from 2019 by the end of June, we can already see that in the U.S., the average size of the American shopping basket has continued to come down from peak COVID-19 levels,” McKenzie said. 

As a result of the decline in bulk purchases, McKenzie predicts that more companies will opt for smaller packaging sizes. “Consumers who would normally be able to save money by buying larger, more economical pack sizes may be forced to actually buy smaller pack sizes as and when they can afford them,” he said. 

More ordering in on employers’ dime 

At the onset of the pandemic, a big question was how long working from home would last. At that point, employers were hesitant to allow employees to expense lunches, said Eric Friedrichsen, CEO of Emburse, an expense management company with more than 14,000 clients around the world. 

But now that several companies, including Google GOOG, +0.42% GOOGL, +0.37% GOOGL, +0.37%, have told employees that a return to the office won’t be for at least a year, employers have been more generous with allowing employees to expense lunches, he said. 

“In the first month of the pandemic, we saw a lot of one-time expenses, such as office equipment and monitors, went up dramatically then flattened out,” Friedrichsen told MarketWatch. 

From January to March this year, the average transaction employees expensed on lunch through Uber Eats UBER UBER, +0.13%, GrubHub GRUB, -2.41%, Postmates and Doordash was $35.61, according to data Emburse provided to MarketWatch. By May the average transaction for the month jumped to $55.37.

“This is part of organizations’ efforts to humanize work for their teams,” he added. 

From January to March this year, the average transaction employees expensed on lunch through Uber Eats , GrubHub, Postmates and Doordash was $35.61, according to data Emburse provided to MarketWatch. By May the average transaction for the month jumped to $55.37.

Another trend he’s noticed is that business expenses for alcohol are a lot higher than what would normally be the case for this time of the year. That’s likely due to more companies making an effort to pay for alcohol for virtual employee happy hours, Friedrichsen said.

People are embracing ‘do-it-yourself

With time on their hands and many businesses closed, Americans have become their own barbers, home renovation contractors and chefs.

They’ve also been filling their time at home with new hobbies such as gardening and embracing the outdoors for recreation. For example, there’s been in uptick in sales of fishing gear, Walmart WMT, -0.52% CFO Brett Biggs pointed out on the company’s second-quarter earnings call. 

A “do it yourself” or “DIY” mentality has found its way into many American homes in the form of home improvement projects, hair styling and cooking. 

Don’t miss: Which DIY home renovation projects could add the most value to your house — and which ones to avoid

In June, sales of electric razors, hair coloring, pet grooming and food preparation products such as canning supplies and seaweed and sushi wraps all increased by more than 19% compared to June 2019, according to Nielsen. 

Sales of meal-kits made by Hello Fresh HFG, +1.21%, a Germany-based company that is popular in several international markets including the U.S. and Canada, saw a 122% jump in sales in the second quarter this year compared to last year. The kits include ingredients that home cooks can quickly turn into dinner.

“Companies that can intelligently drive the discovery and learning of DIY behaviors, will succeed in empathizing with current consumer interest in creative, cost-conscious and safe consumption,” the Nielsen report states.

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