COVID-19 caused consumers to abandon cash during the pandemic, and most intend not going back, according to new data from the Commonwealth Bank.
But perhaps more surprisingly, support for the BNPL model is tepid at best, with consumers preferring digital wallets and debit cards. Turns out consumers recognise another debt trap when they see one after all.
The CommBank Consumer Insights Report asked over 5600 consumers about their spending behaviours and their expectations. The authors point out that consumers have adapted to rapidly changing customer priorities as they dealt with COVID-induced restrictions.
Among the other key findings:
- More than 50 per cent of Australian shoppers want to buy locally sourced and produced products. This is across many categories e.g. recreational goods, fashion, electronics and groceries.
- Half of consumers chose to shop more with domestic online retailers and say they will continue to do so.
- Two fifths of consumers directed their unspent money toward savings and investments, the majority of which were amongst Gens Z and Y.
- Most people expect that they will reduce DIY and household improvement activity and working from home.
But it is the data about how consumers buy and how they intend to buy in future that stand out.
According to the report, cash is no longer king. Indeed, cash will crash, if consumers are telling the truth (and the unwinding of national ATM networks by the banks suggests that they, at least, believe it’s true). Consumers are two to three times more likely to use less cash than to return to it this year. And in the younger cohorts the results are more pronounced.
The result is reversed when it comes to attitudes to digital wallets, where expectations are running strongly towards increased usage, with huge increases in expectations of usage among Gen Z and Gen Y.
Buy Now Pay Later, however, gets a tepid response. Younger consumers are only slightly more likely to say they will adopt the model this year, and just as many Gen Y users say they will use it less this year as those who say they will use it more. Older consumers show a little bit more interest, but from a low base.
Credit cards, meanwhile, are most on the nose. Four of the five age cohorts show either no increase in usage expectations, or declines. Only the youngest consumers expect to increase their usage, and then only by a small percentage. Interestingly. Gen-Z consumers are more likely to say they will increase credit card usage this year and BNPL usage.
CommBank’s Executive Manager of Consumer and Diversified Industries, Jerry Macey, told which-50, “And all of these have been reactions to consumers, wanting simpler ways to shop.”
He said it is important for retailers and hospitality venues to recognise if their cohort of customers is demanding one of these particular ways of shopping. “Whether that is with Apple Pay or Buy Now Pay Later, make sure that you get on top of that, and you understand it, and that you that you enable it.”
Commbank’s analysis is echoed in other data sets.
According to Radnick van Vollenhoven, managing director, Stocard, “Our data shows a similar trend, Australian consumers continue to adopt mobile wallets with growth in downloads of the Stocard wallet increasing by around 25 per cent year on year to around 4.4 million shoppers.”
Stocard’s audience data further shows that the largest consumer segment using its app in Australia are female household decision makers between 35-44. “We continue to see strong adoption of our mobile wallet, with 60 million global users and 4.4 million of them in Australia.”
“Our payments product in Europe that is integrated with the loyalty functionality is seeing strong demand and take-up and we plan on rolling this out in Australia later this year to further enhance the shopping experience and build the mobile wallet of the future.”
He said, “In terms of the benefits of digital wallets for the consumer, I think there are really only upsides. Mainly the speed, convenience and ease of use, increased security and COVID safe nature of the transaction are key reasons why shoppers will continue to flock to these solutions for their loyalty and payment needs.”
The report also reveals that one in four consumers have increased online purchases, with the biggest change in online shoppers’ activities during the pandemic being an increase in purchases made from Australian online retailers.
The report’s authors observe that the trend looks set to continue — with nearly one in two people (49 per cent) shopping more with domestic online retailers in 2020, and 52 per cent saying they will continue to do so this year. In contrast, consumers who made purchases from online retailers based offshore indicate their number of purchases moving forward will taper or revert to pre-pandemic levels.