By Sourcing Journal
This article was originally published in Sourcing Journal October 8, 2020. We are sharing because it provides insight into how the U.S. presidential election and Covid-19 may affect consumer spending. The author suggests companies should begin to execute on strategies now that take this information into account
While the winner of next month’s presidential election stands to have a momentous impact on issues ranging from the Covid-19 recovery to trade, health care and national security, shoppers aren’t basing their future shopping decisions on the candidate who emerges victorious.
First Insight research says this election, however contentious, will not have a measurable impact on consumer spending.
Should incumbent President Trump win the race for a second term in office, 55 percent of shoppers said they would spend more or the same at retail as they’d been planning. Should his Democratic challenger, Joe Biden, pull out a victory, 56 percent of consumers said they would spend more or the same—a mere 1 percent difference.
The survey of more than 1,000 Americans also showed that anxiety about the coronavirus is ebbing. Consumers may be over hearing and talking about the deadly contagion, as concern about the virus dropped by 20 percent since April, from 87 percent to 69 percent.
What’s more, while 89 percent of shoppers said the pandemic influenced their purchasing decisions in April, that number dropped 27 points by September to 65 percent. While 62 percent of consumers said the situation prompted them to actively cut back on spending at the virus’ peak, they gradually loosened their purse strings over the ensuing months. In September, only about half (48 percent) of survey respondents said they were still reining themselves in.
These trends align with observed purchasing behaviors in categories like car sales, home sales and home improvement-related buys, First Insight said.
“It is surprising to hear from the voice of consumers that they expect the election outcomes will have so little impact on their shopping behavior or purchase patterns,” Greg Petro, CEO of First Insight, said in a statement. “It’s also clear that coronavirus fatigue has set in, with the pandemic playing a lesser role in shopping decisions than it once did.”
Given this data, Petro said, companies should begin to execute on strategies now that take this information into account, “and not have a wait-and-see point of view.” Consumers aren’t holding their breath for election results as they head into the holiday shopping season, and retailers should take advantage of the fact that the virus’ hold on their pocketbooks has lessened.
Findings from 451 Research, a part of S&P Global Market Intelligence, revealed similar sentiments in late September. The survey of more than 1,000 shoppers saw 75 percent saying the election would have no impact on their spending for the next 90 days.
However, looking to the remainder of shoppers—those who said their habits would change—reveals some notable insights. More than 16 percent said they expected to pull back on spending due to the election, while just over 4 percent said they planned to spend more.
“For a lot of people, [the election] is a very meaningful event every four years and consequential,” Joshua Levine, senior research analyst for digital economics at 451 Research, said in a statement. “But I think in the end, the majority of households don’t really spend a lot of time thinking about it day to day between their jobs and their families.”
“It’s their personal finances that count” in making decisions about spending, he said, along with their understanding of the overall economy and the safety of their jobs. The results of the election might have more clear cut implications on spending should those areas of their lives be positively or negatively impacted.