Although spending has decreased as a result of the pandemic, going forward, the expectation is that people would revert to their previous consumption patterns, an Ernst and Young (EY) Malta survey has revealed.
The survey, titled ‘Malta Future Consumer Survey’ was carried out in the first week of August 2020 with a stratified random sample. It assessed the behavioural changes and concerns of consumers as well as provide certain sectoral considerations based on the results.
Ronald Attard, EY Malta Country Managing Partner, said: “While some results may not come as a surprise, such as initial decreases in spending for non-essential items and increases for essential items, others provide Maltese businesses clearer indications of the behavioural changes that have been accelerated as a result of the Covid-19 pandemic. Organisations will need to transform their businesses to engage more effectively with the virtual customer seeking limited proximity. Pricing models, product portfolios, precision marketing campaigns and operational considerations around footprint will need to be assessed with a different mindset altogether.”
One major behavioural change the survey picked up on is a significant decrease in current spending across various categories of discretionary items including vacations, clothing, sporting equipment, luxury items and out of home entertainment. On the other hand, increased spending has been registered for non-discretionary categories such as food items, groceries and household products.
The general perception is that there will be a return to pre-COVID-19 levels of spending across all categories in the future once the pandemic is over. Affordability remains a concern though, with 67% of respondents indicating they will be cautious about their spending and 45% saying they will postpone major purchases.
Furthermore, the survey indicated that a significant segment of respondents shows that several behaviours that may permanently change post Covid-19. 18% of respondents (mostly young respondents up to the age of 40) said they will own fewer physical items, suggesting that a segment of society may attach more importance towards ‘experiences’.
With regards to consumer concerns, the survey found that which most respondents across all age groups are generally comfortable to carry out essential activities, levels of anxiety increase across other non-essential activities such as shopping, going to restaurants, bars and pubs. More significant anxiety levels are perceived in activities involving schooling for children, vacations, and using public transport.
Most respondents also perceive a protracted period until daily activities can return to normal; activities linked to leisure and travel attract the highest levels of concern.
EY Malta concluded that technology is a major influencer of these changes, which suggest that businesses will need to transform their organisations towards more digitalised solutions and seek to accelerate this process in order to compete effectively in the future. It came up with the following sectoral recocomendations;
Restaurants; social distancing and contactless payments are of paramount importance with 88% of respondents expecting this change. The trends suggest a closer affinity towards local, independent restaurants compared to other restaurant categories, like buffets which are the least popular.
Work; there are increasing trends towards technology for flexible work conditions are highly indicative of potential pressures on future demand of commercial properties and office space.
Retailers; potential threats to demand emerge as a significant number of people (67%) indicated increasing caution towards levels of spending, and 45% are willing to postpone big-ticket items. Retailers will need to align their pricing and promotion strategies effectively in order to address these pressures.
Banking; there is a growing trend towards digital and remote banking platforms which are broadly unrelated to the age profile of the respondent; 41% of respondents said they will not visit physical branches.
Travel; there is a significantly negative outlook towards the future demand for travel with 52% expecting to take fewer flights. However, 30% would switch to domestic tourism which may create certain opportunities for hospitality sector players to tap into this segment effectively.
This survey will be conducted periodically to capture changes in consumption. In fact, it will be further explored during EY’s Future Realised Week in October.
To find out more about the virtual event, which includes several international and local speakers analysing Malta’s FDI and business landscape for Covid-19 and beyond, visit: https://www.ey.com/en_mt/events/future-realised-malta-2020-. To register for the event, send an email should be sent to events@mt.ey.com.