By the end of 2020, unemployment rates in working capitals are expected to more than triple due to the effects of COVID-19.
This has subsequently affected behavior for the ‘bargain hunters’ consumer group as they are most affected by price changes. In fact, 21% of bargain hunters reported that they are in paid employment but earning a lower income due to the COVID-19 pandemic, while a further 10% are now unemployed as a direct consequence of the pandemic, writes GlobalData, a leading data and analytics company.
According to GlobalData’s report, ‘Bargain Hunters – Coronavirus (COVID-19) Impact on Consumer Behavior’: https://store.globaldata.com/report/cscv2005bi–bargain-hunters-coronavirus-covid-19-impact-on-consumer-behavior/?utm_source=email&utm_medium=pr&utm_campaign=201015a_gd_cm_pr_bargain_hunters_consumer&utm_nooveride=1, the unemployment rate for the US is expected to increase from 3.66% in 2019 to 9.53% in 2020. Simultaneously, consumers have experienced a decrease in their salary, where businesses are asking employees to take pay cuts.
Ramsey Baghdadi, Consumer Analyst at GlobalData, comments: “As the number of bargain hunters continue to grow throughout the pandemic, it is important for brands to find new strategies that accommodate the needs of this consumer group – such as highlighting affordability within their pricing strategy and promotions. Many brands have been accused of profiting from COVID-19, therefore, price reduction strategies will ensure long-term trust with consumers’ post-COVID-19.”
In terms of living conditions, the majority of bargain hunters are young parents with children under 18 (53%) or have three or more people living at the household (62%). This reflects the core drivers for having a tighter budget due to salary cuts on top of unemployment levels, as younger generations such as millennials (50%) would have less disposable income and are more likely to have a family to feed, compared to the silent generation (2%).
Baghdadi concludes: “As many countries settle into the ‘new normal’ conditions that have surfaced in 2020, competition between brands remains high. However, manufacturers need to ensure that the consumers who are on a tight budget are still offered affordable options, now more than ever. This may be the difference between sinking and swimming in a highly competitive environment.”