Lockdown sees people’s spending habits change
THE Covid-19 pandemic has changed consumer spending habits equivalent to an annual £12.9bn, according to new research from financial services group Legal & General and Cebr.
This change is largely a result of adult increased expenditure on four key “at home” categories in groceries, alcohol, entertainment and hobbies & crafts, during the lockdown.
This shift, however, comes as consumers are spending an average of £17.9 bn less per month in the wider economy as a direct result of Covid19.
Since the lockdown of March 23, UK adults are now spending an average of £104 per week on the top four ‘isolation economy’ categories alone – a 5% increase on pre-crisis spending.
This equates to a weekly rise in spending of £247m. Those aged 35 to 54 are the biggest contributors in terms of spend, averaging £170m per week on these four key sectors.
Overall, however, despite this £12.9bn shift in where money is being spent, UK households are spending an average of 31% less, equating to a fall in expenditure of £4.1bn per week – or £215bn per year.
Nigel Wilson, chief executive of
Legal & General said: “The Covid-19 crisis is creating fundamental changes to how we work, live and how we spend both our money and our time. Businesses should prepare for lasting change to the consumer economy and falling levels of demand that other areas of the economy will need to step up to fill.
“Billions will need to be invested in new growth industries like health, well-being and life sciences to replace falling spend and fewer jobs in traditional face-to-face consumer industries like travel, physical retail and hospitality.”
Some 6.3 million jobs have been furloughed since the launch of the Coronavirus Job Retention Scheme last month.
Many consumers are having to make cutbacks in certain areas, even if they haven’t seen a change in their employment status, but for those still in employment, spending on the combined four key categories of the isolation economy has risen.
The employed are now spending an average of £107 a week on groceries, alcohol, entertainment and hobbies – a 10% rise on pre-lockdown levels. By contrast, spending on takeaways and fitness-related activities have declined most, with the share of people reporting a decrease in spending exceeding those reporting an increase by 27 percentage points and 14 percentage points, respectively.
The share of people reporting a decrease in spending on tobacco, socialising and costs associated with education was 7% higher than those reporting an increase for each of those categories.
When the monetary value of spending on the four major categories if the isolation economy is averaged across the UK, groceries are the only category that has seen an increase in monetary terms.
UK adults are now spending £73.69 per week on grocery shopping, compared to £67.51 prior to the outbreak of the pandemic.
This increase in spending has largely been driven by those aged between 35 and 54, who are spending 15% more each week to reach £89.94, versus an 8% increase in spending among the under-35s, taking their spending to £56.90.
Those aged over 55 are now spending £70.94 per week on grocery shopping.
Overall, across the UK this represents a 9% rise amongst all adults, and a 14% increase for those who have had no changes to their salary or employment status as a result of Covid-19.
Mr Wilson said: “The isolation economy is a new feature of our daily lives and now encompasses some £13bn a year of the consumer economy.
“As the hub of the isolation Economy, the home is becoming a more flexible space, doubling-up as a place for schooling, work, fitness and entertaining – and we can expect changes to the way we think about and design homes for future homeowners.”
Despite paying less for fitnessrelated activities, across the UK there has been an increase in time spent on exercise and wellness.
On average, adults are dedicating an extra 20 minutes each week to these pursuits compared to pre-crisis levels.
Streaming entertainment has increased dramatically - adults are now spending on average two hours 22 minutes more each week watching TV, streaming programmes and gaming. Socialising via digital platforms like Zoom came in a close second, with an increase of two hours per week per person.