Consumer Behavior Shifts & How it Impacts Real Estate Part 2
In part 1 of CBC’s Consumer Behavior Shifts & How it Impacts Real Estate blog series, we discussed the ways in which consumer behavior has changed over the past two years and how those changes impact every facet of retail strategy. In part two, we will dive into the long-term impact of COVID on consumer behaviors and patterns, how these patterns are impacting both the restaurant and retail industry, and the effects of online shopping.
Understandably, the unique circumstances of the pandemic led to long-term behavioral shifts and patterns amongst consumers. Uncertainty driven by inflation, increased gas prices and ongoing COVID concerns has motivated consumers to eat at home. According to a study by Acosta, 47% of adults ate breakfast at home every day (versus 37% pre-COVID) following the start of the pandemic. Additionally, 47% of adults ate breakfast at home every day (versus 37% pre-COVID), 40% of adults ate lunch at home every day (26% pre-COVID) and 31% of families ate dinner at home every day (18% pre-COVID).
“These shifts have significantly impacted the restaurant industry, leading to $240 billion in lost revenue and 110,000 restaurant closures, according to the National Restaurant Association,” explained Colin Stewart, executive vice president of business intelligence at Acosta. “Post-COVID, shoppers believe eating together as a family will continue, and 20% even say that it will increase.”
The Rise of Online Shopping
Ecommerce was growing rapidly before COVID-19 hit, but the pandemic pushed more U.S. consumers online and led to people spending more money and time online in general. In fact, Digital Commerce 360 estimates the pandemic contributed an extra $218.53 billion to ecommerce’s bottom line over the past two years. In 2020, the coronavirus added $102.08 billion in U.S. ecommerce, and it added $116.45 billion in 2021, according to Digital Commerce 360.
Additionally, in part 1 of our Consumer Behavior Shifts & How it Impacts Real Estat blog series, we discussed the shift towards shorter, more frequent visits to the grocery store amongst consumers. According to a whitepaper by Placer.ai, 52% of respondents from their survey reported doing more online grocery shopping since the start of the pandemic. The increase in online grocery shopping could indicate that a significant share of shoppers view their trips to the store as complementary to online shopping. Many consumers now place their larger grocery orders online and make quick, frequent trips to the store to grab items in between deliveries.
Now that we’ve observed new behaviors and patterns amongst consumers, especially when it comes to eating at home versus going out to restaurants; more people utilizing online grocery shopping due to the pandemic, inflation, and gas prices; as well as the way in which people are shopping more frequently but for a shorter amount of time, it will be interesting to see what new consumer patterns arise with less COVID related restrictions. Investors and developers will have to navigate these significant changes and challenges when deciding if opening new restaurants, shopping centers, or grocery stores is the right business decision/ investment.