Bloomberg: Unrest Is Changing the Way Americans Spend Money

(Bloomberg) — The back-to-back shocks of a deadly virus, lockdowns and civil unrest have a growing number of Americans reevaluating not just their life priorities, but also how — or even, if — they’ll spend their money.

Good.Must.Grow, a Los Angeles-based firm, said its Conscious Consumer Spending Index, which tracks expected purchases of socially responsible brands, suddenly rebounded after trending down since 2017, jumping 15% in May from the previous study in November. Asked what criteria would influence their post-pandemic spending, almost 70% of respondents cited a company’s ability to make a positive impact on society and the environment. The firm polled more than 1,000 Americans. 

“The environmental crisis has become better understood by more people in recent years,” said the consultancy’s founder, Heath Shackleford. “You layer on what’s happening with Covid, with George Floyd and all these things — I think we’re going to see a bigger piece of the economy taken up by companies that are purpose-driven.”

In another survey this month of 1,000 young Americans, marketing research firm Morning Consult reported that two-thirds of people between the ages of 13 and 23 would base future buying decisions on how businesses respond to social issues such as Black Lives Matter. Adults responding to the poll rated that movement, along with the coronavirus, as the two most-impactful events of their lives, surpassing even the election of President Donald Trump.

Molly Graham, a 20-year-old Rhodes College junior studying to become a teacher, said she’s directing what little money she’s spending to local stores where she’s adding to books featuring people of color for her future classroom library. Beyond that, she said, “I’ve kind of put a halt on buying.”

These kinds of shifts already are affecting consumer spending, which accounts for almost 70% of the U.S. economy, although hard data tracking behavior changes are only now starting to trickle out.

But early studies show a clear impact on consumers, and anecdotes back this up. For example, Ricky Steele, a 67-year-old Atlanta technology executive, said he’s never made a conscious decision to boycott a restaurant until now. But after a Fifties-style local diner hung a cryptic banner that appeared to criticize the Black Lives Matter movement earlier this month, Steele publicly vowed to take his cash elsewhere. He estimates he’s spent more than $200,000 over the years at the restaurant and said dozens of his social-media contacts — the majority of them White — indicated they’ll join the boycott.

“Spending power has power, and we don’t always appreciate it,” said attorney Yendelela Neely Holston, who also pledged to spurn the popular Atlanta eatery and instead seek out Black-owned businesses.

Some of them, such as ShearShare in McKinney, Texas, are seeing a surge in customers past pre-Covid-19 levels since states began reopening. Revenue generated by the beauty-tech app, which allows hairstylists and other industry professionals to book spaces in salons, jumped 76% this month from a year ago, according to founders Courtney and Tye Caldwell.

Unrest Is Changing the Way Americans Spend Money

“I think that Covid-19 ushered in that change, unbeknownst to any of us,” Courtney Caldwell said.  Frank Warren, the Black owner of Brooklyn’s Breukelen Coffee House, agrees: “We’ve all been forced to live simply, so it gives us lots of time to think.” Sales jumped 30% the week following the Floyd protests, he said. 

Last month’s Conscious Consumer Spending Index also found that almost half of respondents said they plan to work harder on their health going forward. That trend, combined with growing interest in socially conscious enterprises, is steering new customers to businesses including White Oak Pastures in Bluffton, Georgia, which raises grass-fed livestock and grows organic vegetables.

The vast majority of its $20 million in annual revenue historically has come from wholesalers such as Sysco Corp. and retailers like Whole Foods Market, but during the coronavirus lockdown, online consumer orders soared sixfold, owner Will Harris said.

Most of that increase was due to people replacing grocery-store visits with e-commerce, he said. Even so, he expects the online-consumer business to roughly double from its pre-pandemic level of about $2.5 million a year. Almost a third of White Oak’s new customers placed a second order after states reopened, according to Jenni Harris, his daughter and the farm’s marketing director.

Unrest Is Changing the Way Americans Spend Money

“We’re not the cheapest, quickest place out there,” she said. So along with enjoying the products they bought while sheltering in place, the new customers likely “have an interest in animal welfare, land regeneration or rural economics.”

Early data and consumer polling also show that more Americans are less inclined to part with their dollars. While the U.S. savings rate hit an all-time high of 33% in April thanks mostly to Covid-19-induced business closures, some of that frugality seems to be persisting. A June survey of 876 Americans by Acupoll Precision Research found that almost half of even affluent households had cut back on nonessential spending.

Unrest Is Changing the Way Americans Spend Money

Carol Stanford, a longtime San Diego-area Realtor, falls into that category. She’d always been an “avid shopper” in the past, she said, often meeting friends for lunch and then spending the afternoon at favorite stores such as Nordstrom and Bloomingdale’s. But while sheltering in place, she had “a complete change of outlook” about shopping and invited a friend over to help clean out her closet and donate numerous items to charity.

Read more at: https://www.bloombergquint.com/global-economics/events-of-2020-are-reshaping-the-american-consumer
Copyright © BloombergQuint

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