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 percent 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 percent 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’, the unemployment rate for the US is expected to increase from 3.66 percent in 2019 to 9.53 percent 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 percent) or have three or more people living at the household (62 percent). 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 percent) would have less disposable income and are more likely to have a family to feed, compared to the silent generation (2 percent).
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.”