90 Days To A New World

Fear has been a key ingredient in some of the strangest episodes in human history, and the COVID-19 pandemic now joins that dubious list. PYMNTS’ research division has tracked the pandemic’s progress since the first week of March – not just in economic terms, but with regard to the sentiments of consumers and business leaders contending with this extraordinary event.

The latest report in PYMNTS’ three-month Navigating the COVID-19 Pandemic series is How A Global Pandemic Created a Digital-First Customer in 12 Weeks. It paints a statistical portrait of a changed America, yet one adapting with agility and glimmers of optimism.

PYMNTS’ COVID-19 research showed early on that Americans were making changes out of an abundance of caution – also known as common sense. Despite early skepticism about the danger posed by the disease, people began modifying their behavior. “No matter how skeptical consumers might have been about the outbreak in its early days, they had already started showing signs of adapting their behavior to it,” the report states.

“Even before any official shutdowns, 43.8 percent of consumers told [PYMNTS] they were traveling for personal reasons less often than they had before the outbreak. Similarly, 49.4 percent said they were traveling internationally for personal reasons less often. Dining habits also shifted, with 35.3 percent reporting dining less at quick-service restaurants (QSRs) and 35.9 percent going to sit-down restaurants less often than they had before the outbreak began.”

That was before mandatory lockdowns and fear gripped the nation and the world. In the following weeks, Americans witnessed a blazing-hot economy reduced to a bed of coals astoundingly quickly. PYMNTS’ mid-March survey was bleak, with nearly 72 percent of respondents reporting feeling worried they might infect their friends or family, followed by fears of perishing themselves, cited by 42.4 percent.

Familiar pandemic-era patterns began emerging at that point. In mid-March, nearly 30 percent of respondents were worried that investments would lose value, and nearly 18 percent feared job loss. Business travel was down almost 67 percent, and sit-down restaurant dining had fallen off more than 85 percent; 52.3 percent of the drop happened between March 6 and March 17 alone.

Of the pandemic “phases” identified by PYMNTS researchers, phase 3 occurred in April and represents the cratering of the U.S. economy, typified by the looming failure of millions of Main Street small businesses. “By mid-April, the U.S. employment situation was a leading concern for consumers,” the new report states, “[with] only 40.9 percent of U.S. consumers [reporting] having jobs or earning incomes as of April 11.”

The disintegration of entire industries marked the April-May transition as bankruptcies came down, and long-term challenges facing sectors like travel and hospitality came into stark focus. A digital shift had absorbed large swaths of commerce, and the trend has held. “Our data indicated that the majority of those that had brought their pre-pandemic routines online planned to keep them there once the crisis has ended,” per the report.

As of the early May survey, “5.5 percent of U.S. consumers had gone online and planned to keep doing so somewhat more often than they did before the pandemic. And 22.9 percent said their intention was to maintain all of the activities they had transitioned to doing online.”

Health concerns still prevalent in early May were also showing signs of weakening later that month, as PYMNTS’ polling found that COVID fears were slowing, ceding ground to the desire for a return to aspects of normal living, starting with an easing of restrictions and the ability to reunite with loved ones.

“Even as predictions about the length of the pandemic continued to stretch in May, consumers also began to think about the outside world and the activities they’d most missed during the lockdown,” the reporting states. “Leading the list – by a fairly wide margin – was seeing their family and friends. Among those we polled, 80 percent were interested in leaving their homes more often to see their family and friends, and for 42.6 percent, this was their primary reason.”

When May turned to June, PYMNTS research found that most consumers expected the pandemic to have a nine-month duration. That tracks roughly with expectations around the idea of “normal” returning, but 10 percent of respondents don’t think the old normal is coming back at all.

Perhaps underscoring that belief is the power of the digital shift that now dominates sectors like quick-service restaurants (QSRs) and casual dining. Phased reopenings have eased some on-premise restrictions, but reports of infection spikes are throwing cold water on optimism.

“By late May, consumer digitization preference began emerging most clearly in the data, with consumers reporting an increased likelihood of shopping with merchants that have taken the pandemic period to upgrade and enhance their digital feature,” the new report states.

“Some 33.8 percent of consumers say they are ‘very’ or ‘extremely’ likely to consider digital offerings when deciding where to shop, while another 55.3 percent are ‘somewhat’ or ‘slightly’ likely to take merchants’ digital capabilities into consideration. Only 11 percent say digital offerings do not factor into their decisions.”

Analyzing months of surveys taken at key pulse points of the COVID episode, PYMNTS has identified four distinct consumer personas to emerge from the pandemic:

• “Social shifters” who have gone online to make retail purchases but are most likely to return to physical stores and engage in activities outside their homes.
• “Safety shifters” who embraced digital channels to buy groceries and other products and are more concerned about contracting the virus than other respondents.
• “Convenience shifters” who put a premium on speed and convenience and choose merchants based on digital offerings.
• “Office shifters” who have shifted to working from home and want to go back to being outdoors and working in office environments.

The surfacing of distinct new personas with behaviors acquired (or even invented) at the nadir of the COVID-19 event is incredible enough, considering the compact timeframe. What they will do next and how those demands will shape payments are open questions at this point.

The one thing everyone agrees on is that the second half of 2020 is still a mystery.

As How a Global Pandemic Created a Digital-First Customer in 12 Weeks states, “Consumers may have leapt the great digital divide in the last 12 weeks, which isn’t to say they are ready to sign on for fully virtualized lives. But fully digitally moderated lives? That doesn’t seem so much like a remote possibility as a reasonable prediction, as consumers emerge for quarantine ready to do things digitally and are looking for firms that are wired to help them do so.”