How Social Isolation is Influencing Our Buying Habits

Every year, American consumers contribute around 70% of the U.S. economy. The Federal Reserve classifies spending into two categories: discretionary and non-discretionary. Essentials like food, medication, housing, and clothing fall under non-discretionary, whereas purchases for leisure and entertainment are considered discretionary. By the end of 2019, Americans spent a whopping $13.4 trillion, fueling optimism about what 2020 would bring.

But then, the unexpected happened.

With the rapid spread of the coronavirus across China and beyond, governments worldwide imposed lockdowns on non-essential businesses, urging citizens to stay indoors. Suddenly, millions of us were juggling remote work, homeschooling our kids, and minimizing public outings. Naturally, this shift has impacted our spending habits. Are we splurging more now that we're stuck at home, or are we cutting back? Let's explore how our lifestyles have changed.

Impulsive Online Shopping

For many, being confined at home without our usual social interactions has heightened feelings of anxiety and depression. This has spurred a rise in impulsive online shopping, often referred to as "retail therapy." It offers a semblance of control during uncertain times. This explains the surge in orders from platforms like Amazon, online clothing stores, and even grocery chains.

However, the flood of online spending has created delays in deliveries and overwhelmed warehouses. Amazon, in particular, has been scrambling to keep pace and is hiring thousands of new employees to handle the unprecedented spike in orders.

Stockpiling Supplies

In the early stages of quarantine and social distancing, panic-buying became widespread. Items like toilet paper, bottled water, cleaning supplies, and hand sanitizers vanished from store shelves almost overnight. To manage demand, supermarkets implemented purchase limits, yet stockouts persist in certain regions.

Stockpiling during emergencies isn't unheard of, but it usually occurs ahead of major weather events or natural disasters. The scale of hoarding witnessed during the COVID-19 pandemic, however, was unprecedented. Families loaded carts with perishables like meat, milk, bread, and frozen meals, preparing for the worst-case scenario. These buying patterns have evolved significantly and show no signs of reverting.

Luxury Purchases

Turning back to discretionary spending, social distancing has amplified materialistic tendencies. According to Psychology Today, concerns about mortality and isolation foster materialistic mindsets. This leads to an uptick in luxury goods, as individuals seek comfort and status symbols during crises.

While purchasing a high-end Alfa Romeo or a costly Hermes Birkin bag might seem frivolous in a crisis, these items serve as emotional anchors for those who can afford them. Their value lies not in functionality but in the prestige and reassurance they provide.

The Shift to Digital

With physical stores shuttered indefinitely, consumers are increasingly relying on mobile apps and e-commerce platforms to meet their needs. While this approach lacks the social aspect of traditional shopping, it helps maintain social distancing and slow the virus's spread.

Even restaurants have adapted by leveraging apps like UberEats, GrubHub, and DoorDash. These platforms allow eateries to stay operational and continue serving their communities as essential businesses. They offer carry-out and delivery options, ensuring customers receive their meals safely.

Stay Hydrated with Clean Water

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