Los Angeles Business Journal | Cristel Russell Explains Consumer Spending Patterns During the Pandemic
Consumer spending makes up roughly 68% of U.S. gross domestic product (GDP) and since mid-March, many consumer department stores have plunged. The COVID-19 pandemic has upended every single facet of the market and has directly impacted consumer purchasing behaviors. Data from financial data analytics firm Facteus highlights how the pandemic has reshaped local consumer spending. Local pharmacy and drug store spending jumped 78% in the second week of March, while grocery stores and supermarket spending rose 57% over the same period. Panic-buying was the main driver behind the boosts, with spending growth in these categories deflating as the pandemic and shelter-in-place orders continued.
Cristel Russell, marketing professor, said the buying spree was driven by the “perfect storm” of psychological factors. “Descriptive norms caused people observing mass runs on items like toilet paper to imitate peer behavior and enter buying frenzies themselves. Prescriptive norms, on the other hand, made people feel obligated to purchase items like hand sanitizer following guidance from health officials on hand washing, Together these factors led to the supply runs that reshaped grocery and pharmacy spending in the early lockdown period.” As demand for groceries and drugs began to fade, home supply warehouse stores experienced a large increase in consumer spending each week between mid-April and early June, according to Facteaus data. “That is when you see people trying to make the most of (being locked up). They’re doing home improvement projects, planting gardens, and trying new recipes,” said Russell. Read more.