How Consumer Spending Habits Could Change in 2021 [New Data]

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As businesses and economies closed down due to the COVID-19 pandemic in 2020, consumers also tightened up their budgets.

According to data from McKinsey, most consumers were more conscientious about purchases than before the pandemic. Because of this, most households primarily budgeted around essential products and services.

But, now, as economies begin to swiftly reopen following mass vaccinations, business owners and marketers might also be wondering what this could mean for the next year of revenue.

Specifically, many business leaders are asking, “Will consumers continue to spend cautiously, or will they spend more freely in 2021?”

To help businesses prepare and navigate for the coming months, I asked nearly 300 random consumers, “Which best describes your budgeting plan for the next year?”

Here’s what they said and tips for how to navigate future spending behaviors.

How Consumers Will Spend Money in the Next Year

As economies reopen, people return to work, and household revenues start to rise again, you might think that people will be racing to online or physical stores to shop for all the things they didn’t have the budget for in 2020.

However, when looking at the results of our small survey, it seems that people are cautiously optimistic about their 2021 budget.

Although one-third of respondents say they plan to “loosen” their budgets and spend more money than they did in 2020, a whopping 43% plan to keep the same budget they had in 2020. Meanwhile, nearly one-quarter of respondents will tighten their budget and spend less money in the next year.

Data Source

If you sell non-essential products or services or rely on your customers to have a larger budget, you shouldn’t panic just yet. Keep in mind that this is just one small survey of a random consumer group. Additionally, had we polled people in different industries, locations, or age ranges, the results might have been different.

However, what this survey does remind us of is that people are still more conscientious than ever about the products and services they’re purchasing — and likely will remain that way for months to come.

Ultimately, to turn audiences into customers, it’s still more important than ever to market your offering’s value — even if you don’t sell something that’s considered “essential.”

Tips for Marketing Your Product or Service in Uncertain Financial Times

1. Make your value proposition a priority.

When someone is on a tight budget, each dollar they spend has to be worth it. This means that the products or services they buy have to help them do something essential, solve a common pain point, save them time or money, or fulfill other major needs.

As a marketer or business owner, it’s important to learn the ins and outs of your buyer persona, their needs, and what motivates them to make a purchase. Then, you must use your messaging to explain why your offering will be worth their money.