Amid economic rebound, spending increases for first time across the board

As the U.S. emerges from the COVID-19 pandemic, the general and business press has been filled with bullish news, including projections that the American economy will expand this year at the largest annual rate of growth since 1984.[1] According to a new KPMG study, consumer spending is increasing in retail categories across the board, a first since KPMG launched the bimonthly survey in April 2020. Notably, sectors outside the home such as restaurants and entertainment turned positive, suggesting consumers are anticipating a return to pre-pandemic behaviors. Experience-based spending on travel, dining and entertainment is expected to ramp up and continue this trajectory.

 

In the new report The Big Thaw, KPMG reveals key findings from its survey of 1000 consumers:

  • For the first time since April 2020, spending has increased in areas like entertainment and media as well as restaurants, up 12 percent and 15 percent respectively from pre-COVID-19 levels. Additionally, personal care spending is up 16 percent, and spending on apparel is up 14 percent, all suggesting increased social activity and events.
  • The percentage of respondents who projected a return to pre-pandemic economic levels within six months declined in the past year, while more than 50 percent thought the recovery would take one or more years.
  • Over one-third of survey respondents said their employment status had been impacted by COVID-19, but over 75 percent reported they have been able to return to work. Only 38 percent of survey respondents said their income has been negatively impacted as a result of COVID-19.
  • Among those who relocated during the pandemic, a majority (53 percent) said that the relocation was temporary.
  • If consumers have their say, the seismic changes in workplace and remote working patterns set into motion by COVID-19 are here to stay. Saving on commute time was the most common reason (28 percent) cited by those who want to stay remote, followed closely by more comfortable space at home (24 percent) and better work-life balance (24 percent).
  • While most plan to stay home on Memorial Day, a higher percentage of those vaccinated plan to attend a social gathering.

“It’s encouraging to see that spending is rebounding across retail categories. There is much to be optimistic about as more and more people are vaccinated,” said KPMG Advisory Industry Leader, Consumer & Retail Scott Rankin.

KPMG has several recommendations for businesses in the current environment. For a start, the firm recommends that businesses heavily invest in digital technology to deliver the experiences and value propositions that consumers desire. Additionally, companies should take advantage of the upswing in the economy to restructure their operating models to enable customer centricity, faster supply chains and improved balance sheets.

 “Businesses that pivoted swiftly during the pandemic to create more flexibility can be optimistic about their prospects as the recovery accelerates,” said KPMG National Sector Leader, Consumer & Retail Matt Kramer.

To schedule an interview with Scott Rankin or Matt Kramer, contact Melanie Batley.

To read the full report or review the findings, click here.

[1] Ben Casselman, “Strong U.S. Job Growth in March Fuels Optimism on Recovery,” The New York Times, April 2, 2021.

 

Media Contact

Melanie Malluk Batley

Melanie Malluk Batley

Associate Director, Corporate Communications, KPMG US

+1 201-307-8217

 

 

Scott Rankin

Scott Rankin

National Advisory Leader, Consumer & Retail, KPMG LLP

+1 617-988-1474
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