How coronavirus has completely changed our spending habits

Covid-19 has turned household spending on its head. Shops are running out of things that, in recent times, we rarely purchased (yeast, anyone?).Other spending, such as dining out and childcare, is mostly gone. So what impact is the virus having on our wallets, and could the pandemic recalibrate our spending in the longer term?

Supermarket challenge

Going to the supermarket used to be fine – well, not awful at least. Dawdling in the biscuit aisle, squeezing vegetables, zooming the toddler in a trolley... now that’s all gone. In its place, all the queuing, hand sanitising, trolley-spritzing and social distancing makes shopping fraught. Frequent, small shopping trips have gone as we bulk buy to stock up or avoid going at all.

March was the biggest month for grocery sales in Ireland ever recorded, figures from research group Kantar show, as households prepared to spend more time at home, with more mouths to feed. It was all about toilet rolls and they became the locus of our national anxiety as supplies ran out.

The average household spent an additional €122 on groceries during the four weeks to March 22nd, largely driven by shoppers making bigger trips, Kantar says. Last year, 15 per cent of households did a shopping trip in which they spent €120 or more of groceries; this year, almost twice as many households are doing this.

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Those who aren’t bulk-buying are buying their groceries online. More Irish households than ever placed an online order in the four weeks to March 22nd, with approximately one in 10 taking advantage of the service. This represents 25,000 more shoppers purchasing groceries online than last Christmas, the previous peak, and 54,000 more than the same period in 2019.

The pandemic has accelerated the trend for online grocery shopping and, with Government emphasising a very gradual easing of restrictions, it's a habit that may well stick.

Drink up

The pubs are shut but we’re drinking at home more. We are spending almost twice as much on drinking at home in a pandemic week versus a normal week, according to ESRI estimates. That’s €21 on drinking at home, versus €11 normally.

When the pubs do eventually reopen, will we still have a taste for drinking there? Crowded counters, snug snugs and queues for loos don’t seem that appealing right now. The pandemic may accelerate the decline of the pub, driving even more drinkers home.

This potentially means less money spent on alcohol in pubs, with that spend moving to off-licences and supermarkets where alcohol is cheaper.

Not going out

Your home is your castle, and now it’s your beauty salon too. “SuperValu has noticed a trend of people being kind to themselves, especially women,” a spokesperson says. They’re clearly missing the salon, as sales of facemasks, body lotions and candles are on the up.

The retailer reports “a massive spike in sales of L’Oréal Magic Retouch” too, as Zoom calls with colleagues and family mean personal appearance standards can’t entirely slip.

Sales of nail polish remover, face creams and hand creams are surging too, Lidl says. Getting a facial anytime soon when face-touching is a no-no is hard to envisage. Increased spend on home beauty treatments, a fraction of the salon cost, are likely to be with us for the medium term at least.

Home entertainment

Our overall spend has tightened up as lockdown has progressed, indicating consumer caution as incomes are hit and recession looms. Debit card spend has dropped 25 per cent compared to before the restrictions, according to data from Bank of Ireland.

There have been significant increases, however, in online spending on gaming, electronics and streaming services. Subscriptions to streaming services such as Netflix are up 27 per cent. There was an increase of 122 per cent in PlayStation spend, while Xbox spend increased by 86 per cent.

“Shoppers are responding to the new normal, adapting behaviour and spend,” says Bank of Ireland director of products John O’Beirne. “As we continue to travel less, we are looking for more ways to keep ourselves and our families engaged, and spending habits are clearly reflecting that trend.”

It's no surprise that online sales of home fitness products and services are on the up

Ireland had the highest per capita cinema attendance in Europe last year, according to the International Union of Cinemas. Matinees were always beloved of those for whom social distancing was a joy. Whether our frenzied buying of home entertainment will ebb in favour of the big screen when it returns remains to be seen.

Then there is the home-as-gym trend as people look to keep fit and battle the Quarantine 15 – that’s the weight gain in pounds or kilos, depending on your target, some of us are edging towards. It’s no surprise that online sales of home fitness products and services are on the up. With gym doors shut, the shift of exercise to an activity rather than a place is the new norm.

Filthy lucre

The value of ATM withdrawal amounts in the first week of April nosedived by 57 per cent compared to the first week of March, says the Central Bank, as people spent less and seemed to eschew cash for plastic payment. With the use of cash already on the wane before the pandemic, people are now avoiding banknotes, well, like the plague. Some retail outlets are refusing to handle cash at all.

If cash is now seen as dirty, where does this leave longstanding norms such as pocketmoney, piggybanks, Communion money and tipping? It could mean the end of grandparents sticking a tenner in a card and the start of putting a tenner on a card.

Money is an abstract concept anyway but, without paper and coins, it becomes more so. The pandemic may speed our move away from cash to plastic. From there, it’s a short hop to e-wallet payments using our smartphones.

Commuting costs

Hundreds of thousands of us are now working from home. Organisations that kept employees’ work-from-home requests at bay have realised there was nothing to be afraid of. Expensive trophy offices sit idle as emails, WhatsApps and internal messaging systems ping between colleagues’ homes and work gets done. One of the many upsides for households is the reduced cost of commuting.

The average annual cost of running a family car last year was €10,690, according to AA estimates. That includes everything from motor tax to insurance, fuel, NCT and repairs. And you can double that, because for many families, particularly where at least one earner is commuting, there are two cars in the drive.

In the past five weeks our cars, like ourselves, have stayed mostly at home. We might need one right now, but we certainly don’t need two, idle and leeching money before our eyes.

But what if we didn’t need a car to get to an office or train station? Or by alternating days in the office, could commuting households share one car? That’s an average of €10,690 in after-tax income back in their pocket.

If adopted widely, working from home would have the knock-on effect of less commuter traffic

Or perhaps a home worker could buy a three-day-a-week travel pass, or commuting couples could share a pass? Instead of shelling out up to €5,500 each depending on their commute, they could share that cost between them.

The new Fine Gael/Fianna Fáil policy plan says a continued need for social distancing post-pandemic will mean greater emphasis on remote and flexible working. The plan sets public sector employers an unambitious target of one in five staff working from home by next year. Private sector employers would be incentivised to do likewise.

If adopted widely, working from home would have the knock-on effect of less commuter traffic, less money spent on fuel to sit in that commuter traffic and less soul destruction from the whole exercise. There’s the reduction in emissions too. Continuing to spend tens of millions to widen motorways into an already gridlocked Dublin seems like madness.

Childcare costs

During the shutdown, creches, preschools and schools have all closed and that hasn’t been ideal for anyone. Parents who have temporarily stopped paying for some form of childcare, however, are reminded now of just what a dent in their disposable income it is.

Anyone who has worked from home knows that minding children while doing so just isn't possible

Ireland has among the highest childcare costs in the world. The average net cost – taking account of child benefit and other State supports – is about 28 per cent of earnings compared to the EU average of 12 per cent. The National Childcare Scheme has provided some relief, but new staff ratios are pushing the cost of afterschool childcare even higher.

Anyone who has worked from home knows that minding children while doing so just isn’t possible. But for some, more flexible working could mean that care before and after school isn’t needed every day of the week. Organising your workload so that you can drop the kids to school and/or pick them up afterwards on some of the days would ease logistics and save money.

A more rapid normalising of flexible working is also likely to bring more women back into the workforce and improve household income, particularly for lone parents.

Research by the ESRI and Pobal found that mothers who face high childcare costs work fewer hours. Mothers with higher childcare costs at age three tended to work fewer hours when their child was aged five. The findings show that, for example, 10 per cent higher childcare costs were associated with 30 minutes less paid work by mothers per week. The normalising of flexible working could increase access to employment for some previously dissuaded or shut out by childcare costs.

Big crises tend to accelerate trends. The pandemic, at least for now, has brought a slew of social and economic changes. Some of the changes will be worth hanging on to.