4 consumer spending trends on the rise in 2021

4 consumer spending trends on the rise in 2021
Image: iStock
This article is sponsored by PayPal.

While almost all sectors of the economy have been impacted after almost two years of a global pandemic, the retail industry has seen a shift like never before.

As more and more countries, including our own, have been locked down by COVID and locked out of physical retail environments, our shopping habits have moved online and we have been forced to rethink how we shop.

Unsurprisingly, consumers are also rethinking where they spend their money. What was once used on a luxurious dinner or concert tickets is now either being saved, invested in home decor or used to cover home office equipment or maintenance around the home.

According to PayPal Australia, 15% of Australian adults started shopping regularly online for the first time during 2020. This upward trend in online shopping will likely continue as 2-in 5 Australians (38%) said they’ll continue a higher level of online shopping.

Because of this, four consumer trends are now on the rise in 2021.

1. Buy now, pay later

Over the past few decades, and now more than ever, Australians have wanted more choice and flexibility with online shopping, which has seen the rise of a number of buy now, pay later (BNPL) platforms.

 Almost unheard of 5 years ago, 45% of Aussie online shoppers have now used BNPL, with that figure rising to 65% for Millennial online shoppers according to the PayPal 2021 eCommerce Trends research. And we’re using BNPL frequently with 1-in-7 Aussie online shoppers making a BNPL purchase at least weekly.

In July, PayPal launched PayPal Pay in 4 in Australia. PayPal Pay in 4 has no late fees and is interest free for consumers and there are no additional costs for businesses.

By using BNPL, customers can purchase what they want, when they need it and pay it off in easy instalments – but unless you’re using a ‘no late fee’ option like PayPal, make sure you don’t overcommit to avoid being stung if you miss a repayment.

2. The rise of influencer and social media marketing

As we spend more time on our devices, businesses — large and small — are turning to social media marketing to sell their goods.

Aussie spending through social media increased massively by a factor of 5, from $5 per month in 2019 to $25 per month in 2020 according to the 2020 PayPal eCommerce Index. Unsurprisingly, younger people are more likely to purchase through social media and more than a third of both Gen Z and Millennials shop on social channels. Younger consumers also spend more on social.

On average, Aussie Gen Zs spent $51 a month and Millennials spent $36 a month via social in 2020 – making social a marketing channel that can’t be ignored.

From influencer marketing to interactive Instagram profiles, consumers can purchase something they love with the tap of a screen.

And now that a good portion of the population knows how to use a QR code, these are also becoming commonplace in advertising around the country.

While trends are constantly changing, the rise of social media, in particular, is unlikely to go away anytime soon.

As a result of the pandemic, consumers have had to rethink the way they spend their money and for those who still had income or weren’t tightening the purse strings, turning to new products related to health and beauty, computers and electronics plus home and garden. And, at the time of publication, as parts of Australia are just emerging from lockdown, it will be interesting to see if these trends continue to rise in a post-pandemic environment.

Customers have become accustomed to buying more essentials online, including groceries, household and cleaning supplies, frozen food, pet care and alcoholic beverages.

There’s also been a rise in the use of online and app-based fitness, health, diet and mindfulness classes and programs. 

While the challenges of the pandemic are not to be overlooked, COVID has created opportunities for businesses from a broader range of goods and service categories to sell online. Consumers are now, out of necessity, much more comfortable with eCommerce and digital experiences beyond the standard online retail purchases – creating an opportunity for savvy businesses.

4. Go green and embrace ethical

In a recent survey, it was found that 1-in-10 Australian consumers had boycotted a brand for environmental or other ethical reasons, a number that increases to 1-in-5 for Australians under 24. More than half of Australian consumers (55%) had made a green or ethically-based purchasing decision within the last 12 months and 1-in-7 have purchased products specifically because they were environmentally friendly. 

For 10% of Aussie consumers, the environment is even more important than their own wallet, as this cohort will buy environmentally-sustainable products wherever possible, regardless of price.

Consumers are clearly moving away from an easy fix of plastic and chemicals, and are now looking to “go green” to achieve a sustainable future.