COVID-19 has altered Maltese consumer spending behaviour

Although spending has decreased as a result of the COVID-19 pandemic, the expectation is that people will revert to their previous consumption patterns, according to EY’s Malta Future Consumer Survey.

Consumers expect technology will play a greater role in addressing their safety concerns and improve their overall customer journey. However, there remain high levels of anxiety for non-essential activities, which are expected to persist for a prolonged period until a return to normality.

“While some results may not come as a surprise, such as initial decreases in spending for non-essential items and increases for essential items, others provide Maltese businesses clearer indications of the behavioural changes that have been accelerated as a result of the COVID-19 pandemic,” Ronald Attard, EY Malta Country Managing Partner, said/

“Organisations will need to transform their businesses to engage more effectively with the virtual customer seeking limited proximity. Pricing models, product portfolios, precision marketing campaigns and operational considerations around footprint will need to assessed with a different mindset altogether.”

As expected, there has been a significant decrease in current spending across various categories of discretionary items including vacations, clothing, sporting equipment, luxury items and out of home entertainment.

On the other hand, increased spending has been registered for non-discretionary categories such as food items, groceries and household products. The extent of spending cuts was more pronounced for the segment of respondents (19%) who have a negative financial outlook over the next 12 months.

To a limited extent, there will be increased spending on vacations, mainly driven by people up to 40 years old, and respondents with a positive financial outlook, clothing and out of home entertainment. However, the general perception is that there will be a return to pre-COVID-19 levels of spending across all categories in the future once the pandemic is over. Affordability remains a concern though, with 67% of respondents indicating they will be cautious about their spending and 45% saying they will postpone major purchases.

There has been no material indication that respondents would permanently change the composition of products and services they purchase in the future.

However, a significant segment of respondents has indicated several behaviours that may permanently change post COVID-19. The perceived extent of these changes is significantly more pronounced among the younger generation, and more generally, respondents up to 40 years old. 18% of respondents said they will own fewer physical items, suggesting that a segment of society may attach more importance towards ‘experiences’.

Most respondents across all age groups are generally comfortable to carry out essential activities connected with the acquisition of essential food items, personal care and work. Levels of anxiety increase across other non-essential activities such as shopping, going to restaurants, bars and pubs.

More significant anxiety levels are perceived in activities involving schooling for children, vacations, and using public transport. This perception is stronger among people over 40 years old and health concerns remain high. Businesses need to create the right ecosystem to mitigate customers' anxiety levels and concerns.

Technology emerged as a major influencer of these changes, which suggest that businesses will need to transform their organisations towards more digitalised solutions and seek to accelerate this process in order to compete effectively in the future.