The digital readiness of Cyprus consumers is quite well-developed, a new study shows.
Consumers in the pandemic spent more using cards in supermarkets, pharmacies and on insurance, while they bought less at restaurants, shops, department stores, hair salons, and personal care.
A survey by Bank of Cyprus in collaboration with KPMG provides insights regarding the spending patterns that emerged in the pandemic crisis.
“By analysing data from banking transactions, specifically data on deposits, withdrawals, transfers and payment orders undertaken by individuals in Cyprus, this report examines the trends relating to consumer migration from cash to digital during the Covid-19 outbreak.”
The Covid-19 pandemic and the restrictive measures implemented not only in Cyprus, but globally, have undoubtedly disrupted consumers’ usual spending habits, both in value and in volume, the study shows.
Card spending in supermarkets, pharmacies and drug stores increased significantly throughout the period of the lockdown and continues to remain much higher than last year’s levels for all Cyprus regions.
In contrast, spending in restaurants, restricted to delivery-only services for several months, initially experienced a marked decline before recovering somewhat, according to the study.
The same trend is also evident in commerce and beauty, including shops and department stores, as well as beauty and hair salons, barbers and personal care shops. It is worth noting that prices have risen in this kind of commerce as a consequence.
“A significant trend is also observed during the lockdown period, where average spending per transaction is 17 per cent higher when compared with the preceding period and the corresponding period in 2019, indicating that consumers during the lockdown were performing fewer but larger purchases. This may reflect strategic bulk buy to reduce the number of trips, rather than price inflation,” the study shows.
Spending in electronics, computers, peripherals and music stores, was not as negatively affected during the lockdown, possibly due to online deliveries, and demonstrated a similar spending trend to that of last year.
A fluctuation in customer spending is also evident in the health industry, probably driven by the fall in patient visits and the postponement of the provided healthcare services; spending in this industry dropped during the lockdown, as did the transactions on petrol.
On the other hand, overall spending on insurance for the first half of 2020 significantly exceeds that of 2019, according to the study.
Additionally, tourism, being directly affected by travelling restrictions and the closure of holiday accommodations, records very large declines in transaction volumes and overall spending over the course of the lockdown months.
The greatest decline in spending is evident for travel agencies, as it falls to near-zero values from the lockdown onwards. Although a slight increase can be detected following the airport re-openings, this increase is negligible compared to last year’s spending. The airline industry follows a similar pattern; nonetheless airport re-openings seem to have facilitated an increase in airlines spending. In the Hotel industry, on the other hand, we note some recovery of spending following complete collapse during the lockdown period. This is clustered around summer weekends, according to the study.
“Although it is early to predict what the future might hold and what the long-term shifts will be to several industries, the Pandemic undoubtedly disrupted both where consumers allocate their disposable income and the means by which they do it. In addition, it revealed the digital readiness and appetite of local consumers and legal entities to shift to digital channels, uncovering what was already known; relying solely on physical channels and physical means of payment is no longer an option,” the study concludes.