More than a year after the World Health Organization declared the new coronavirus (Covid-19) a global pandemic, it has become clear that the effects of the epidemic go beyond the health aspect to include various aspects of life, including – of course – the purchasing behaviors of consumers, which affected directly on business strategies around the world as well.
Panic buying was perhaps one of the first and most obvious of these effects that emerged once the World Health Organization classified the coronavirus as a global pandemic. With many countries announcing precautionary closure measures, people rushed to buy and store their supplies in large quantities, whether from foods, especially dry and canned foods, or cleaning and disinfection products, and protection tools such as medical masks and gloves. t
This reflects a normal behavior in such times. It is – only – attempts to feel having some control in the face of fear and anxiety about facing the unknown, in addition to the presence of real concern about the high prices of goods or their scarcity in light of a crisis that no one knows where its extent will be. Which eventually led to the spread of many photos and videos that highlight empty store shelves on social media. (1)
The scene of empty shelves did not last long, with the exacerbation of the economic challenges resulting from the epidemic, new concerns emerged. According to the International Labor Organization report issued at the beginning of this year (January 25, 2021), the Covid-19 epidemic has caused the loss of the equivalent of 255 million jobs in 2020, and Jay Ryder, President of the International Labor Organization, stated that this is the most severe crisis in the world of work since the Great Depression. in the thirties. The global unemployment rate rose by 1.1 percent, according to official figures, bringing the global unemployment rate to 6.5 percent last year.
On the other hand, global labor income has fallen by almost a tenth compared to the average before the pandemic, and in the face of job losses and declining incomes, many families have been forced to reduce their spending rates and rearrange their priorities. In Germany, for example, household spending fell last year by 5% compared to the average of previous years, and according to the data this was the largest drop in consumption since the 1970s. (2) In the United States of America, on the other side of the Atlantic, debt has fallen US credit cards are down their biggest drop in more than thirty years as concerns about spending increase and people increasingly save in anticipation of the unknown. (3)
In his conversation with Maidan , Ahmed (a pseudonym) says: “My wife and I lost our jobs at the beginning of the crisis, and with no income we had to spend from our limited savings, and then we had to rearrange priorities, we were limited to basic needs only, and we had a permanent nightmare About running out of our savings, and that one day we won’t be able to pay the rent.” He adds shortly: “Things got worse after being infected with the Corona virus in the absence of health insurance that covers the expenses of treatment and examinations. Fortunately, I found another job, and our financial situation began to improve. Old spending for a long time.” https://www.youtube.com/embed/T0XqPOlPFCs?version=3&rel=1&showsearch=0&showinfo=1&iv_load_policy=1&fs=1&hl=ar&autohide=2&wmode=transparent
Whether they have lost their jobs entirely or those whose income has fallen, nearly everyone has been affected by the crisis in one way or another, and while many have re-ordered their priorities and given up buying luxuries, the loss or decline of income has prompted some to abandon many essentials. According to the United Nations report, in the period leading up to the Corona pandemic, more than 820 million people went to bed hungry every day, including 110 million people who were living in acute food insecurity. Today, these people are facing a double crisis of hunger and coronavirus. (4)
Ms. Olga, who is just over sixty, did not expect to be able to purchase her household necessities with just a few touches on her smartphone screen. After the precautionary measures began, she was no longer able to go out from the house to the market, and there is no one to help her after everyone is isolated from everyone.
In a long video call, her son, stuck in another country, explained to her how to buy groceries online. This was only the beginning. Today, despite the easing of lockdown measures, Ms. Olga is now completely dependent on online purchases, not only for groceries, but also medicines. clothing and even household appliances.
And it seems that Ms. “Olga” was not the only one, as the changes that occurred in the volume of e-commerce revenues around the world showed the impact of the emerging Corona virus on the shopping habits of individuals around the world. In contrast to the rise in the volume of e-commerce, traditional stores witnessed a noticeable stagnation, in light of the closing decisions taken by many countries, which threatens to fundamentally change the shape of the world of stores as we know it.
In this context, a report issued by the Swiss investment bank and financial services “UBS Group” confirmed the possibility of the disappearance of more than 100,000 traditional stores by the end of 2025, which the bank attributed to the high expenses imposed by opening stores in exchange for reduced sales. (5)
On the other hand, the percentage of increase in the volume of e-commerce varied from one sector to another. For example, the global sales of “Nestlé” for foodstuffs increased by 30% in the first three months of last year, and “Procter and Gamble”, which specializes in cleaning materials and cosmetics, achieved a growth in electronic sales by 35% in the same period. No wonder people were stuck in their homes for months doing nothing but eating, washing their hands and disinfecting surfaces in endless attempts to go after the invisible enemy. Meanwhile, Amazon, the most popular online store, has added 100,000 new full- and part-time jobs in the United States.
With the closure of gyms and entertainment venues, it seemed as if many had rehabilitated homes to be suitable for exercise, work and various activities, and according to data collected by the “Stackline” retail technology company, online sales of products such as exercise equipment increased by 307%, and handicrafts tools by 117%. (6)
On the other hand, a survey conducted by “Euromonitor International” showed that 40% of companies in the fashion sector will be affected much worse by the pandemic crisis than even the impact of the economic crisis in 2008. A company the size of “Inditex” that owns brands such as “Zara”, Bershka” and “Stradivarius” did not survive. Sales decreased by 44% and amounted to $ 3.7 billion, to record a net loss of about $ 457 million during the first quarter of the fiscal year, while the “Guess” brand announced that it would close 100 stores in the United States and China, while “Victoria’s Secret” announced It will close 250 stores. (7)
Darren (a pseudonym) Meydan told : “At the beginning of the crisis, I started searching for what I want to buy online, and every time I went in to buy something, I found myself adding more items that I really didn’t need to the shopping cart, and I did not dare to resist the temptation to buy it. Facebook, I am surrounded by news of deaths among my acquaintances, and I think that death may be soon, closer than I imagine, why am I saving money and not enjoying it now? And exercise, and these games are just trying to make up for it.”
In a US survey, 72% of respondents said they made impulsive purchases during the pandemic to help lift their mood. The temporary happiness caused by shopping helps stimulate an increase in dopamine, which is called the reward hormone, which helps lift the mood and numb negative emotions, but high dopamine levels quickly fade, and you may empty the place for feelings of guilt due to overspending, which in turn drives To increase the desire to shop, in an endless circle, and during the rotation in this circle we get a real addiction to shopping.
This phenomenon has been reinforced by various factors, perhaps the most prominent of which is the simplicity of the process, just magical flicks of our fingers that push the goods to our doorsteps without making much effort (8)(9), and apparently without paying money either. According to Amir Afendik, professor of behavioral economics at the University of Louvain, our use of credit cards delays the pain of paying money. In other words, credit cards have a magical ability to separate the pleasure of buying from the pain of paying. (10)
As if all this were not enough, companies extract data from computers and smartphones to provide each of us with personalized shopping suggestions based on our interests and moods. Companies picked up the tip and quickly changed their marketing strategies. Instead of traditional advertising, they focused on creating ad videos and broadcasting them across various social media platforms, creating online shopping apps, investing in social media campaigns, search engine ads, and growing influencers. Their role in the marketing campaigns during the past year significantly. (11)
Although these changes all appear to be logical responses to the crisis, they pose extended and long-term economic challenges that we all need, whether we are consumers or business owners, to find new forms to adapt to. In other words, we urgently have to change our spending patterns, not by eliminating luxuries altogether, but by looking at it in the context that we might just be drawn to doing so because there are giants who pay billions to convince us to buy again and again without really wanting to. .