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    Consumer Behaviour After Covid

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    Himadri Jana
    The COVID-19 pandemic led to an unprecedented drop in consumer spending across many countries. While spending may rebound once the pandemic ends, previous recessions like the Great Recession of 2007-2008 suggest consumers develop more frugal habits that can persist long-term. The recovery of consumer demand will depend on factors like the savings rates and spending habits of high-income households, government stimulus for low-income groups, as well as the industries and services that are permanently affected by long-lasting changes in consumer behavior caused by the pandemic.

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    Consumer Behaviour After Covid

    Uploaded by

    Himadri Jana
    38 views2 pages
    The COVID-19 pandemic led to an unprecedented drop in consumer spending across many countries. While spending may rebound once the pandemic ends, previous recessions like the Great Recession of 2007-2008 suggest consumers develop more frugal habits that can persist long-term. The recovery of consumer demand will depend on factors like the savings rates and spending habits of high-income households, government stimulus for low-income groups, as well as the industries and services that are permanently affected by long-lasting changes in consumer behavior caused by the pandemic.

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    The COVID-19 pandemic led to an unprecedented drop in consumer spending across many countries. While spending may rebound once the pandemic ends, previous recessions like the Great Recession of 2007-2008 suggest consumers develop more frugal habits that can persist long-term. The recovery of consumer demand will depend on factors like the savings rates and spending habits of high-income households, government stimulus for low-income groups, as well as the industries and services that are permanently affected by long-lasting changes in consumer behavior caused by the pandemic.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    38 views2 pages

    Consumer Behaviour After Covid

    Uploaded by

    Himadri Jana
    The COVID-19 pandemic led to an unprecedented drop in consumer spending across many countries. While spending may rebound once the pandemic ends, previous recessions like the Great Recession of 2007-2008 suggest consumers develop more frugal habits that can persist long-term. The recovery of consumer demand will depend on factors like the savings rates and spending habits of high-income households, government stimulus for low-income groups, as well as the industries and services that are permanently affected by long-lasting changes in consumer behavior caused by the pandemic.

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    The consumer demand recovery and lasting effects of COVID-19

    The pandemic led to an unprecedented consumption shock across countries that upended
    long-standing consumer habits. But what happens when the pandemic is over?

    If we take the example of United States recession of 2007-08 which was more severe than
    any of the recessions happened so far, then we will find that the Great Recession may have
    left a “deep and lasting trauma” on consumer behaviour and spending habits. Now as the
    economy has begun to slowly recover, market researchers have yet to discover if consumers
    will snap back to their former buying behaviours. Consumers affected by the Great Recession
    now find importance in saving money and buying fewer goods and services on credit. Due to
    the recession, consumers have learned how to find the best deals and greatest value for their
    buck. Similar kind of activities can be seen in the consumer behaviour after covid impact.
    There is no consumer debt overhang, no bursting asset price bubbles, and no long-term
    business cycle swings in this recession, unlike previous ones. Cutbacks to in-person services,
    particularly travel, entertainment, and dining, caused a sudden and deep reduction in
    consumer spending across several countries, ranging from 11 to 26 percent in the early
    months of the pandemic. Consumer demand could be restored to pre-epidemic levels if an
    effective vaccination deployment ends the pandemic, fuelled by increased consumer
    confidence, pent-up demand, and accumulated savings. The substantial consumer spending
    recovery in China following the control of the COVID-19 virus is another cause for most
    countries to be optimistic.
    Between 2021 and 2022, we estimate expenditure by middle- and high-income generations to
    return to pre-COVID-19 levels, but spending by low-income cohorts may fall below pre-
    COVID levels once stimulus measures expire. Because of a greater share of the population
    over 65 and a delayed post-pandemic recovery for low-income cohorts, consumption is likely
    to move toward older and wealthier groups. However, we must underline that this is greatly
    dependent on how rapidly health hazards subside as a result of immunizations and whether
    governments provide additional financial assistance. We predict three criteria to determine
    the size and longevity of the consumer demand rebound once the virus has been contained
    and reopening has begun: high-income households' propensity to spend, low-income cohorts'
    income limits, and what happens to savings. The consumption recovery will be influenced by
    what middle- and high-income people do with their considerable savings after the pandemic
    —consume, hold, invest, or repay debt. Real estate or other long-term assets investments do
    not have a high direct multiplier effect and can take years to add to aggregate spending.
    Many industries were thrown into turmoil as a result of the pandemic. Changes in
    consumption patterns, in particular, have resulted in market share movements and the
    prospect of new entrants. Many businesses have been pushed to increase their e-commerce
    investments and improve their capabilities, such as client delivery. The effects of these
    changes will be felt for some time, and they will continue to influence consumer decisions
    even after the pandemic is finished.
    In other cases, increased work-from-home adoption has reduced demand for corporate air
    travel, with some estimates predicting a 20 percent or more drop in demand could be
    permanent, affecting the routes and flights available to leisure travellers. In the entertainment
    industry, where worldwide box office revenue in 2020 is expected to be 20 to 35 percent
    lower than in 2019, we foresee a long-term decline in demand for movie theatres due to the
    high chance of permanent theatre closures and movie studios' transition to digital platforms.
    Governments will confront numerous issues, including finding the proper balance of
    monetary policies to encourage consumer demand recovery, updating consumer market
    regulations to keep up with ongoing changes, and dealing with the pandemic's long-term
    effects, particularly on inequality.

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