CC BY
113
JEL: D10, D11, I19 DOI: 10.14529/em210319
COVID-19 AND CONSUMER BEHAVIOUR: A REVIEW OF RECENT LITERATURE
M. Olumekor, S.N. Polbitsyn
Ural Federal University, Yekaterinburg, Russian Federation
COVID-19 has impacted all areas of our lives. It has caused an increase in the mortality and morbidity rates of countries around the world, and an increase in domestic violence and mental health issues, among others. It has also made an unprecedented - and likely lasting - impact on the economy, particularly on the behavior of consumers.
This article provides an excellent review of recent data, research and literature into how COVID-19 is contributing to changing consumer habits in Russia and around the world. Among others, our research found a profound shift in the buying habits of Russian customers, who not only shopped online at historic levels, but also significantly increased their online purchases of things like food, drinks, cosmetic products, etc.
This article is relevant for entrepreneurs, business leaders, policy makers and everyone seeking to understand the changing preferences of consumers.
Keywords: consumer behavior, COVID-19, e-commerce, Russian economy, pandemic, review paper, online shopping, e-tailing.
Introduction
Pandemics and epidemics have always influenced all spheres of human society. Le Goff (1988) argued that the Spanish Flu and Cholera outbreak was directly responsible for the destruction of food distribution and economic activity, eventually leading to famine. And when making forecasts for the risks associated with a future pandemic and its economic impact, Fan et al. (2017) estimated annual losses of about $500 billion, totalling about 0.6 % of global income. In a similar earlier study by the Commission on a Global Health Risk Framework for the Future led by Sands et al. (2016), researchers found that a future pandemic would cost the global economy over $6 trillion in the 21st century. Research from the US Institute of Medicine (2004), estimated the Severe Acute Respiratory Syndrome (SARS) epidemic to have caused a $40 billion dollars loss to the global economy, while the MERS virus - Middle East Respiratory Syndrome -caused a 54 % drop in South Korean tourism (Czosnek, 2018). The real impact of COVID-19 was far more devastating than most experts predicted. It was socially, economically and psychologically disruptive, and its impact has far outweighed the impact of any modern virus.
Coronavirus or COVID-19 has changed our entire lives in unprecedented ways. It was officially declared a pandemic by the World Health Organization (2020), and countries around the world - including Russia - resorted to lockdowns and strict social distancing measures to counter the spread of the virus. These measures significantly affected the lives of people in different ways. Horsesh and Brown (2020) reported a spike in mental health problems and traumatic stress. This was buttressed by the findings of Holmes et al. (2020), Brooks et al. (2020), and Retti
and Daniels (2021). COVID-19 is also poised to impact population growth, and the mortality and morbidity rates of countries (Pfefferbaum & North, 2020). And there has been a marked increase in domestic violence and disagreements between neighbours as a result of the pandemic (Campbell, 2020).
Moreover, COVID-19 also created a state of uncertainty across the global economy and in the financial condition of people (Rettie & Daniels, 2021). During the first and second waves of the virus, many businesses were forced to temporarily or permanently close down, forcing them to layoff workers. This in turn created a situation in which neither the employers nor employees were in good financial condition (Akkermans et al., 2020; Gallup, 2020; Hamouche, 2020; Sergent & Stajkovic, 2020). This lack of excess disposable income, alongside economic uncertainty and a lack of social interaction, all contributed to changing the consumption behaviour of people in Russia and around the world.
This paper explores the impact of COVID-19 on buying behaviour by synthesising the recent literature on the subject.
COVID-19 and Consumer Behaviour
Consumer behaviour is the sub-field of marketing concerned with studying the decision making process of consumers, including the factors influencing the decision to buy, use and dispose of goods and services. Consumer behaviour doesn't just study what a consumer buys, but the reason behind the purchase and the frequency of purchase (Schiffman, et al, 2007). The internal and external environment has always played a significant role in the decision making process of consumers (Wright, 2006), and Howard and Sheth (1969) argued that human consumption is always influenced by the time and location of every
consumer. Therefore, it is only fitting that an event as monumental as the coronavirus pandemic would reshape consumer behaviour.
All around the world, there were massive shifts in the buying habits and preferences of consumers. Surveys from consumer data firm, Numerator (2021) showed that in April 2020, more than 90 % of consumers reported a change in shopping behaviour due to the pandemic. Accenture (2020) reported a shift in the purchasing priorities of consumers, with consumers prioritising the most essential needs such as food and hygiene products. While nonessential products experienced a slump. Research from PwC (2020) also found a notable increase in the purchase of essential goods such as frozen foods, perishable and non-Perishable groceries, beverages and household supplies. Consumers also overwhelmingly began to prefer online purchases with home delivery. A similar survey by McKinsey (2020) in India showed that 76 % of Indians were willing to cut back expenses and focus on essential purchases because of the pandemic. This type of behaviour is consistent with the earlier findings of Ragnan, Clyde and Kasturi (2010) who found that in the face of a crisis, consumers usually become more careful with spending and develop a better value for money. In China, Chen et al. (2020) conducted a detailed study into the impact of COVID-19 on consumption by looking at transaction data across hundreds of cities. In Wuhan, which was initially the epicentre of the pandemic, there was a 70 % drop in consumption during the first 3 months of 2020. While in the overall Chinese economy, restaurants experienced a 64 % drop, and travel saw a 59 % contraction in sales. These show that consumers prioritised cooking their own food, likely because they could not go out to eat due to the lockdown.
Data from Accenture (2020) also showed that during the earlier waves of the virus, 73 % of consumers preferred socialising in their homes or in the homes of friends and family, and people began to develop a preference for social media and other online entertainment platforms. According to the New York Times (2020), Facebook experienced a 27 % increase in user traffic, while Netflix and YouTube saw a 16 % and 15 % increase respectively. Furthermore, apps for social interaction like Houseparty and Nextdoor saw 79 % and 73 % increases respectively. The New York Times (2020) also reported an increased preference for video games and a reduced preference for sports. For example, while ESPN saw a 40 % drop in viewership, apps like TikTok and Twitch saw user increases. All of these happened during the earlier waves of the virus.
The rebirth of e-commerce and online businesses
As stated in the previous section, during the height of the pandemic, there was a drastic change in the consumer preferences of people around the world. Online entertainment and social media usage reached
historic levels, and videoconferencing apps like Zoom and Google Meet achieved total dominance. Zoom in particular became one of the world's leading pandemic success stories with a 326 % increase in sales in 2020 alone (BBC, 2021). Additionally, due to the lockdown imposed to contain the spread of the pandemic and a fear of contracting the virus, global consumers began to buy everything online including groceries like food and drinks. In Russia, e-retail giants like Yandex Lavka, Sbermarket, Ozon and Wildberries all introduced 'safe delivery' systems to meet the desires of consumers. In the United States, e-grocery was projected to have grown by 52.9 % in 2020 (eMarketer, 2020). This was similar in countries all over the world.
Furthermore, according to the United Nations Conference on Trade and Development - UNCTAD (2021), global e-commerce rose by 4 %. For example, in South Korea, e-commerce sales increased from 1 in 5 people in 2019, to 1 in 4 people in 2020. It was the same in the United Kingdom where e-commerce sales reached 23.3 % and in Australia where it reached 9.4 %. Canadians also increased e-commerce purchases to 6.2 %, while China and Singapore reached 24.9 % and 11.7 % respectively. However, not all e-commerce companies experienced growth. People began shopping online more than ever before, but they could not travel or move around freely due to governmental restrictions. Therefore, transport and travel companies like Airbnb, Expedia and Booking all suffered huge losses (UNCTAD, 2021).
Fig. 1 below is a table showing the performance of the world's leading e-commerce companies by looking at their Gross Merchandise Value (GMV).
How COVID-19 reshaped Russian consumer behaviour
According to the World Bank, the COVID-19 pandemic affected every area of the Russian Economy. Unemployment reached its highest level in eight years at 6.3 % and the national poverty rate reached 13.2 % in the second quarter of 2020. Furthermore, about 500 thousand jobs were lost in the manufacturing, construction and retail/hospitality sectors, and like many other countries in the world, the Russian economy experienced a recession in 2020 (World Bank, 2020). However, when compared with other countries, the Russian economy performed relatively better, even in the heights of the pandemic. While Russia experienced a GDP contraction of 3 % in 2020, the world economy contracted by 3.8 %, and advanced economies by 5.4 % (World Bank, 2021).
Similar to other countries around the world, COVID-19 completely changed the consumption habits of Russian consumers. And like other countries, the first notable shift for Russian consumers is a significant increase in online activity. Russian e-commerce sales reached historic levels as an increasing number of Russians - including elderly consumers - began to buy more things online. Euro monitor projected Rus-
Олумекор М., Полбицын С.Н. COVID-19 и поведение потребителей: обзор
новейшей литературы
Rank by Company HQ Industry GMV GMV change
GMV
($ billions) (%)
2020 2019 2018 2019 2020 201819 201920
1 1 Alibaba China E-commerce 866 954 1,145 10.2 20.1
2 2 Amazon USA E-commerce 344 417 575 21.0 38.0
3 3 JD.com China E-commerce 253 302 379 19.1 25.4
4 4 Pinduoduo China E-commerce 71 146 242 104.4 65.9
5 9 Shopify Canada Internet Media & Services 41 61 120 48.7 95.6
6 7 eBay USA E-commerce 90 86 100 -4.8 17.0
7 10 Meituan China E-commerce 43 57 71 33.0 24.6
8 12 Walmart USA Consumer goods retail 25 37 64 47.0 72.4
9 8 Uber USA Internet Media & Services 50 65 58 30.5 -10.9
10 13 Rakuten Japan E-commerce 30 34 42 13.6 24.2
11 5 Expédia USA Internet Media & Services 100 108 37 8.2 -65.9
12 6 Booking Holdings USA Internet Media & Services 93 96 35 4.0 -63.3
13 11 Airbnb USA Internet Media & Services 29 38 24 29.3 -37.1
Companies above 2,035 2,399 2,890 17.9 20.5
Source: UNCTAD, 2021. GMV = Gross Merchandise Value, also known as Booking Value.
Fig. 1. GMV for the world's top e-commerce companies
sian e-commerce sales to have grown by more than 40 % in 2020 (Reuters, 2020). For example, in the Far Eastern region of Chukotka, Wildberries - Russia's leading e-commerce store, reported a growth of 490 % between April to October in 2020. In the same time frame, consumers in Ingushetia had increased orders by 385 %, and by 239 % in Buryatia.
While e-retail stores like Shopify and Walmart saw 95.6 % and 72.4 % growth respectively, travel and transportation companies like Airbnb and Booking Holdings experienced losses.
In fact, in the first 9 months of 2020, Wildberries had attracted 12 million new customers, while existing customers began to spend more money on the website. But it was not only Wildberries. Ozon experienced an 84 % increase in new active buyers between April-May 2020, while Yandex Lavka, a firm specialising in the sales of groceries surpassed 1 million orders, from
about 50 thousand less than 1 year ago. Another online grocery shop, Utkonos, reported a quarterly increase of 65 % from the same period in 2019 (Reuters, 2021). And Sbermarket reported a 500 % increase in food orders in the first quarter of 2020 (Statista, 2021).
Russia's extraordinary e-commerce growth did not only happen in specific months or quarters of 2020. The entire year was a historic one. According to figures from Data Insights (2021), Russian ecommerce grew by 58 %, reaching 2.7 trillion rubles, and sales of groceries online grew by 250 %. Furthermore, about 10 million new customers began shopping online in 2020.
All of these show that a large number of Russians became comfortable with buying groceries like food, drinks and vegetables online. While in previous years Russians felt the need to feel the quality of food prod-
600%
500%
sbermarket.ru ozon.ru** Х5 Retail Group*** ¡gooods.ru utkonos.ru'
Source: Statista, 2021.
Fig. 2. Impact of COVID-19 on growth of online food sales in Russia in 2020 Quarter 1
ucts in physical stores before buying them, the quality of online shops, backed by huge companies like Sberbank and Yandex, alongside the threat of COVID-19, have made online grocery shopping an increasingly favourable alternative.
Nevertheless, it was not only grocery shopping experiencing astronomical growth. Russians also developed a keen taste for buying other products, particularly cosmetics. In a survey by Migel, 69 % of Russian women between the ages of 18 and 40 reported buying cosmetic products online, and 70 % said they would continue to do so (Migel, 2020).
Ozon reported extraordinary growth of cosmetic sales including a 185 % increase in the sales of lipgloss in 2020 (VC.ru). Wildberries also reported a 3 times increase in its sale of general cosmetic products in April 2020. In the same time period, kits for making cosmetic masks at home increased 44 times year-on-year growth, and thermal water 11 times (Retail.ru).
Conclusion
This paper succinctly reviewed contemporary research and data into the impact of COVID-19 on the consumption habits and patterns of people. We found that all around the world, including in Russia, people turned to online companies and services to meet basic needs. Consumers turned video conferencing and social media apps like Zoom and TikTok into overnight successes. In Russia, consumers also began to develop a preference for ordering food, drinks and other groceries online. For example, Sbermarket saw a 500 % increase in sales, while Utkonos and Yandex Lavka also experienced astronomical growths.
This paper is relevant for policy makers, business leaders and entrepreneurs looking to understand the
ever shifting nature of consumer preferences. However, because this is only a review paper, there is a big opportunity and need for further research on the topic.
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Олумекор М., Полбицын С.Н.
COVID-19 и поведение потребителей: обзор новейшей литературы
Online sales volume Number of orders Average order value
in million rubles in thousands in rubles
2020 y-o-y 2020 y-o-y 2020 y-o-y
Wildberries.ru General online store 413 200 96% 305 000 100% 1350 -2%
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Mvideo.ru Electronics & household 113 200 100% 8 900 71% 12 720 17%
Eidorado.ru Electronics & household 53 760 95% 6 400 80% 8 400 8%
Lamoda.ru Fashion & accessories 52 970 32% 14 550 28% 3 640 4%
Apteka.ru Online pharmacy 50 070 46% 32 240 48% 1550 -2%
Aliexpress.ru General online store 49 000 171% 19 060 218% 2 570 -15%
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Michael Olumekor, postgraduate student, Ural Federal University, Yekaterinburg, molumekor@urfu.ru; https://orcid.org/0000-0002-1764-2240
Sergey N. Polbitsyn, Professor, Doctor of Economics, Candidate of Technical Sciences, Ural Federal University, Yekaterinburg.
Received August 2, 2021
Олумекор М., Полбицын С.Н.
COVID-19 и поведение потребителей: обзор новейшей литературы
УДК 658
DOI: 10.14529/em210319
И ПОВЕДЕНИЕ ПОТРЕБИТЕЛЕЙ: ОБЗОР НОВЕЙШЕЙ ЛИТЕРАТУРЫ
М. Олумекор, С.Н. Полбицын
Уральский федеральный университет, г. Екатеринбург, Россия
СОУГО-19 повлиял на все сферы нашей жизни. Это привело к росту показателей смертности и заболеваемости в странах по всему миру, а также росту насилия в семье и проблем с психическим здоровьем, среди прочего. Это также оказало беспрецедентное и, вероятно, длительное воздействие на экономику, особенно на поведение потребителей.
В этой научной работе представлен отличный обзор последних данных и исследований о том, как COVID-19 способствует изменению потребительских привычек во всем мире. Среди прочего, в процессе работы над статьей мы обнаружили фундаментальный сдвиг в покупательских привычках российских потребителей, которые не только делали покупки онлайн на исторически рекордном уровне, но и значительно увеличили объем своих онлайн-покупок, в частности, продуктов питания, напитков и косметических средств.
Эта статья актуальна для предпринимателей, бизнес-лидеров, политиков и всех, кто стремится понять меняющиеся предпочтения потребителей.
Ключевые слова: поведение потребителей, COVID-19, электронная коммерция, российская экономика, пандемия, обзорная статья, интернет-магазины, электронная торговля.
Олумекор Майкл, аспирант, Уральский федеральный университет (г. Екатеринбург), https://orcid.org/0000-0002-1764-2240, molumekor@urfu.ru
Полбицын Сергей Николаевич, профессор, доктор экономических наук, кандидат технических наук, Уральский федеральный университет (г. Екатеринбург).
Поступила в редакцию 2 августа 2021 г.
ОБРАЗЕЦ ЦИТИРОВАНИЯ
FOR CITATION
Olumekor, M. COVID-19 and Consumer Behaviour: A Review of Recent Literature / M. Olumekor, S.N. Polbitsyn // Вестник ЮУрГУ. Серия «Экономика и менеджмент». - 2021. - Т. 15, № 3. - С. 183-189. DOI: 10.14529/em210319
Olumekor M., Polbitsyn S.N. COVID-19 and Consumer Behaviour: A Review of Recent Literature. Bulletin of the South Ural State University. Ser. Economics and Management, 2021, vol. 15, no. 3, pp. 183-189. DOI: 10.14529/em210319
