ROLL NO.

(IN DIGITS): 1806

ROLL NO. (IN WORDS): ONE THOUSAND EIGHT HUNDRED AND SIX
SEMESTER: II (TWO)
SUBJECT: ECONOMICS
TOPIC NUMBER: 3
TOPIC NAME: AN ANALYSIS OF THE EFFECT OF COVID-19
PANDEMIC ON THE CONSUMER
BEHAVIOUR

1
AN ANALYSIS OF THE EFFECT OF COVID-19 PANDEMIC ON THE CONSUMER
BEHAVIOUR

ACKNOWLEDGEMENT
On the completion of this project, the writer of this project, takes the opportunity of thanking
the people who contributed in the completion of it, without whose aid, contribution and help
this project wouldn’t have seen practicability.
First, I extend my heartfelt gratitude to, my mentor and Professor of Economics, Mrs. Chitra
Saruparia, Faculty of Economics, whose continuous guidance and support provided me with
the much-needed impetus and gave me a better insight into the topic. I am grateful to the IT
Staff for providing all necessary facilities for carrying out this work. I thank all members of
the Library Staff for providing me the assistance anytime needed.
I also thank my friends and batch mates for providing me the much-needed aid whenever
needed.

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 TABLE OF CONTENTS

ACKNOWLEDGEMENT ......................................................................................................... 2

TABLE OF CONTENTS ........................................................................................................... 3

INTRODUCTION ..................................................................................................................... 4

RESEARCH METHODOLOGY ............................................................................................... 5

WHAT IS CONSUMER BEHAVIOUR? .................................................................................. 6

FACTORS AFFECTING CONSUMER BEHAVIOUR ........................................................... 8

SAMPLE QUESTIONNAIRE ................................................................................................. 11

CHANGE IN CONSUMER BEHAVIOUR IN VARIOUS SECTORS................................... 16

A. SOCIAL MEDIA PLATFORMS ....................................................................................... 16

B. STREAMING PLATFORMS & ENTERTAINMENT INDUSTRY ........................................... 17

C. LUXURY GOODS: HIGHLY ELASTIC GOODS .......................................................... 19

D. E-COMMERCE AND ONLINE SHOPPING ....................................................................... 21

GROCERY ECOMMERCE ..................................................................................................... 22

OTHER ECOMMERCE CATEGORIES. .................................................................................... 23

E. FOOD DELIVERY PLATFORMS AND RESTAURANTS ..................................................... 24

RISE IN USE OF ONLINE FOOD DELIVERY CHANNEL, BUT FALL IN OVERALL DEMAND, FALL IN
PRICES OF ORDERING FOOD ONLINE ................................................................................... 27

F. THE AUTOMOBILES INDUSTRY ....................................................................................... 27

G. THE RISE OF KIRANA STORES .................................................................................... 28

H. CAB AGGREGATORS ................................................................................................... 30

CONSUMER BEHAVIOUR BY AGE GROUPS ................................................................... 32

CHANGE IN CONSUMER BEHAVIOUR BY GENDER ..................................................... 33

CONCLUSION ........................................................................................................................ 34

REFERRENCES ...................................................................................................................... 35

3
 INTRODUCTION
As the COVID-19 crisis continues and geographies around the world begin to reopen,
consumer behaviour has started to change. The COVID-19 pandemic has fundamentally
changed the world as we know it. People are living differently, buying differently and in many
ways, thinking differently. Supply chains have been tested. Retailers are closing doors.
Consumers across the globe are looking at products and brands through a new lens.

The virus is reshaping the consumer goods industry in real time, rapidly accelerating long-term
underlying trends in the space of mere weeks. Consumers are deeply concerned about the
impact of COVID-19, both from a health and economic perspective. People are responding in
a variety of ways and have differing attitudes, behaviors and purchasing habits. People across
the globe are afraid as they strive to adapt to a new normal. Fear is running high as individuals
contemplate what this crisis means for them, but more significantly, what it means for their
families and friends, and society at large.

Consumers are responding to the crisis in a variety of ways. Some feel anxious and worried,
fueling panic-buying of staples and hygiene products. At the other extreme, some consumers
remain indifferent to the pandemic and are continuing their business as usual, despite
recommendations from government and health professionals. Thus making it important for the
companies and various sectors to understand the shift in consumer behaviour, make necessary
changes according to their needs and adapt with the shifts.

Therefore, it becomes extremely important for us, as students of economics to study in detail
as how this pandemic has changed the consumer behavior across various sectors, age groups
and even gender. Relying on the various surveys and their reports published by economic
agencies across the world, we can analyze the statistics and determine the change in consumer
behavior.

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 RESEARCH METHODOLOGY
For the subjective and theoretical part of the project, data was collected using class notes, and
other online articles from various journals and websites.

However, for determining the impact on consumers, a questionnaire was made asking the
respondents certain questions which will further our understanding about the factors affecting
the decision-making process of buyers for different product categories. Next, all the data was
assembled and recorded responses analysed and interpreted in terms of the observations
written in the project.

A sample of 50 respondents were chose using Convenience Sampling. 10 respondents were

friends, and family of the researcher, and the remaining 40 consisted of consumers who were
encountered shopping in general stores. The questionnaire has been attached in the
subsequent part.

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 WHAT IS CONSUMER BEHAVIOUR?

Consumer decision making has long been of interest to researchers. Beginning about 300 years
ago early economists, led by Nicholas Bernoulli, John von Neumann and Oskar Morgenstern,
started to examine the basis of consumer decision making.1 This early work approached the
topic from an economic perspective, and focused solely on the act of purchase. 2 The most
prevalent model from this perspective is ‘Utility Theory’ which proposes that consumers make
choices based on the expected outcomes of their decisions. Consumers are viewed as rational
decision makers who are only concerned with self-interest.3 Where utility theory views the
consumer as a ‘rational economic man’4, contemporary research on Consumer Behaviour
considers a wide range of factors influencing the consumer, and acknowledges a broad range
of consumption activities beyond purchasing. These activities commonly include; need
recognition, information search, evaluation of alternatives, the building of purchase intention,
the act of purchasing, consumption and finally disposal. This more complete view of consumer
behaviour has evolved through a number of discernible stages over the past century in light of
new research methodologies and paradigmatic approaches being adopted. While this evolution
has been continuous, it is only since the 1950’s that the notion of consumer behaviour has

1
RICHARME 2007.
2
LOUDON AND DELLA BITTA 1993.
3
SCHIFFMAN AND KANUK 2007, ZINKHAN 1992.
4
ZINKHAN 1992.

6
responded to the conception and growth of modern marketing to encompass the more holistic
range of activities that impact upon the consumer decision.5

This is evident in contemporary definitions of consumer behaviour: “consumer behaviour……

is the study of the processes involved when individuals or groups select, purchase, use or
dispose of products, services, ideas or experiences to satisfy needs and desires.”6

Similarly, “the behaviour that consumers display in searching for, purchasing, using,
evaluating, and disposing of products and services that they expect will satisfy their needs”.7

While most contemporary definitions of consumer behaviour are similar in scope, but the most
common definition followed by the economists define consumer behaviour as, he aspects that
affect consumers’ search, selection, and purchase of products. We can use the term for the
purchases of services too. Consumer behaviour also includes the post-purchase stage.
Consumer behaviour is an area of research within the business field of ‘marketing.’

5
BLACKWELL,MINIARD ET AL. 2001.
6
SOLOMON,BAMOSSY ET AL. 2006, P6.
7
SCHIFFMAN AND KANUK 2007.

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 FACTORS AFFECTING CONSUMER BEHAVIOUR
There are many factors affecting consumer behaviour. These all factors jointly shape consumer
behaviour. Due to impact of various factors, consumers react or respond to marketing
programme differently. For the same product, price, promotion, and distribution, their
responses differ significantly. The factors do not affect equally to all the buyers; they have
varying effect on their behaviour. However, some factors are more effective, while others have
negligible effect on consumer behaviour. The consumer behaviour or buyer behaviour is
influenced by several factors or forces. They are:

1. Internal or Psychological factors

Human psychology is a major determinant of consumer behavior. These factors are difficult to
measure but are powerful enough to influence a buying decision.

2. Social factors

Humans are social beings and they live around many people who influence their buying
behavior. Human try to imitate other humans and also wish to be socially accepted in the
society. Hence their buying behavior is influenced by other people around them.

3. Cultural factors

A group of people are associated with a set of values and ideologies that belong to a particular
community. When a person comes from a particular community, his/her behavior is highly
influenced by the culture relating to that particular community.

4. Economic factors

The consumer buying habits and decisions greatly depend on the economic situation of a
country or a market. When a nation is prosperous, the economy is strong, which leads to the
greater money supply in the market and higher purchasing power for consumers. When
consumers experience a positive economic environment, they are more confident to spend on
buying products.

Whereas, a weak economy reflects a struggling market that is impacted by unemployment and
lower purchasing power. Economic factors bear a significant influence on the buying decision
of a consumer.

5. Personal factors.

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Factors that are personal to the consumers influence their buying behavior. These personal
factors differ from person to person, thereby producing different perceptions and consumer
behavior.

While the resulting consumer behavior is an effect of all the factors together, but in our case
the change in today’s consumer choice is largely limited to few of the determinants like
economic situation, family, personal choice, income, etc., in this time of a pandemic.

9
 6. Marketing Factors

Apart from these, marketing factors like price, place, product and promotion also influence
consumer decisions to a great extent. Marketing factors are basically the 4 P’s of marketing
mix which determine a product’s performance and have a deep impact on consumer choices
and behaviour.

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 SAMPLE QUESTIONNAIRE
Q 1. How has your use of social media platforms like Facebook, Instagram &
Whatsapp changed after the imposition of Lockdown?
a. Not Changed
b. Increased Significantly
c. Increased Slightly
d. Decreased
Q 2. Have you subscribed to any media streaming platforms like Netflix, Amazon
Prime, Hotstar, etc., after the imposition of Lockdown due to COVID-19?
a. Yes
b. No
c. Yes, Multiple
Q 3. How has your use of media streaming devices changed after the imposition
of Lockdown due to COVID-19?
a. Not Changed
b. Increased Significantly
c. Increased Slightly
d. Decreased
Q 4. Have you purchased any Luxury items after the imposition of Lockdown due
to COVID-19?
a. Yes
b. Yes, many
c. No
Q 5. Is your purchasing behaviour for Luxury products and services going to
change after the end of COVID-19?
a. Yes, it’s going to decrease
b. Yes, it’s going to increase
c. No
Q 6. Has your use of E-commerce platforms like Flipkart and Amazon increased
after the imposition of Lockdown due to COVID-19?
a. Not Changed
b. Increased Significantly
c. Increased

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 d. Decreased
Q 7. How do you prefer to purchase groceries these after the imposition of
Lockdown due to COVID-19?
a. Grocery marts
b. Kirana stores
c. Online platforms
Q 8. Have you eaten food prepared in a restaurant after the imposition of
Lockdown due to COVID-19? If yes then how?
a. No
b. Yes, through dine in
c. Yes, through online food delivery platforms
d. Yes, through take-away services
Q 9. Will you prefer to use shared transportation services like cabs, taxis, bus,
metro, etc., after the end of COVID-19?
a. No
b. Yes, as usual
Q 10. Were you planning to buy a automotive personal vehicle before COVID-19
and has the decision changed after that?
a. Yes, it has changed
b. Yes, no it has not changed
c. No, it has changed.
d. No, it has not changed
Q 11. Did you use any of the online services (like E-commerce platforms) for the
first time during the COVID-19 and will you prefer to keep using them after that?
a. No
b. Yes, but I won’t continue using them
c. Yes, I will probably continue using them

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 Q 1. How has your use of Q 2. Have you subscribed
social media platforms like to any media streaming
Facebook, Instagram & platforms like Netflix,
Whatsapp changed after Amazon Prime, Hotstar,
the imposition of etc., after the imposition
Lockdown? of Lockdown due to
COVID-19?

Not Changed
Increased Significantly
Increased Slightly
Decreased Yes No Yes, multiple

Q 3. How has your use of Q 4. Have you purchased

media streaming devices any Luxury items after
changed after the the imposition of
imposition of Lockdown Lockdown due to COVID-
due to COVID-19? 19?

Not changed Inreased Significantly

Increased Slightly Decreased Yes Yes, many No

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 Q 5. Is your purchasing Q 6. Has your use of E-
behaviour for Luxury commerce platforms like
products and services Flipkart and Amazon
going to change after the increased after the
end of COVID-19? imposition of Lockdown
due to COVID-19?

Yes, it's going to decrease

Yes, it's going to increase
No Not changed Increased significantly
Increased slightly Decreased

Q 7. How do you prefer to Q 8. Have you eaten food

purchase groceries these prepared in a restaurant after
after the imposition of the imposition of Lockdown
Lockdown due to COVID- due to COVID-19? If yes then
19? how?

No
Yes, through dine-in
Grocery marts Kirana stores Yes, through online delivery platforms
Online platforms Yes, through take-away services

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 Q 9. Will you prefer to use Q 10. Were you planning to
shared transportation buy a automotive personal
services like cabs, taxis, bus, vehicle before COVID-19 and
metro, etc., after the end of has the decision changed
COVID-19? after that?

Yes, it has changed Yes, it has not changed

No Yes, as usual No, it has changed No, it has not changed

Q 11. Did you use any of the online services (like E-

commerce platforms) for the first time during the COVID-19
and will you prefer to keep using them after that?

No Yes, but I won't continue using them Yes, I will probably continue using them

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 CHANGE IN CONSUMER BEHAVIOUR IN VARIOUS SECTORS
A. SOCIAL MEDIA PLATFORMS

96% of individuals are using some form of social media during this time of social distancing.
The majority (39%) spend two to three hours per day on social media, and another 29% spend
four or more hours. 64% say their use has increased since the COVID-19 outbreak began.

While 87% of individuals use these platforms to stay in touch with loved ones, social media
has now become an outlet for a variety of activities, including both a distraction from and an
outlet for COVID-19 news, somewhere to draw inspiration for at-home activities, and a means
to livestream events or workouts.

Not all platforms win for every activity, though. While Facebook and WhatsApp are kings of
keeping in touch, TikTok is the clear winner for providing distraction, and Pinterest dominates
at-home activity inspiration. Interestingly, the number of those using Facebook as a distraction
from COVID-19 news is only slightly higher than those who use it to stay up to date with
COVID-19 news. Now more than ever, within the realm of social media, brands and retailers
must know where to reach their consumers and how to resonate with them.

RIGHTWARD SHIFT IN THE DEMAND CURVE

Due to the lockdown, there has been an increase in the use of social media. Generally, increase
in demand leads to increase in prices as seen from the graph above. However, since social

16
media platforms are free now-a-days, it will lead to an increase in the Cost of Marketing on
these platforms.

B. STREAMING PLATFORMS & ENTERTAINMENT INDUSTRY

The global economic effects of the COVID-19 pandemic are already taking shape, as markets
tumble and countries take emergency actions to respond. As global habits change to adapt to
the new realities of the outbreak, consumer spending also appears likely to fall, and the impacts
could have far-reaching effects on the media, sports and entertainment industries.

The evolution of the internet and the proliferation of smart devices has created a digital
revolution that has paved way for a number of business. The global economy owes a significant
part of the revenue to various digital solutions. The combination of these has helped in the
inexpressible growth of the media and entertainment industry. People are increasingly
switching from traditional cable/dish TV setup and moving towards subscription based video
and audio streaming. The OTT services are being increasingly adopted across growing
economies such as India and China. The COVID-19 pandemic is forcing people to stay indoors
to promote social distancing. As a result of this, individuals are resorting to online streaming
services to satiate their entertainment needs. For instance, the OTT traffic showed an increase
of 198% in April 2020 as a result of the government mandates that promote home isolation.

Publicis Groupe India in its latest report ‘Reboot to a New Normal’ details the consumption
patterns, media usage, purchase behaviour and overall marketing and brand trends in India, in
the face of the COVID-19 outbreak. In the period between March 1 and 21, gaming witnessed
a 41 per cent increase in time spent while entertainment and OTT have registered a 34 per cent
increase.8 Ever since the government issued its earliest warnings about the outbreak, TV
consumption has been on the rise with news, religious programming, and children’s programs
seeing the highest spikes in viewership. TV ratings, on the decline for the past year, have
experienced a jump with the rise in Coronavirus-related news. There has been an 8% spike in
weekly TV viewing from 887 billion minutes pre-COVID19 to 959 billion minutes during the
pandemic. The trend is in line with other Asian markets such as China and Korea.9

8
Gaming and OTT spike in COVID-19 lockdown: Publicis Report, BRAND EQUITY,
https://brandequity.economictimes.indiatimes.com/news/media/gaming-and-ott-spike-in-covid-19-lockdown-
publicis-report/75173664.
9
Reboot to a new normal, PUBLICIS, http://e4media.net/PublicisGroupe_Rebootreport.pdf.

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For example, Netflix has shared that it saw a steep rise in its subscribers post most countries
went into lockdown. The company announced it added 15.77 million paid international
subscribers, versus the 7.2 million Wall Street expected. It said it expects to add 7.5 million
global subscribers in Q2.10 This shows that even after the lockdown ends, an independent report
by Bloomberg shows that most consumers will increase their OTT consumption.

RIGHTWARD SHIFT IN THE DEMAND CURVE

10
Jessica Bursztynsky, Netflix says these three effects of the coronavirus crisis are impacting its business, CNBC,
https://www.cnbc.com/2020/04/21/netflix-q1-2020-earnings-three-effects-coronavirus-has-on-business.html.

18
When quantity of goods consumer increases, there is a rightward shift in the demand curve.
This indicates increase in prices. Due to the lockdown, there has been an increase in the
consumption of these services. Generally, increase in demand leads to increase in prices as
seen from the graph above. Therefore, the prizes of these channel are expected to rise in a few
months.

C. LUXURY GOODS: HIGHLY ELASTIC GOODS

Elasticity of demand is the degree of responsiveness of demand due to a change in the goods
demand determinants. If the change in the percentage of demand is greater than the percentage
change in the determinant of the demand, we say that the demand of the good is elastic. If the
percentage change in demand is less than the percentage change in determinant of demand, we
say that the demand is inelastic. Therefore, when income of the consumer falls, we also see a
fall in the demand of goods by the consumer.

As reported by the Index of Consumer Sentiment (ICS), coronavirus has strongly impacted the
way consumers perceive their financial situation. This sentiment has particularly affected the
high-income customers (the Index focuses on American market) and consequently their
confidence as to discretionary spending.11 In other words, people no longer feel comfortable
spending high amounts of money on goods and services which are not strictly necessary.

With luxury products taking the backseat in the global coronavirus crisis, sales are likely to
drop to 35 percent by the end of 2020, according to a recent report by Bain & Company, a
management consultant firm. According to various studies, the impact may be very subjective
in regards of the country or the target population. The world baseline industry forecast scenario
for 2020 predicts that no luxury category will be exempt from the negative impacts of COVID-
19 and that many sectors, including designer fashion, jewellery and timepieces, can expect to
experience an immediate drop to normalisation.

11
Barbara Czyzewska, What Can We Expect From The Luxury Market After COVID-19?, HOSPITALITYNET,
https://www.hospitalitynet.org/opinion/4098227.html.

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Most luxury brands feel that the negative impact of the outbreak will linger even after the
lockdown is lifted, it said in the ‘Impact of Coronavirus on Luxury Industry’ study. “Around
79% of the respondents feel that customers are in a wait-and-watch mode since they are unsure
of the likely turnout of events,” Luxury Connect said.12

People are staying more at their homes and buying products online rather than going physically
to crowded locations. In the long term, this may lead to a permanent change in the behaviour
of consumers and online luxury buying may become a new norm. (Just like after
demonetisation episode in India, consumers who were most reluctant are also gradually
embracing digital mode of payments).

However, One of the most striking characteristics is that spending in the luxury sector is often
based not on rational decision-making process and reasoning but on emotions and feelings.
While this unexpected crisis will undoubtedly have strong impact on societies, it is unlikely to
affect the very roots of human nature. After potentially months of austerity and isolation,
customers may, indeed, be willing to go back to their lives from before the pandemic and enjoy
luxury services including luxury travel, entertainment, food and beverage and spa services.

12
Sobia Khan, ‘Conscious’ connoisseurs may hurt luxury market, THE ECONOMICS TIMES,
https://economictimes.indiatimes.com/industry/services/retail/conscious-connoisseurs-may-hurt-luxury-
market/articleshow/76098646.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst.

20
Therefore, the response of consumers towards luxury items can take either router, which will
then impact the luxury products market.

HIGH ELASTICITY OF DEMAND

The demand for luxury goods is highly elastic. Therefore, when there is a recession, the
demand for these goods will fall. A rational consumer will divert his limited resource
towards essential goods and commodities.

Hence, demand for these goods will fall.

D. E-COMMERCE AND ONLINE SHOPPING

E-commerce includes buying and selling of raw material, products, services or any kind of
goods and services through an electronic medium (internet) by the consumer, retailer, and
business. Whereas, e-commerce retail is the exchange of goods and services between an online
retail company and consumers (generally end-users). The e-commerce transaction can be of
different types such as business to Business or B2B (Cisco, Alibaba), Business to Consumer
or B2C (Amazon, Walmart) and Consumer to Consumer or C2C (eBay).

The COVID-19 pandemic, social distancing and staying home is further expected to push the
consumers towards online shopping. However, uncertain consumer demand and supply chain
issues can affect the e-commerce industry. The COVID-19 pandemic issue can also affect big
merchants such as Walmart, which are experiencing a drop in casual shopping, supply chain
disruption, and an increase in purchases of essential toiletries, groceries, and other products.

14% of those who placed an online ship-to-home order in the past month indicated it was their
first time ever or first time in the past six months doing so; 31% of click-and-collect users said

21
the same. These new or “new lately” groups are slightly smaller this week than we’ve seen in
previous weeks, indicating a potential slow-down in these services’ attraction of new
customers. However, retailers should continue to prioritize and invest in these offerings, given
their evident appeal and need in this time of social distancing.13

GROCERY ECOMMERCE
Grocery ecommerce soared in the second week of March, after shoppers turned online to find
the goods they needed but weren’t available at their local grocery stores. The following graph,
with data from Rakuten Intelligence, shows a huge spike in grocery-related ecommerce. The
rest of ecommerce seems like it might be up a little bit, but no drastic peaks or valleys.

The demand for groceries is not elastic as they are essentials. Therefore, the consumers will
shift to online shopping for groceries as they are essentials.

13
The Impact of Coronavirus (COVID-19) on Consumer Behavior, NUMERATOR,
https://www.numerator.com/resources/blog/update-impact-coronavirus-covid-19-consumer-behavior-us-6.

22
OTHER ECOMMERCE CATEGORIES.
In addition to grocery, ecommerce covers a wide number of products, across
categories. Common Thread Collective14 has been providing valuable updates with COVID
data on ecommerce shopping behaviour, including the chart below. While ecommerce

14
Aaron Orendorff, Opportunities, Data & Strategies: Online Shopping in the Age of COVID-19 [Updated],
COMMON THREAD COLLECTIVE, https://commonthreadco.com/blogs/coachs-corner/coronavirus-
ecommerce#coronavirus-ecommerce-data.

23
performance is not generally up or down, breaking down the data by vertical tells a bit more of
the story.

The shift we’ve seen in consumers moving to online shopping can only help to accelerate
innovation in ecommerce across multiple industries. As companies have been working hard to
improve their ecommerce experience – whether that be from improving delivery times,
updating product descriptions on web pages, or utilising ratings and reviews across their
products – it will be interesting to see whether once COVID-19 is over these consumers keep
shopping online, or if they will want to return to shopping in physical stores.

E. FOOD DELIVERY PLATFORMS AND RESTAURANTS

The online food industry was valued at USD 2.92 billion (₹20,000 crore) in 2019, according a
data analytics firm EMR. The sector was about to witness robust growth this year, until the
coronavirus stopped it on its tracks. Although 61% of consumers say they are eating/drinking
out less than before, the majority still made at least one purchase of a meal or snack outside of
the home last week, and many plan to do the same next week. When asked about their
likelihood of ordering from a restaurant or delivery service next week, 38.3% said they
probably or definitely would. 24% mentioned they would do so for convenience or because
they didn’t want to cook, and 13% mentioned supporting local or small businesses.15

15
The Impact of Coronavirus (COVID-19) on Consumer Behavior, NUMERATOR,
https://www.numerator.com/resources/blog/update-impact-coronavirus-covid-19-consumer-behavior-us.

24
With non-essential services being suspended in order to contain the spread of coronavirus, food
delivery players have started entering into other sectors where hyperlocal deliveries such as
groceries and medicines to adjust to the changing needs. 13% of those who placed an online
ship-to-home order in the past month indicated it was their first time ever or first time in the
past six months doing so. About one-third of click-and-collect users were new or ‘new lately.’
Retailers should continue to prioritize and invest in their online and click-and-collect offerings,
given their evident appeal in this time of social distancing. As expected, online quick service
restaurant (QSR) orders have grown significantly as a result of consumers sheltering-in-place
across the country. Pizza chains stand out in particular as having large increases in orders
compared to earlier in the year. Interestingly however, QSR and pizza chains both saw an initial
drop in volume on March 12, one day after the World Health Organization characterized the
outbreak as a global pandemic. While consumers may have had hesitations early on about
bringing outside food into their homes, a shift in mindset occurred within days and volume has
steadily increased since. For the foreseeable future, food delivery services will be critical in
attracting customers and staying afloat for casual and fine dining restaurants.

25
With restaurant closures, online food delivery companies like Uber Eats, Zomato and Swiggy
are left with little to deliver. They reported a 70% drop in sales. While this could be temporary,
experts view that the orders could drop in the long term as well.

Even though online delivery is growing, when people do decide to spend money dining on-
premise, the quality of the experience is likely to be a significant factor. According to recent
studies done by AMC Global, a market research firm, while 33% of consumers are spending
more money on takeout now due to the quarantine, they expect to go back to more traditional
modes of dining once the situation normalizes. Although food quality will continue to be the
most important variable for people in choosing a restaurant, the quality of a restaurant’s
atmosphere and service will be increasingly vital to attract consumers to dine-in in lieu of
ordering online.

26
RISE IN USE OF ONLINE FOOD DELIVERY CHANNEL, BUT FALL IN OVERALL DEMAND, FALL IN
PRICES OF ORDERING FOOD ONLINE

Online food delivery service has an elastic demand. Post the lockdown, there has been an
increase in the use of online food delivery channel due to closing for restaurants for in-house
dinning. However, due to safety concerns, there will be lower overall demand.

Fall in demand might lead to fall in prices, wherein these online food delivery channels will be
offering more discounts to attract customers.

F. THE AUTOMOBILES INDUSTRY

In the wake of the current pandemic, the globally integrated automotive industry seems
especially vulnerable and exposed and, is expected to have a deep economic impact in the
coming quarters. As economies emerge economically and emotionally from COVID-19, it will
not be business as usual. Consumer confidence will be severely impacted due to imminent job

27
losses and pay cuts, thus forcing many to postpone discretionary purchases like buying a
vehicle. According to a WSJ article, consumer confidence is shattered globally not many
people would even want to think about buying a vehicle, right after the pandemic passes.16
Over half of consumers say they intend to postpone their plans to purchase a car because of
COVID-19. The predominant reason is of course financial uncertainty in the coming months,
with 40% giving this as the main reason for their decision. The restriction of mobility and
freedom of travel is another reason for many of our respondents to postpone their purchase,
according to a survey.17

Considering the increase of peoples want for personal mobility because of the fear of COVID-
19, shifting the sales to online platforms may increase the overall sales in India.18 Therefore,
after a zero sales number in April, it is important to see how the changed consumer behaviour
will affect the automotive market.

However, the sales in the automobile sector is expected to rise post the upliftment of lockdown
as those who were able to afford a second car in the house but did not buy it due to availability
of public transport and cab services. But now, due to safety concerns, they will either buy a
new or a second hand car.

G. THE RISE OF KIRANA STORES

Despite the proliferation of big FMCG brands and swanky supermarkets, the humble kiranas
have continued to hold sway in India during the pandemic. Consumer expenditure for essential
goods at kirana stores has increased by around 40 per cent since the announcement of the

16
COVID-19: Altered consumer behaviour to redefine demand, shape automotive industry, EXPRESS DRIVES,
https://www.financialexpress.com/auto/industry/coronavirus-car-sales-boom-bike-sales-boom-job-losses-pay-
cuts-covid19-kearney/1941800/.
17
How COVID-19 is affecting car sales and consumer attitudes, CAPGEMINI, https://www.capgemini.com/in-
en/2020/05/how-covid-19-is-affecting-car-sales-and-consumer-attitudes/.
18
Online car sales may gain traction post COVID-19, auto retail needs to become virtual: EY, THE ECONOMIC
TIMES, https://economictimes.indiatimes.com/industry/auto/auto-news/online-car-sales-may-gain-traction-post-
covid-19-auto-retail-needs-to-become-virtual-ey/articleshow/75514846.cms?from=mdr.

28
nationwide lockdown.19 As per the report, the spurt in per person expenditure can be attributed
to panic or advanced buying along with the fact that more people staying and cooking at home,
thereby pushing up food sales. Because of the availability of stocks in these outlets, people
have shifted their choice from online platforms like Amazon and Flipkart to local Kirana stores.

The traditional trade channel of E-commerce that serves over 1.3 billion people, compared to
some 120 million by e-commerce, has fared significantly better when it comes to availability
of essential goods like rice, wheat, pulses, milk, sugar and salt.20 Taking inspiration from the
growth of demand for Kirana stores, many E-commerce giants have shifted their focus to the
grocery and essential commodities sector.

Reliance Industries has set off a chain of events. Its ecommerce platform, JioMart or ‘Desh Ki
Nayi Dukaan’ (the nation's new store), started a new initiative in partnership with WhatsApp
to enable consumers to buy from nearby grocery stores. Almost simultaneously, global online

19
40 per cent spike in consumer spend at kirana stores during lockdown, THE NEW INDIAN EXPRESS,
https://www.newindianexpress.com/business/2020/may/06/40-per-cent-spike-in-consumer-spend-at-kirana-
stores-during-lockdown-2139851.html.
20
Arnab Dutta, Kirana stores beat e-commerce giants during coronavirus crisis: Study, BUSINESS STANDARD,
https://www.business-standard.com/article/companies/kirana-stores-beat-e-commerce-giants-during-
coronavirus-crisis-study-120033001747_1.html.

29
retailer Amazon launched its own project to connect with the kirana stores and help them sell
online in India. Code-named ‘Local Shops on Amazon’, this is expected to help customers get
products from local shops while helping shopkeepers supplement their footfalls, according to
the company. On the other hand, Flipkart has already partnered with around 37,000 kirana
stores, of which 12,000 are in what it calls authorised BuyZones, and close to 25,000 of them
are in last-mile delivery activities. Flipkart deploys detailed selection criteria including
demand-supply parameters, and the interest of kiranas in supplementing their incomes.

This shows the increased demand in the Kirana outlets, throughout the nation. With the fear of
virus hovering around every corner of the nation, people are now preferring Kirana stores to
purchase the essential commodities. Even the above investments by giants into this sector
shows the unification of e-commerce with the kirana outlets. Thus, increasing the revenue of
both the sectors.

H. CAB AGGREGATORS

Cab-hailing companies such as Uber and SoftBank-backed Ola, which have resumed services
in certain cities under green and orange zones amid Covid-19 outbreak, are likely to have their
operations hit significantly even after the lockdown. The deadly virus, which is resetting
consumer behaviour towards the usage and adoption of different services and pushing
businesses to revise their growth strategies for the post Covid world, might also challenge cab-
booking businesses to address hygiene concerns for consumers on a war footing.

According to a study conducted by Institute for Business Value, more than half of people
surveyed who used ridesharing apps and services said they would either use these less or stop
using these services completely. Findings were not quite as dire for taxis and other traditional
car services, as a smaller 24 percent of people surveyed indicated they will no longer use these
modes of transportation.21 More than 17% of people surveyed said they intend to use their
personal vehicle more because of COVID-19, with about one in four saying they would use it
as their exclusive mode of transportation going forward.

21
IBM Study: COVID-19 Is Significantly Altering U.S. Consumer Behavior and Plans Post-Crisis, IBM,
https://newsroom.ibm.com/2020-05-01-IBM-Study-COVID-19-Is-Significantly-Altering-U-S-Consumer-
Behavior-and-Plans-Post-Crisis.

30
In conclusion, there is a clear shift of a consumer trend toward owning and a reduction of
sharing cabs for a minimum of 12 months after the COVID~19 crisis. Overall, the sharing
economy will be one of the most affected sectors in the whole economy, a proposition
supported by the survey data. Even after the lockdown phase, consumers fear a high infection
risk in the shared economy, and the decreased demand will put all sharing business models at
risk.

31
 CONSUMER BEHAVIOUR BY AGE GROUPS
The response to COVID-19 hasn’t been universally felt across generations, with consumers of
different age groups responding differently to the crisis. It is important to caveat that this is a
rapidly evolving situation so surveys are quickly outdated as behaviors change with the
circumstances. When we compare affinity data for four delivery services; Uber Eats,
DoorDash, Grubhub, and Postmates – we see that each generation has a different delivery
service preference. Gen Z leans towards Uber Eats. Conversely, older generations have the
highest affinity with Postmates. Among all generations, we see that Millennials remain the
predominant users of delivery apps. We anticipate this will continue to shift as younger and
older audiences become more frequent customers of delivery services.

While people in general are concerned about the growing pandemic, the youngest generations
are particularly altering their purchasing behaviours. One survey of U.S. and U.K. consumers
found that 96% of Gen Z and Millennials are concerned about the pandemic and its effects on
the economy. This concern is leading them to change their behaviour more dramatically than
other generations, which includes cutting back on spending, stocking up on items, and spending
less on experiences. Although still concerned about coronavirus and its effects on the
economy, older generations are slightly less concerned than younger generations and letting it
impact their shopping habits less. For example, 24% of Boomers and 34% of Gen X said they
were letting current events impact what items they purchase, compared to nearly half of
Millennials. Though older generations are taking more care of their health as the disease is
more dangerous for them so they are spending more on medicines and health products.

32
 CHANGE IN CONSUMER BEHAVIOUR BY GENDER
While more women (71 percent) than men (60 percent) reported being “worried about the
coronavirus,” nearly half of men surveyed (47 percent) said it has impacted their purchase
decisions, versus 41 percent of women. Further, 38 percent of men compared to 33 percent of
women agreed that it had impacted where and how they shop.22

Worth noting, more than a third of both men and women (34 percent and 35 percent
respectfully), reported cutting back on spending because of the Coronavirus outbreak.23

BEHAVIOUR VARIANCE BY PRODUCTS24

Forty percent of men agree that the news is impacting what products they are purchasing, versus
only 34 percent of women. When asked about the kinds of products respondents were
purchasing more, a higher number of men reported buying more Grocery products (22%),
Personal Care items (14%), Health and Household Products (13%) and Beauty Products (7%)
compared to women, who are increasing their purchases in smaller numbers: Grocery products
(17%), Personal Care items and Household Products (13%), Health (11%), and Beauty (6%)
products.

VARIATION IN FREQUENCY25

While both men and women (about 30 percent) say they are shopping less frequently in-store,
more men are shopping more frequently online. Twenty-four percent of men versus 18 percent
of women reported increasing their frequency of online shopping. More men than women are
choosing to take advantage of services that limit in-store shopping, including BOPIS (31%
versus 28%) curbside pickup (22% versus 15%), and subscription services (18% versus 16%).
The only slight outlier was auto ship, where 14 percent of women versus 12 percent of men
report utilizing this service.

22
Greg Petro, Coronavirus and Shopping Behavior: Men and Women React Differently, FORBES,
https://www.forbes.com/sites/gregpetro/2020/03/13/coronavirus-and-shopping-behavior-men-and-women-react-
differently/#2ac71a0b4737.
23
Ibid.
24
Ibid.
25
Ibid.

33
 CONCLUSION
It can be said that COVID-19 has changed the way we work, communicate, and shop more
than any other disruption in this decade. As a result, some key changes in consumer behaviour
have been noted. Moreover, consumers have drastically reduced their spending on
discretionary purchases, mainly due to the uncertainty regarding job security and the future
overall. By observing the shopping patterns, we witnessed both the pre- and post period of
COVID-19, one can clearly see that consumption in industries dealing in luxury items, such as
the apparel and dining industries, has still not picked up significantly, and this goes in line with
consumers’ expectations that they will have to wait for several months - if not years - for
routines to go back to normal. Many households are also expecting their incomes to be
negatively affected post-COVID-19 outbreak. However, on the bright side, there has been a
noteworthy increase in online shopping. Now that retail stores are closed, consumers are
relying more on digital mediums for their purchases. Our detailed analysis of how consumers
reacted to various sectors due to the ongoing pandemic showed us that consumer have become
more aware and thoughtful on the services they want to avail. The rise of streaming platforms
and entertainment sector shows us that with people staying and working from home, their
demand for leisure time entertainment has significantly increase. Whereas, sector like luxury
items, transportation and taxi services have and will continue to show a dip in their demand in
the coming days because of the uncertainty hovering around the risk of getting infected or
security of jobs. However, one sector which has shown a growth and is set to stay is E-
commerce. People and companies have been trying to shift their shopping habits to online
platforms since the beginning of 21st century. But, the sudden rise of COVID-19 has speed
boosted the process like no other. With people wanting to lower their contact and chances of
getting infected, they came to the E-commerce industries, to which many of the consumers
were first-time users. People now heavily rely on these services for ordering groceries, food
and other times. This habit has introduced the consumers to a new comfort and therefore, most
probably, the reliance on online platforms is going to stay.

Therefore, it becomes very important for companies to realize that traditional business models
are now incompatible with the challenges that they face nowadays, with the biggest one being
this pandemic. Entrepreneurs and business owners now need to think about creating flexible
business models that will enable them to quickly remodel and adapt to the changing trends in
their respective industries and consumer behaviours, which is the key to success in today’s
world.

34
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