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[Reuters]- The new coronavirus pandemic has changed the face of the US consumer goods market. The main reason is the spread of work from home. As a result of Reuter’s analysis of the demand and price trends of various consumer goods, it was found that the consumption model that had been valid for many years in all consumer goods, including clothing and food, changed dramatically in the future. new Corona crisis.
“He knew everything about supply and demand, but he could basically throw away all that information, because consumer behavior has completely changed,” said Pyotr Dvorchak, associate professor at Northwestern University.
By taking advantage of this change, some companies have gained incredible price competitiveness, raising prices and stopping discounts.
As the wreck of the crown spreads, the consumption of instant coffee, eggs, slices of ham, ketchup, cheese, etc. it has increased significantly compared to a year ago. However, despite the uncertain outlook for the economy, NikeNKE.N“Airmax” and Lulu LemonLULU.OYoga pants, Louis VuittonLVMH.PAThere is also a seemingly mysterious phenomenon in which the demand for some luxury items such as handbags is increasing.
According to economists, this is because many citizens cannot go out and shop and have more cash on hand. Even employees ordered to stay home can receive unemployment benefits equal to the federally supported wage.
“Of course there are major layoffs, but many people keep their wages and income,” said Nirupama Lao, an associate professor at the University of Michigan. If they hadn’t lost their jobs, the disposable income he said could have risen even more.
When Bernstein analyzed the Nielsen data, JM Smuckers as “Folgers” and “Dunkin”SJM.NConsumer spending on instant coffee increased by an average of 8% year-over-year in the four weeks leading up to August 8.
Heinz CraftsKHC.OSource and Tyson FoodsTSN.NSpending on sliced ham also increased by approximately 10% and approximately 5%, respectively. It makes sense given the growing demand for household food.
On the other hand, some retailers and large manufacturers have been criticized for reducing advertising costs and increasing profits amid the large number of deaths caused by the new Corona crisis.
“While major manufacturers profit and enrich their pockets, consumers are under unprecedented pressure from rising product prices,” said Bart Flickinger of Strategic Resources Group, a consulting firm. What to do.
However, some experts believe that manufacturers are also struggling to increase costs in response to the new Corona epidemic.
For example, before Corona, many people bought coffee on the way to work or school. With the expansion of telecommuting, manufacturers are forced to switch from 20-pound (9.1 kg) bags for restaurants to smaller packages for general households when shipping coffee. Egg shipments have also shifted from restaurant specifications to general household packages.
However, if manufacturers take the increase in demand for granted and raise the price, they are likely to get back on track.
For most of the pandemic period, prices for water in PET bottles and disposable diapers increased, but demand fell. If you can drink the water at home, don’t bother buying a bottle, and if you take care of your baby yourself, you can use reusable or unbranded diapers.
The confinements have prevented many from traveling, going out to eat or going to the movies. Many people are cutting down on gas without going out or sending their children to school. It seems that you are spending the money that you have floated for that purpose on something else.
Professor Michael Collins of the University of Wisconsin calls this movement an “alternative effect.” “It is clear that people are behaving as if they have made a lot of new money. I am not eating out at the moment, so I am generating hundreds of dollars of new and useless income. It can be used for consumption in the field.”
The strong sales of the expensive Nike “Airmax” sneaker can be explained by this alternative effect. Based on data analysis, Nike’s online inventory sales rate for Airmax in July was around 63%, a significant increase from 10% over the same period last year. The average price of Airmax increased 10.5% compared to the same period of the previous year.
According to the website, the price of the Louis Vuitton luxury bag “Neverfull MM Monogram” has increased by 5% since the beginning of May. LVMH Moet Hennessy Louis Vuitton, owner of Louis Vuitton, has been on the rise since June despite the third price increase during the pandemic period.
However, these movements are limited. Demand for Barbary women’s trench coats slowed and inventory sales in July fell from 14% in the prior year quarter to just 3%.
There is strong uncertainty about the future. The big picture of the new corona epidemic and the economic hit in the United States remains uncertain, and it is unclear when the behavior of people and consumers will return to their original state or if it will actually return.
According to Lao, an associate professor at the University of Michigan, food manufacturers are reluctant to make capital investments to change the production process of their factories because they do not know the end of this uncertain situation.
In reality, the public may feel more financially sore and consumer demand and manufacturers’ pricing power may change within weeks or months. The US government’s weekly $ 600 addition to unemployment insurance expired in late July. If there is no income, consumer behavior will be in line with the recession and consumption will decline.
Collins, a professor at the University of Wisconsin, noted that the payment of mortgages, credit cards and student loans has been deferred since the spring, which has also helped consumers. “Eventually the payment grace will be suspended and people can start adjusting their wallets again,” he said.
(Reporter Nick Carey, Reporter Richa Naidu, Reporter Siddharth Cavale)
