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Updated on: Friday, December 17, 2021, 04:29 PM IST

Teji Mandi Explains: ‘How’s the josh’ on the consumption side?

Teji Mandi Explains: ‘How’s the josh’ on the consumption side? | Photo: Pixabay

Teji Mandi Explains: ‘How’s the josh’ on the consumption side? | Photo: Pixabay

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Buying behaviour in pre and post-pandemic has changed drastically. Here's how and what changed in the consumption space over the past two years.

What's Happening?

The COVID-19 pandemic brought an unprecedented change in the consumption sector. The buying patterns have changed too. As soon as the economy reopened the first time, there was a whole influx of demand, but it soon began to dry up. The festive season has also been lukewarm, which reflects a weak demand environment. However, consistent savings last year has expanded the wallet size. More and more people are spending their money on self-care, well-being and travel. This weird combination of consumer behaviour is said to be temporary. Once work and expenses come back to their normal levels, the whole consumption space can be studied better.

Offline retailers are fighting their own battle as most businesses have taken a harsh beating from the pandemic. The first two waves have dried up their books, which is causing the e-commerce space to catch the pace. Online retailers are taking the opportunity of this time and driving up their revenues. With the upcoming new variants of COVID-19, many businesses are unsure of their survival six months from now.

Why Should It Bother You?

It’s important to know how inflation is burning deep pockets of consumers and businesses. Post-pandemic, the increase in the demand for goods and services led to higher demand for labour, which pushed up their wages. Meanwhile, supply shortages caused by world shipment, high energy prices and supply chain disruption remained the major reasons behind the spike in inflation all across the world.

The demand currently is outpacing the pricing pressures, which is good as it is removing all the blocked capital and getting in cash flows. Once the current inventory dries up, buying new units will remain the biggest challenge. At current commodity prices, it will cost businesses a huge amount to buy raw materials. Earlier inventory was easy to sell off but to create a new one is not a piece of cake anymore.

What’s In Store?

The consumption space is not in a good shape. Private capital expenditure will be harder to achieve given high costs, lower savings and inconfidence. Resultantly, corporate credit growth will be affected, preventing companies from further expansion. Meanwhile, the scare of the Omicron (a variant of COVID-19 virus) spread is a big hindrance across the board. The government could jump in the third time if it gets too risky.

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Published on: Friday, December 17, 2021, 04:29 PM IST
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