This article was written by Yuu Shibata and contributed to our publication on Medium.com.
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The rapid spread of COVID-19 in Italy has brought immediate effects on the consumer behaviour. We are now living very particular times, where few months ago we could only see such situation on movies or some conspiration theories.
The international economic prospects are showing downside risks directly conditioned by the evolution of the ongoing health emergency which has increased a high probability of a sharp slowdown in the Italian economy. Of course, this is not a phenomenon that can be noticed only in Italy, but it is affecting worldwide, starting from the first country of outbreak, China, where it was possible to see a clear change in consumer behaviour due to the coronavirus pandemic.
The GDP forecast for Italy in 2020 estimates a -6,5%, and at the end of this year, it is expected to have a very high public debt with serious consequences.
Such level of crisis was possible to see in the Great Recession (especially, the financial crisis of 2007–2009). Yet, there is one big difference with the current crisis. While the financial crisis in 2007–2009 had its origin at financial level where it was possible to see some financial imbalances (concerning especially the housing sector), this time the origin is natural causing physical restrictions (e.g. quarantine, stop of the commercial/industrial activities).
So, is the coronavirus crisis as bad as the financial crisis of 2007–2009? The answer is: We don’t know it yet.
The forecast seems optimistic at this moment and some specialists think that the current crisis may not be as bad as it seems and will not have such profound and prolonged consequences at States’ economy compared to the 2007–2009 crisis. On the other hand, it is also true that it is not possible to compare them yet, because the pandemic basically has just started and we need time to see how this situation will develop in the future.
As everybody knows, Italy is under a strict lockdown since March 10, a situation where people are forbidden to go outside their home without a motivated and valid reason (work, health issues and for necessities). From what it was possible to see, many people have difficulties in accepting such restriction in their freedom of movement, so the government had to introduce sanctions (such as fines) in order to stop further infringement of this measure.
So, by these days, most Italians are under quarantine for about one month already. This means that every person and family are all stuck at home without being able to go out. This dramatic situation has of course affected everyone’s lifestyle, which also includes everyone’s consuming behaviour and also it has leaded to the change of business models.
First of all, it must be clarified that currently in Italy only the following businesses are opened to the public: grocery shops (mainly supermarkets), pharmacies and newsstands. According to the large supermarket chains (GDO, Grande Distribuzione Organizzata), a trend of the type of most sold products can be noticed.
This trend is: Italians are buying “basic products”, such as milk, flour, bread, sugar, meat, soap, water, frozen products and products for personal hygiene. Another product that its sells are rising, yet not as much as the basic products, are books. On the other hand, make-up and perfumes lost their sells for about -60%.
Also, it was possible to observe an interesting phenomenon. Apparently, during the first week of the lockdown, people were shopping at the supermarkets randomly, yet, from the second week, people started being more aware and their shopping list seemed to be more organized, with less compulsive purchases. Regarding to this point, Jesse Garcia, a consumer psychologist based in Los Angeles said, “The coronavirus pandemic has completely changed patterns of consumer behaviour all over the world. People are afraid, and when people are afraid, they go into survival mode”.
In fact, this “survival mode” is what actually can be seen in the consumer behaviour in Italy during this emergency times.
Since the COVID-19 outbreak, people has had the obligation to not go out as much as possible, this measure was established by the government, but also, many people decided to go less times possible to the supermarkets in order to avoid further risks of infection.
As for eCommerce, the trend of sales of consumer products online during the first week of lockdown mas a +97.2%, and for the second week it was possible to see an increase of up to +101%.
It is very interesting that people are starting to actively use technological tools and mostly buying essential things, in times of emergency, such as the one that we are going through. It will be interesting to see how this will change once the COVID-19 emergency will pass.
So, even though people cannot go out for shopping, it seems that Italians continue buying, mostly basic products, through the use of technological tools. This means that, although the amount of demand may have changed during the crisis, there is still demand of products. Yet, what about services or other type of business sectors?
According to the survey carried out by the General Confederation of Italian Industry, 99% of industries related to tourism, catering and transportation reported negative effects.
Tourism industry: Tourism is a very important economic activity in Italy. According to the Bank of Italy (Banca D’Italia), tourism covers directly, approximately 5.5% of the Italian GDP. Since March 2020 to May 2020, it is expected to see an estimate loss of 7,4 billion euros in the tourism sector. In fact, the tourism industry may be the most affected industry in Italy due to the coronavirus emergency. On this regard, Luca Patanè, president of Confturismo-Confcommercio said that the Italian government will have to take national strategies to reboot the Italian economy taking into consideration the tourism sector, otherwise, “it will be an unforgivable mistake”.
Catering industry: This is also one of the most affected sectors. At this moment, all restaurants must remain closed and they are allowed to provide services only through the delivery system. In fact, according to Dario Laurenzi, a known consultant on the catering industry, it is expected an increase of the food delivery service of approximately 20–25 %. According to him, whether a Restaurant will survive or not this emergency situation will depend on: their situation before Covid-19 (many restaurants in Italy have been facing some difficulties even before the emergency), their financial situation (existence of loans/mortgages), their main customers (restaurants that target “tourists” as main customers will have more difficult situation) and on their adaptability (e.g. those that are able to introduce the delivery scheme have better chances to pass through this emergency)
Transportation industry: This includes the transportation services of: buses, trams, trains, subway, taxi and airlines). According to ATM (Azienda Trasporti Milanesi, a public transport company of Milan), there is an estimated decrease of passengers of 40% for public transports of busses, trams, trains and subways. Concerning taxi services, it has been recorded a daily loss of 50%. Concerning the air transport, it has been recorded an average of -30% of passengers in Italian airports, compared to last year at this season.
She is a Legal Counsel and she holds a Ph.D in Law (University of Bologna). She is specialized in European Union Law and she is the Head of the Japanese Desk and Spanish Desk. She is mother tongue Japanese and Spanish and speaks fluently Italian and English.
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