How did Covid-19 affect our decision making?

Hi everyone welcome back! I took a month off from writing my blog entries as I was revising and completing my end-of-year exams. Thankfully they are done now and it is almost summer! So for today's entry, I wanted to look at how COVID-19 affected the economy and the behaviors of consumers.

COVID-19 first emerged around December 2019, and we were all naive about what it was going to evolve into. The economy was just recovering from the 2008 financial crash, which caused companies to undergo bankruptcy, millions of people lost their jobs, and overall confidence within the economy dropped to an all-time low. People no longer trusted the banks, and limited their consumption, the government, desperate to stimulate consumption and investment in the economy cut the interest rate to nearly zero. After years of recovery and various schemes and interventions, things were finally looking up again. Then suddenly we were swept with rules and regulations in a desperate attempt to contain the virus spreading worldwide. No more than 10 people were allowed in a building at one time, everyone was advised to remain 6 feet apart from one another, everyone had to wear a mask, and most importantly we had to stay. At. Home.

This of course created major problems. The free market economy is adopted by the majority of countries in the 21st century and thrives on demand and supply. However, what will happen if consumers are unable to leave their homes to go out and purchase their goods and services, and producers are not allowed to send their workers into the factories and produce those goods and services? No demand, no supply. The world was faced with a huge problem, how do we prevent the collapse of the economy? Firms immediately went into action, allowing suppliers to continue production by implementing strict rules and regulations with frequent sanitization, allowing workers not required to be present in the workplace to complete their tasks remotely, and diversifying supply chains to mitigate any disruptions caused by border restrictions and lockdowns. Of course, some tough decisions had to be made by companies where a record number of layoffs were reported, and many working under an extreme reduction of their original salary. Many companies struggled, as those who relied on in-person consumption simply could not make enough adaptions to survive. Large hits were taken by companies such as Emirates which rely on people traveling and intermixing with one another. All of the border controls and restrictions were their worst nightmare. They ended up taking around $3.1 billion of government assistance and let almost 1/3 of their employees go. If they were not such a big company with their esteemed reputation, I doubt they would have been able to survive the period.

However, while some struggled, others thrived. Companies like Zoom, Netflix, and PayPal saw their success skyrocket. Zoom is a platform where users can engage in video calling sessions in groups of 2 or more, which is transformative for remote working and learning requirements. At the end of the fiscal year 2020, Zoom had a market cap of $66.5 billion and had an increase of 412.92% compared to the same period in 2019. With all these people stuck at home locked inside, people had nothing to do and entertain themselves, so they turned to many people's favorite form of entertainment: television. By the end of the 2020 fiscal year, Netflix's market capitalization was $239.49 billion, up 68% from the same time in 2019. Over the last 12 months, NFLX's shares have increased by 48%. The firm declared at the close of 2020 that it had over 200 million paying customers, up from over 150 million in 2019, and earned $25 billion in revenue annually.

We can see that firms have been affected either positively or negatively, however, we as consumers were impacted by this pandemic. Many of our thinking processes changed, as we were suddenly functioning in a completely new world. Immediately we became more conscious of our hygiene and health habits, spending more on different innovations that arose, such as bands to attach our masks to and various hand sanitizer accessories. We all became fixed on online shopping, making mass orders as we couldn't go out ourselves to malls and shops. There was so much uncertainty within the economy, that people began saving as much as they could, and still today with economic conditions almost back to normal, we continue to ensure savings are in place just in case something may happen again. Everyone's stress levels increased drastically, and we began impulse buying and stockpiling different items. I remember seeing videos on the news of extreme shortages of toilet paper as people bought 100 packs at a time in fear that there would be none left - like some kind of zombie apocalypse end-of-the-world situation. Now I can look back and laugh but at the time it was really frightening. Additionally, there were a lot of tests for brand loyalty for consumers as many large organizations and companies faced difficulties with ensuring that they were able to maintain supply and keep prices at their usual rate.

Luckily there were many interventions and plans that took action during the crisis, and thanks to everyone sticking to the rules set in place we managed to slowly but surely steer the economy back to its original functioning, with all of us being able to move and interact freely and safely. I could definitely write a lot more on this topic but I think that's all for today. Thank you for reading and happy holidays! See you next week :).