COVID-19 has caused unprecedented disruptions, which have thrown even the most previously robust disaster-preparedness teams into a flux. Governments around the world have found themselves struggling to strike a balance between safeguarding public health and avoiding stifling the economy. As a result, consumption behaviour has been forced to change during government-imposed mandatory lockdowns as citizens adapt to rapidly altering lifestyles. This leads us to wonder: How have consumption patterns shifted? Do the changes form a basis for safe re-opening? What will economic recovery look like?
Asia Competitiveness Institute (ACI) hosted a webinar in collaboration with Mastercard on 12th November 2020 in order to walk the public through these pressing questions. The webinar was titled “What Consumers want during the Pandemic: A Singapore Perspective” and saw over 100 participants, representing 10 nationalities. Watch the webinar recording below.
The ACI team used high frequency, aggregated and anonymized consumption data from Mastercard for the time period up to the second phase of re-opening as a framework. The analysis found that consumption recovery in Singapore among non-travel sectors are not associated with “revenge spend” but reflect rational consumer behavior instead.
Furthermore, the research findings depicted that consumers internalize the risk of the pandemic by avoiding highly contagious activities and instead reallocated spending to online shopping. The policy implications are that in the case of a second wave, there is less need for a strict lockdown, but instead Singapore could potentially rely on consumers’ internalization of risk, to lower the economic and health costs of the pandemic.
Regarding reallocation of consumption activities, consumers significantly reduced their travel due to health concerns, even prior to the circuit breaker being implemented. This occurred just due to government advisories and voluntary decisions made by airlines. Data also showed a shift of consumption to online platforms due to both hygiene reasons and ease of transactions. Geographically, the data depicts increased spending in the suburbs due to citizens working from home and attempting to avoid crowded areas in the city centers.
While the “circuit breaker” helped flatten the infection curve, the possibility of a second wave or future pandemic still remains. Upon reopening, it is important that consumers continue to internalize the infection risk by minimizing consumption activities with direct human interactions. This is a key factor to prevent escalating economic costs due to subsequent waves of COVID-19 or future pandemic events.
View press coverage of the webinar event below: