Impact of Covid-19 on Consumer Retail Demand and Government Policies for Economic Recovery

This report discusses the impact of Covid-19 on consumer retail demand and the government policies implemented in the UK for economic recovery. It includes a supply and demand analysis to determine the factors impacting consumer retail demand and the strategies adopted by the government to revive the retail sector.

Economics for
business
1

INTRODUCTION...........................................................................................................................3
Task 1...............................................................................................................................................3
Supply and Demand analysis to determine the factors impact on consumer retail demand........3
Task 2...............................................................................................................................................8
Governmental and Economic policies of UK for economic recovery from loss of consumer
retail spending..............................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
2

INTRODUCTION
Coronavirus pandemic nearly affected every business sector at some extent. This outbreak
have positive as well as negative impact upon growth and development of the businesses that
lead them to face heavy losses while some are driving to fulfil their essential needs. Covid-19 not
only effected growth of businesses around the world but also changed the perception and
behavioural pattern of customers (Goeb, Boughton and Maredia, 2020). This situation forced
businesses to attract customers more in attractive manner as to conduct business and retain
consumers for long period of time. Covid-19 affected B2C, B2B, E-commerce and the entire
business segment especially those who are performing operations in retail segment. Present
report includes data and information which is essential to understand by businesses in retail
sector. This will allow them to evaluate changing behaviour of customers from past few months
after lockdown and Covid-19. Supply and demand analysis technique is being mentioned in this
report as to present this information in an effective manner through which businesses can
evaluate positive and negative shift in demand of retail goods as well as services. Along with this
report also includes discussion upon Kingdom government economic strategies as well as
policies in order to revive businesses from the losses that have been faced due to corona virus
outbreak.
Task 1
Supply and Demand analysis to determine the factors impact on consumer retail demand
The income effect and shift in employment –
Employment plays most important role which is also having high influence on demand of
goods and services within retail industrial sector. It has been identified that people those who
have stable sources of income generation are having expectations stable source of income on
continuous manner. This makes them to spend more on purchasing that will lead demand curve
shift towards right. While on the other hand increase in unemployment relative lead towards
3

opposite outcome. In this people who are having less income sources will spend less on
purchasing even necessity for luxury goods, it lead words having negative impact upon every
sector of United Kingdom that will automatically lead towards loosing of jobs (Unemployment
rate: How many people are out of work?. 2020). According to the analysis it has been identified
that many segments in United Kingdom are however the engaged in the process of hiring
individual for job such as to step delivery. As per the analysis of BBC report, this has been
identified that in United Kingdom many companies are forcing its workers to quit the job that
will severely affect economy of country and lower down purchasing power of customers which
increases demand of customers for retail services and goings in order to make fulfil their basic
needs comparatively to luxury goods.
Price
D1 D2 here, D2 = Rise in demand of food and groceries
D3 D3 = Decrease in demand of other retail goods
Quantities of retail goods
UK regional or local demand factors –
Economics around the world faced massive shock due to coronavirus outbreak that not only
affected business growth and development but also have negative impact on purchasing
behaviour of customers. Similar, in the case of United Kingdom which economy is badly
affected due to the situation of Covid -19, in addition to this it has been identified that GDP and
other economic aspects in United Kingdom also faced negative impact from this outbreak. It has
been identified that business food retailing sector have stable business processes as they are
engaged in the offering of basic necessities to individual. This analysis states that food retail
sector continue to have expected growth by 7.5 billion. However in context with footwear and
clothing segment in retail Industry sector it has been identified that this segment will continue to
face losses that can be approximately to 13 billion British pound. According to the analysis it has
also been identified that those segments that are mainly dependent upon hospitality,
4

manufacturing and tourism sector will significantly at expected to face of fall in 2020 as
compared to other sector of retail. In addition to this set has been underlined that due to covid-19
government are forced to restrict travel activities in both International and Domestic processes
this creates obstacles in front of individuals who are operating their jobs in this segment;
however in this digital services will proved to be an effective measure.
Further it has been underlined that there are also other factors that get negatively affected
due to this pandemic especially businesses those who are engaged in the supply of raw material
and more. In context with United Kingdom this is being identified that number of retailers are
conducting their operation at smaller scales. This is being identified that large business
organisations like ALDI who is having product of customers did not faced decline in the sales
ratio comparatively to those who are performing their businesses in smaller sector. Along with
this it is been identified that demand of home furnishing health and beauty furniture flooring and
electronics also lower down. While on the other hand food in grocery demand keeps on
increasing specially in those organisations who are conducting their business operations on
digital platform comparatively in physical stores.
Figure 1: Annual Retail sales in UK with pre and post coronavirus forecast. 2020
5

Complementary or substitute goods
Due to lockdown and covid-19 economic and social living of individual get affected on
same extent such as rise in unemployment rate that automatically affected consumer spending as
well as purchasing behavioural pattern. According to the analysis it has been identified that in the
in retail sector demand of groceries and food are high in the provinces of United Kingdom and
even in other countries around the globe. This increase leads towards rise in some of the
commodity prices. However it has been identified that people who have less source of income
get out reached from these products demand of complementary or substitute goods significantly
This has shift the demand of luxury retail goods to left and demand of complementary towards
right in following way –
6

Price
D1 D2 here, D2 = Increase in demand of complementary goods
D3 D3 = Decrease in demand of luxury retail goods
Quantities of retail goods
State of the economy –
According to the analysis it has been a underlined that people feel more confident when they
see stable economic growth within the country on continuous name. This indicates stable
economic growth plays most essential role that relative influence demand of customers in
context with retail sector. It has been identified that continuous spread of covid-19 in countries
around the world forced government to restrict many activities. Main aim behind this is to break
the chain. Same in the case in United Kingdom, it has been identified that due to lock the United
Kingdom face reduction in pound units which has been significantly swiped from London stock
market and negatively affected country economy. It has been evaluated that this negative
influence also affected purchasing behaviour of customers. However after lockdown number of
customers are purchasing products and services and are gradually returning in markets which are
leading businesses in retail sector to measure slow economic growth. It is also reflecting positive
sign of growth in this sector. However second lockdown probability may lead UK to get fall in
7

the low growth. It has been evaluated that in retail sector there was 0.8 % increase but clothing
and fashion segment will continuously face reduction in growth.
Task 2
Governmental and Economic policies of UK for economic recovery from loss of consumer retail
spending
Coronavirus pandemic forced government around the world to implement many
governmental as economic policies. Main aim behind this is to make slow increase in the out
spread of viruses as this can have serious or negative impact upon business growth and
development. According to the evaluation it has been identified that covid-19 have negative
impact upon sustainability as well as profitability of businesses around the world from past few
months. In addition to the underlined that covid-19 also affected demand and supply of products
and services of retail industrial sector along with its daily basis operation. As per the evaluation
it has been identified that retail industry in United Kingdom significantly contributes in countries
GDP and growth. As per the report of BBC, this is being identified that retail sector is having
widespread contribution in country employment rate industry as it provide job opportunities to
individual in large, small and medium sector. Thus, this makes government of United Kingdom
to enforce different type of relaxing economic policy as to provide effective support to the
business organisation those who are conducting their services in Retail Industry sector. This
industry is having major contribution in GDP, employment rate and other aspects thus, it is
essential for government to provide significant aid to the sector in order to overcome the
consequences that has been faced by this industry in demand and supply curve. With the help of
relaxing measures as well as policies government can assure slow growth of businesses in this
sector.
According to the analysis it has been identified that corona virus negatively affected many
retailers in the provinces of United Kingdom that makes them to nearly manage their sales
performance in a well defined and effective manner. as per the analysis is being underlined that
some of their businesses in this sector are engaging in the process of recruiting candidates. With
the help of these aspects policymakers can identify the factors which are increasing growth and
development of these businesses even in the time of covid-19. For instance large business
8

organisation ALDI conducting is business services in United Kingdom are planning to recruit
more than 12000 individuals in their new store before Christmas (The companies still hiring in
the UK during coronavirus crisis. 2020). In addition to this other organisational Lidl is also
looking forward to open up 25 new stores that will automatically towards offering number of job
opportunities. All these factors can be undertaken by policy makers in order to understand the
reason behind sustainable sales. It has been identified that major reason behind this is that these
organisations are providing sanitized and hygienic environment in their stores that attracts
customers attention and it if customers have healthy and safe environment then they
automatically make their purchases in the stories.
Retail Industry is playing most important role that allows government to increase its GDP
rate. This segment is contributing up to 5 to 6% in gross domestic production of country. Along
with this it offers job opportunities to individuals. Thus, by proving significant support to this
industry government can increase household income and can further allow businesses to
overcome from the losses in a significant manna. This makes government to enforce different
type of policies as well as measures in order to revive this business organisation from the worst
impact of corona virus. Mentioned below there are some certain form of policy that can be
considered by government:
 Government is required to ensure that liquidity schemes assistant will be accessible to all
business organisations in retail sector in easy manner despite of their size as well as
scope.
 It is essential for government to provide support as well as assistant to those organisations
who have faced serious issues and losses in context with labour supply.
 Government is also required to assured that entities within retail industry sector are
maintaining proper Health Care guidelines such as social distancing in a well defined and
effective manner as it effectively attracts a large base of customers.
 Government is required to ensure that retail industry is having more aggressive form of
competition after Covid-19 as it is a major factor that can increase production and sales.
 It is essential to diversify sales channels in retail industrial sector in order to increase
resilience in addition to this support in terms of small brick and mortar retailer is also
required to be provided in order to enhance their online presence.
9

According to the analysis it has been underlined and government authorities by offering
liquidity assistance to the organisation in retailing sector can provide quick and easy access
through which these organisation can sustainability conducted business operations. It has been
identified that demand of non essential products are lower down in retail industrial sector during
lockdown. In this liquidity assistance can offer significant measure through which organisation
can overcome from the crisis. In addition to this by offering emergency support can aid
organisation to conduct their operations in a sustainable manner further it has been evaluated that
it is also essential for government United Kingdom to make sure that there is less dependency on
digital online services and they are required to make balance in order to increase sales ratio of
physical store (Richards and Rickard, 2020). In this government is required to offer maximum
financial incentive to those employees who are performing their responsibilities in this segment.
By offering relaxation in labour and other taxes government can allow retailers to conducted
operation in a sustainable manner as providing these different type of assistance and measure
government can assure stable economic growth.
CONCLUSION
As per the above mentioned report it has been concluded that corona virus pandemic have
severe impact upon organisations in every sector around the world at some extent. In addition to
this it has been the underlined that due to this pandemic number of businesses are striving to
even surviving to fulfil their daily basis. Alone with this according to the analysis it has been
evaluated that this pandemic does not only impact upon operations of business but also affected
purchasing behaviour of customers around the globe and make government of many countries to
implement economic theories as well as measures in order to provide support to businesses who
are facing immense amount of losses. In addition to this has also been underlined that
unemployment and decrease in income level of individuals are also increased due to this
pandemic. Thus, in order to effectively overcome all these losses from covid-19 government of
10

countries around the world is required to support every sector with the help of relaxation in
economic policies like taxes, surcharge and more. These measures will lead businesses to assure
slow growth and revive from the losses that have been faced by them.
REFERENCES
Books and Journals
Goeb, J., Boughton, D. and Maredia, M.K., 2020. Monitoring the impact of COVID-19 in
Myanmar: Agricultural input retailers (Vol. 8). Intl Food Policy Res Inst.
Richards, T .J. and Rickard, B., 2020. COVID‐19 impact on fruit and vegetable
markets. Canadian Journal of Agricultural Economics/Revue canadienne
d'agroeconomie.
Unemployment rate: How many people are out of work?. 2020. [Online] Available Through:<
https://www.bbc.com/news/business-52660591>
The companies still hiring in the UK during coronavirus crisis. 2020. [Online] Available
Through: https://www.theguardian.com/world/2020/jul/31/how-covid-19-has-reshaped-
the-jobs-landscape-in-the-uk
Covid-19 and the retail sector: impact and policy responses. 2020. [Online] Available
Through:< http://www.oecd.org/coronavirus/policy-responses/covid-19-and-the-retail-
sector-impact-and-policy-responses-371d7599/>.
Annual Retail sales in UK with pre and post coronavirus forecast. 2020. [Online] Available
Through: https://www.statista.com/statistics/1111013/pre-and-post-coronavirus-growth-
forecasts-for-retail-uk/
11

12