A survey reveals how consumers belonging to the middle to high-income group are anxious about the pandemic and fearful of making expenditures for the upcoming Eid-ul-Fitr
Last year on Eid-ul-Fitr, Nusrat Jahan had bought new mobile phones for both of her parents; she had also managed to buy new clothes for herself. She had bought everything from a posh shopping mall in the city.
This year, she is looking for discounted items on the internet and is not buying anything for herself.
The pandemic has caused customers like Nusrat Jahan, who otherwise would spend a lot more during Eid, to cut down on their expenditures.
Every year, shops and businesses in the country make most of their profits during Ramadan. Eid economy usually consists of thousands of crores of taka.
From designer clothes for Eid to food items for iftar, there isn't anything consumers won't splurge on during this festive season.
This year, it is hard to find anyone whose spending pattern has not been affected by the coronavirus pandemic.
The uncertainty and fear surrounding the situation has caused consumers to step back from their expenditure for Eid.
Center for Enterprise and Society (CES) at the University of Liberal Arts Bangladesh (ULAB) carried out an online survey with 651 working professionals above the age of 25 whose monthly income ranged between Tk 40,000 to more than Tk 250,000 per month.
The research was conducted by Sajid Amit, associate professor, ULAB, and ULAB research associates Lumbini Barua and Oliur Rahman Tarek.
CES undertook the survey to understand consumer sentiments ahead of Eid and beyond, for products and services over a broad spectrum.
The idea was also to shed light on the effect of the pandemic on people's livelihoods and incomes, and how people plan to make adjustments to spending.
This in turn helps small businesses reduce inefficiencies and inventories.
Findings from the survey revealed patterns of spending which indicated how consumers belonging to the middle to high-income group are anxious about the pandemic and fearful of making expenditures for the upcoming Eid-ul-Fitr.
96 percent of respondents are worried about their own safety, as well as that of their family members.
88 percent of them are worried about the unpredictable and long lasting nature of the pandemic.
Majority of respondents (85 percent) are also unsure or pessimistic about the economy bouncing back after the situation improves.
Tasnia (alias) was working at a UK based apparel firm in Dhaka. The company shut down its operations since the Covid-19 outbreak and employees like Tasnia have not been paid for almost two months.
It is not just her; companies have been downsizing and laying off many workers in this crisis.
As a result, consumers are cutting back on their day-to-day spending. The consumer pulse survey showed that at least 84 percent of respondents are cutting back on spending and at least 67 percent are experiencing drop in income.
The comparatively low presence of customers in markets that were reopened on May 10 bear out the findings of CES.
Most markets and shops were closed following the countrywide 'general holiday' starting March 26. Although markets were allowed to reopen on May 10, some major shopping malls such as Bashundhara City and Jamuna Future Park have remained closed.
A PR professional, Md Rakib Uddin, does not want to put his family members in danger and avoids going out of the house for shopping as much as he can.
He has also limited his spending to only buying necessities for the household.
He said, "I live with my baby daughter and elderly parents. So safety is always the priority. Now I am only buying the bare minimum, milk and diapers for my daughter and so on. Eid would of course be an emotional time, but so far I have not planned anything for it. Perhaps at the last moment I will buy something for the family, that too after much scrutinising."
Without a doubt, this year's Eid expenditures will experience a sharp fall.
According to the survey, 79 percent of respondents said their spending on grocery shopping for Eid will decrease, 92 percent said spending on new clothes will decrease, whereas 95 percent said that eating out at hotels and restaurants during Eid holidays will decrease.
The survey did not distinguish between public and private sector stakeholders, but rather income categories.
But regardless of income brackets, respondents said that they would cut back spending on non-essentials (e.g. restaurants, take-outs, fashion items, furnishing, etc.).
However, beyond Eid, these consumers were likely to increase their spending on pharmaceuticals by 16 percent and on online learning by 5 percent in the next three months.
The pandemic has pushed educational institutions in the country to take online classes and assignments.
One of the interesting findings on the survey was that, 55 percent of respondents preferred to go to stores for grocery shopping, even during a shutdown.
This probably indicates consumer habits are hard to change and despite official warnings to stay indoors, many people still get out of their houses.
Professor Dr Rezai Karim Khondker, development economics programme, Dhaka School of Economics, feels that the pandemic is especially bad for consumers because of its effect on both demand and supply sides.
He said, "It goes without saying that given the degree of contagion, it is normal for people to be scared at the moment."
"In the early 90s, we had witnessed a demand side recession when banks collapsed. Oil embargoes, natural disasters etc. can cause supply side recessions. However, the one triggered by this pandemic comes from both demand and supply sides, making it extra hard for consumers."
Dr Rezai Karim went on saying, "Expenditure on durable goods would be greatly affected during this Eid as people will not be buying televisions, refrigerators, furniture etc. Consumption makes up for a major part of our GDP, therefore, it would be some time before our economy can recover from these lower spending."
With Eid-ul-Fitr being held amid the pandemic, not only has it discouraged consumption, but it has also affected companies who make giant preparations surrounding this festive season.
A source from the brand Walton said that by the time shops were allowed to open, they no longer had the time to arrange for any campaigns for this Eid.
Moreover, around 30-40 percent of Walton branches in the country remain open at the moment, with the rest 60-70 percent permanently closed since the shutdown.
They have now targeted Eid-ul-Azha for rise in sales, if the situation improves. Products like refrigerators usually sell massively during that time.
ULAB Associate Professor Sajid Amit also informed The Business Standard that CES, ULAB would conduct similar surveys in future and they are currently unraveling deeper insights from this one.
He said, "More research outputs in the form of academic paper and white paper are forthcoming based on this survey."