ANALYSIS OF COVID-19 AS A FACTOR FOR COMMERCE AND CONSUMER BEHAVIOUR (A CASE STUDY OF JUMIA, LAGOS STATE, NIGERIA)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The rapid outbreak of the COVID-19 presents an alarming health crisis that the world is grappling with. In addition to the human impact, there is also significant economic, business and commercial impact being felt globally. As viruses know no borders, the impacts will continue to spread. In fact, 94 percent of the Fortune 1000 across the globe, and businesses in Nigeria have been impacted and are already seeing COVID-19 disruptions. Amidst the evolving strategies and initiatives to halt the spread of corona virus pandemic around the globe, shifting consumer behaviour to online trade channels and digital platforms can provide the needed incentive to keep people safe and by extension promote the growth of Nigeria’s e-commerce industry. Keeping safe and staying alive is everyone’s most cherished watchword at this time. The corona virus (COVID-19) pandemic in many of the countries including Nigeria is not abating despite concerted steps by governments, private sector players, multilateral organisations and other stakeholders to halt the rate of transmission. In the face of the escalation of the pandemic, the Nigerian government and 36 state governments are strengthening enforcement and compliance of residents with the stay-at-home order aimed to check movement of people. By implication, Nigerians will stay at home for longer days, weeks or even months. Disruption in the logistics and supply chain that has already affected the availability of basic essential goods will also be disrupted further. The likelihood of a shortage of foods, water, toiletries, drugs and other essential items may result in days to come, as existing products in the warehouses and those on the shelves at the supermarkets and malls may run out. As COVID-19 becomes a global pandemic and consumers change their buying habits, it's more important than ever that you have a complete view of the marketplace. Our global study reveals how this changing behaviour can create new opportunities for marketers. The outbreak of the COVID-19 pandemic has impacted many different sectors in business. Not only retailers are suffering from the consequences, but also the E-Commerce sector is experiencing a slump in sales. Due to “Social Distancing” it is observed that more and more people spend their time online. Social Media platforms are mostly used and enable the people to see more content from certain companies. This is reflected by the online activity of followers of Brand sites having increased by 16.1%, compared to the last full week of February [Internet resource: 2020].

Businesses are established by investors to mainly undertake or handle certain services and products upon which they are expected to overtime build their brand in a particular market and environment. This makes the activities, crisis and events or happenings in such market and environment could to an extent influence the sales, patronage, and profit of that business (like departmental stores). Averting this scenario amidst a crisis like COVID-19, as a coronary disease and fast spreading global pandemic that has unprecedentedly ignited the transformation and shuttering of economic activities including aiding consumers evolving or shifting and changing their brands and needs, is extremely important. In view of this Motti (2020) stated that COVID-19 has not only impacted consumer shopping and habits but has inevitably compelled operators of stores to responsively make changes in stocking the products and delivering services that is essential and trending among customers if they are to retain their brand loyalty. This is what Adach (2020) regard as the COVID-19 business world that marketers must strategically plan to effectively respond to by deliberately rising to occasion and intense pressure of swiftly providing and delivering the products, brands, goods and services (like household staples and health-related goods, such as groceries, bottled water, hand sanitizer, toilet paper, face masks, etc.) that consumers desire or crave for in these times of the COVID-19 outbreak, using technology as a strategy to increase retailing without physical contact in this period of isolation (Meyer, 2020). In other words, the adoption of agile marketing which Kalsi (2020) says has soar from 32% globally, would help businesses meet up with changing their short, medium and long-term marketing plan and marketing campaigns in line with current realities like flexible payments, remote work and shifting priorities expected to change consumer buying pattern and behaviour, task marketers ingenuity, as well as dip business output (i.e. performance, profit and patronage).

Furthermore, the COVID-19 crisis has tested stores abilities to pivot swift response to unprecedented changes that has compulsorily obliged them to protect frontline workers or staff with personal protective equipment (PPE) as safeguards for the at-risk customers who on and offline access, buy and receive goods and services from these retailers. Kahle and Close (2011) stated that understanding purchasing and consumption behaviour is a key challenge for marketers. As this begets consumers knowing the products and services to purchase and consume at any particular point in time (Minton & Khale, 2014). Also, Team (2020) reiterate that consumer buying behaviour entails the series of on and offline actions (via technology and physical presence respectively) taken prior to consumers’ changing their preferences or leanings for the demand and purchase of certain staple products (like groceries, diapers, cosmetics, detergents, etc.) or services. Incidentally, the COVID-19 pandemic has led to the adoption of stringent measures like shutdown of especially conventional markets including closure of local and international borders. This prompted the drastic reduction or decline in the consumer’s discretionary and impulsive buying or spending in terms of clothing, footwear, fittings, travel, showbiz, furniture, automobiles, and hardware (Bhakat & Muruganantham, 2013), for the more purposeful and imperative needs or wants with which they have now streamlined their finances and reprioritize their shopping or spending, and changed their purchasing or buying behaviours (Team, 2020). According to Helm (2020, p.5) “COVID-19 crisis has led to many consumers attempting online grocery ordering or procurement through platforms provided by online stores”. Chand (2018) see online store as a large local and international retailing organizations (like Spar, MacDonalds, Chanrais, Timeless, Everyday Mart, Market Square, Kingsway, Domino, etc.) which handles extensive variety of shopping and specialty goods from different departments in same building that are centrally controlled by the one purpose, promotion, service, and ordering. Thus, satisfying the changing consumer behaviour in intensively stockpiling variety of products requires stores to discern, catalogue and display inventory of fairly priced product brands that are essentially needed and accepted by customers at any given time. Mahjoub, Kordnaeij and Moayad (2015) states that continuously meeting consumers need is a function of market research which is a set of proactive demand assessment strategies adopted to help shopping companies ascertain and predict the threshold of wants (like groceries, food items, sanitizers, face mask, soaps, medicines, etc.) by consumers at any given time. Hence, the prevailing social, economic, and health conditions (like COVID-19) which induces, constrains or restricts people to certain palatable or unpalatable actions, orders or guidelines (like stay-at-home) within the community, state, country or global. Also, the constrains on the ensuing emergency disease combating orders on its own inadvertently triggers changes in the modalities for meeting individual consumption pattern changing due to micro and macro reasons (Vijayalakshmi & Milcah, 2017). Similarly, globalization amid the scourging COVID-19 brings almost unified changes, innovations, and styles (devoid of racial, religious, and ethnic boundaries) in the global, national, communal and household consumption patterns for products and services both now and in the future (Mishra, 2015). Although, Cohen and Murphy (2012) had stated that consumption pattern begets unsustainable expenditure pattern because it is only concerned with today’s use up of resources and products for individuals’ sustenance. However, Ibbih and Siyan (2018) argued that the decision on using services and products is influenced by certain factors (like cultural, social, personal, and psychological) and values guiding producers delve into new, quality and profitable products and resources that could help meet the ever-changing and immediate needs needed for the survival, comfort, enjoyment and satisfaction of consumers. Hence, the crux of this study.

1.2 STATEMENT OF THE PROBLEM

Businesses are consistently or continuously exploring strategies like market research, product brand and friendly pricing regimes in order to advantageously position or situate them designing effective systems and practices which they could leverage to edge-out or outshine their fellow competitors and enhance consumer loyalty, patronage, and buying behaviour in favour of their brand, store or outlet’s increased profit or business even during crisis period. In specificity, a crisis like the novel COVID-19 pandemic which has necessitated remote, restricted and closed work rules or guidelines alongside businesses (like departmental stores) shifting priorities towards adopting e-commerce and total retail industry M&A deals that increased in February 2020 to a net worth of over $2.05bn globally (Kalsi, 2020). Also, conceiving e-commerce is said to enable departmental stores to stay afloat without experiencing the business acquisitions and mergers which has already commenced with the recent acquisition of AR technology startup, NextVR for a $100 million by Apple, which is contemplated post-COVID-19 economic fallout that may well be worse than the Great Depression (Motti, 2020). Despite, the novel or unique nature of the origin, spread, threat, and modus of the COVID19 pandemic or epidemic which has dropped retail sales at 8.7% in the month of March, 2020 due to stringent actions like market shutdown and border closure (Helm, 2020). Businesses continue to innovate or update steps, techniques, systems and strategies to maximally swell up their reach, patronage and profits by identifying the essential needs (like food, groceries, medicines, sanitizers, face masks, etc.) required to benefit their customers. Thus, the innovations designed to promote product and brand loyalty is considered a modern business development strategy that could enhance business profits amidst emergency policies or programmes like market shutdown and border closure which seems plausible to truncate or slow down businesses, reduce production and economic activities, yet businesses or firms have devised means and integrated activities that could maximize investment profits in the midst of this global pandemic. Furthermore, there abound to be uncertainties surrounding the influence these specific emergency policies would still edge them among competitors, enhance brand loyalty, customer patronage, sales, and profits beyond the pandemic wherein such measures of stimulating consumer buying behaviour was instituted. And at the same time ensuring that strategic planning guides the emerging consumption pattern in order not to encourage wastage thereby, jeopardizing the future and viable use of resources for a sustainable post-COVID-19 economic development of the state and country (Ibbih & Siyan, 2018). Previous studies focused on students consumption pattern and financial management (Vijayalakshmi & Milcah, 2017), that by Kalsi (2020) examined the effect of COVID-19 on consumer behaviour of Apple products. Not much study was directed towards commerce and consumer behaviour. It is based on this premise that this study attempts to examine covid-19 effects on commerce and consumer behaviour in Jumia, Nigeria.

1.3 AIM AND OBJECTIVES OF THE STUDY

The major purpose of this study is to analyse Covid-19 as a factor for commerce and consumer behaviour. Other general objectives of the study are:

1. To examine the impact of COVID-19 on e-commerce platforms
2. To analyze the impact of Covid-19 on commerce and consumer behaviour in Nigeria
3. To examine factors causing change in customer behaviour during COVID-19 Pandemic
4. To examine the influence of market shutdown on commerce and consumer behaviour.
5. To examine the relationship between effect of Covid-19 pandemic on commerce and consumer behaviour.

1.4 RESEARCH QUESTIONS

1. What is the impact of COVID-19 on e-commerce platforms?
2. How is the impact of Covid-19 on commerce and consumer behaviour in Nigeria?
3. What are the factors causing change in customer behaviour during COVID-19 Pandemic?
4. How did market shutdown influence commerce and consumer behaviour?
5. What is the relationship between effect of Covid-19 pandemic on commerce and consumer behaviour?

1.5 RESEARCH HYPOTHESES

Hypothesis 1

H0: Corona virus (COVID-19) has no significant impact on commerce and consumer behaviour in Nigeria

H1: Corona virus (COVID-19) has a significant impact on commerce and consumer behaviour in Nigeria

Hypothesis 2

H0: There is no significant relationship between effect of Covid-19 pandemic on commerce and consumer behaviour

H1: There is a significant relationship between effect of Covid-19 pandemic on commerce and consumer behaviour

1.6 SIGNIFICANCE OF THE STUDY

The study on the effect of corona virus disease (COVID-19) on the Nigeria economy will be of immense benefit to all the Nigeria citizens, the health sector, and the federal government of Nigeria. The study will explore the prevalence of corona virus disease (COVID-19), the causes, and the impact of the corona virus (COVID-19) on the Nigeria economy, commerce and consumer behaviour. Due to the difficulty of quantifying the real impact as a result of the uncertainty, the rapidly evolving nature of the pandemic, and scarcity of the data, our work focuses on understanding the possible socio-economic repercussions in order to propose policy recommendations to respond to the crisis. The study will educate the Nigeria government on the policy implementation to curb the prevalence of the corona virus disease (COVID-19) and how to improve the Nigeria economy during this period. The study will serve as a repository of information to other researchers that desire to carry out similar research on the above topic. Finally the study will contribute to the body of the existing literature on the effect of corona virus disease (COVID-19) on commerce and consumer behaviour.

1.7 SCOPE OF THE STUDY

The study is based on the analysis of Covid-19 as a factor for commerce and consumer behaviour, a case study of Jumia, Lagos state, Nigeria.

1.8 LIMITATION OF THE STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9 DEFINITION OF TERMS

Corona Virus Pandemic (COVID-19): Corona virus disease (COVID-19) is an infectious disease caused by a new virus. The disease causes respiratory illness (like the flu) with symptoms such as a cough, fever, and in more severe cases, difficulty breathing. You can protect yourself by washing your hands frequently, avoiding touching your face, and avoiding close contact (1 meter or 3 feet) with people who are unwell.

Commerce: Commerce is the conduct of trade among economic agents. Generally, commerce refers to the exchange of goods, services, or something of value, between businesses or entities.

Consumer behaviour:  Consumer behaviour is the study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of goods and services, and how the consumer's emotions, attitudes and preferences affect buying behaviour.