Skip to main content
SpringerLink
Log in

Were Consumers Less Price Sensitive to Life Necessities During the COVID-19 Pandemic? An Empirical Study on Dutch Consumers

  • Conference paper
  • First Online:
Intelligent Systems and Applications (IntelliSys 2022)

Part of the book series: Lecture Notes in Networks and Systems ((LNNS,volume 544))

Included in the following conference series:

Abstract

This research investigates if consumers were less price sensitive to life necessities during the COVID-19 pandemic via a demand modeling system. Consumers’ price sensitivity was explicitly quantified by the price elasticity of demand. Consumer behavior in nine categories of products considered as life necessities were studied in two non-overlapping time periods: a year before the onset of the COVID pandemic and a year following the initial panic buying caused by the declaration of the COVID pandemic. The changes in price elasticity of demand between the two periods across the nine product categories were determined from the weekly sales data of a Dutch retailer. Using the proposed demand modeling system applied to available data, it was empirically found that the majority of essential food products were price inelastic, while the majority of non-food products were price elastic during the COVID period. Among the nine product categories, four categories were identified to have significantly different elasticities across the two time periods, while eight categories were observed to have practically smaller magnitudes in elasticities. These insights not only prove the usefulness of the proposed demand modeling system, but also provide valuable theoretical and managerial implications for retail business practitioners, particularly in pricing and inventory planning.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 129.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 169.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  1. Anderson, P.L., McLellan, R.D., Overton, J.P., Wolfram, G.L.: Price elasticity of demand. McKinac Center for Public Policy (1997). Accessed 13 Oct 2010

    Google Scholar 

  2. Andreyeva, T., Long, M.W., Brownell, K.D.: The impact of food prices on consumption: a systematic review of research on the price elasticity of demand for food. Am. J. Public Health 100(2), 216–222 (2010)

    Article  Google Scholar 

  3. Arafat, S.M., et al.: Responsible factors of panic buying: an observation from online media reports. Front. Public Health 8, 747 (2020)

    Article  Google Scholar 

  4. Atalan, A.: Is the lockdown important to prevent the COVID-19 pandemic? Effects on psychology, environment and economy-perspective. Ann. Med. Surg. 56, 38–42 (2020)

    Article  Google Scholar 

  5. Barlow, D.H., Durand, V.M., Hofmann, S.G.: Abnormal psychology: an integrative approach. Cengage Learning (2016)

    Google Scholar 

  6. Bentall, R.P., et al.: Pandemic buying: testing a psychological model of over-purchasing and panic buying using data from the United Kingdom and the Republic of Ireland during the early phase of the COVID-19 pandemic. PLOS One 16(1), e0246339 (2021)

    Article  Google Scholar 

  7. Bhatti, A., Akram, H., Basit, H.M., Khan, A.U., Raza, S.M., Naqvi, M.B.: E-commerce trends during COVID-19 pandemic. Int. J. Future Gener. Commun. Networking 13(2), 1449–1452 (2020)

    Google Scholar 

  8. Bolton, R.N.: The robustness of retail-level price elasticity estimates. J. Retail. 65(2), 193–219 (1989)

    Google Scholar 

  9. Cain, S.L.: Americans are Spending More During the Coronavirus Pandemic. Slickdeals (2020)

    Google Scholar 

  10. Chakraborty, N.: The Covid-19 pandemic and its impact on mental health. Prog. Neurol. Psychiatry 24(2), 21–24 (2020)

    Article  Google Scholar 

  11. Chen, H.-W., Lim, A.: A network price elasticity of demand model with product substitution. J. Revenue Pricing Manage. (2022). https://doi.org/10.1057/s41272-022-00375-w

  12. Chronopoulos, D.K., Lukas, M., Wilson, J.O.S.: Consumer spending responses to the COVID-19 pandemic: an assessment of Great Britain. Available at SSRN 3586723 (2020)

    Google Scholar 

  13. Chua, G., Yuen, K.F., Wang, X., Wong, Y.D.: The determinants of panic buying during COVID-19. Int. J. Environ. Res. Public Health 18(6), 3247 (2021)

    Article  Google Scholar 

  14. Clapp, J.E., Niederman, S.A., Leonard, E., Curtis, C.J.: Peer reviewed: changes in serving size, calories, and sodium content in processed foods from 2009 to 2015. Preventing Chronic Dis. 15, E33 (2018)

    Google Scholar 

  15. Colchero, M.A., Salgado, J.C., Unar-Munguía, M., Hernandez-Avila, M., Rivera-Dommarco, J.A.: Price elasticity of the demand for sugar sweetened beverages and soft drinks in Mexico. Econ. Human Biol. 19, 129–137 (2015)

    Article  Google Scholar 

  16. Cooper, J.C.B.: Price elasticity of demand for crude oil: estimates for 23 countries. OPEC Rev. 27(1), 1–8 (2003)

    Article  Google Scholar 

  17. Cox, E.: Retail Analytics: The Secret Weapon, vol. 45. Wiley, New York (2011)

    Google Scholar 

  18. Delasay, M., Jain, A., Kumar, S.: Impacts of the COVID-19 pandemic on grocery retail operations: an analytical model. Available at SSRN 3979109 (2021)

    Google Scholar 

  19. Dermott, E., Main, G., Bramley, G., Bailey, N.: Poverty and Social Exclusion in the UK, vol. 1. Policy Press (2018)

    Google Scholar 

  20. Di Domenico, L., Pullano, G., Sabbatini, C.E., Boëlle, P.-Y., Colizza, V.: Impact of lockdown on COVID-19 epidemic in Île-de-France and possible exit strategies. BMC Med. 18(1), 1–13 (2020)

    Article  Google Scholar 

  21. Engstrom, T., et al.: Toilet paper, minced meat and diabetes medicines: Australian panic buying induced by COVID-19. Int. J. Environ. Res. Public Health 18(13), 6954 (2021)

    Article  Google Scholar 

  22. Fahmy, E., Sutton, E., Pemberton, S.: Are we all agreed? Consensual methods and the ‘necessities of life’ in the UK today. J. Soc. Policy 44(3), 591–610 (2015)

    Article  Google Scholar 

  23. Ferreira, K.J., Lee, B.H.A., Simchi-Levi, D.: Analytics for an online retailer: demand forecasting and price optimization. Manuf. Serv. Oper. Manage. 18(1), 69–88 (2016)

    Article  Google Scholar 

  24. Fibich, G., Gavious, A., Lowengart, O.: The dynamics of price elasticity of demand in the presence of reference price effects. J. Acad. Mark. Sci. 33(1), 66–78 (2005)

    Article  Google Scholar 

  25. Goddard, E.: The impact of COVID-19 on food retail and food service in Canada: preliminary assessment. Can. J. Agric. Econ./Revue canadienne d’agroeconomie 68, 157–161 (2020)

    Google Scholar 

  26. Goolsbee, A., Syverson, C.: Fear, lockdown, and diversion: comparing drivers of pandemic economic decline 2020. J. Public Econ. 193, 104311 (2021)

    Article  Google Scholar 

  27. Grashuis, J., Skevas, T., Segovia, M.S.: Grocery shopping preferences during the COVID-19 pandemic. Sustainability 12(13), 5369 (2020)

    Article  Google Scholar 

  28. Green, R., et al.: The effect of rising food prices on food consumption: systematic review with meta-regression. BMJ 346, f3703 (2013)

    Article  Google Scholar 

  29. Hashem, T.N.: Examining the influence of COVID 19 pandemic in changing customers’ orientation towards e-shopping. Mod. Appl. Sci. 14(8), 59–76 (2020)

    Article  Google Scholar 

  30. Inflation.EU. Historic inflation the Netherlands - CPI inflation, December 2021. https://www.inflation.eu/en/inflation-rates/the-netherlands/historic-inflation/cpi-inflation-the-netherlands.aspx

  31. Islam, T., et al.: Panic buying in the COVID-19 pandemic: a multi-country examination. J. Retail. Consum. Serv. 59, 102357 (2021)

    Article  Google Scholar 

  32. Morgan, J.P.: (2020). https://www.jpmorgan.com/solutions/cib/research/covid-spending-habits

  33. Keane, M., Neal, T.: Consumer panic in the COVID-19 pandemic. J. Econometrics 220(1), 86–105 (2021)

    Article  MathSciNet  MATH  Google Scholar 

  34. Klem, L.: Structural equation modeling (2000)

    Google Scholar 

  35. Kumar, S., Nigmatullin, A.: A system dynamics analysis of food supply chains-case study with non-perishable products. Simul. Model. Pract. Theory 19(10), 2151–2168 (2011)

    Article  Google Scholar 

  36. Kwak, Y.: Adult necessities of life in South Korea. J. Asian Public Policy 7(1), 41–57 (2014)

    Article  Google Scholar 

  37. Leung, J., Chung, J.Y.C., Tisdale, C., Chiu, V., Lim, C.C.W., Chan, G.: Anxiety and panic buying behaviour during COVID-19 pandemic-a qualitative analysis of toilet paper hoarding contents on Twitter. Int. J. Environ. Res. Public Health 18(3), 1127 (2021)

    Article  Google Scholar 

  38. Lilien, G.L., Kotler, P.: Marketing decision making: a model-building approach. Harpercollins College Division (1983)

    Google Scholar 

  39. Lim, A., Xu, J., Yu, Y.: Consumer food demand shifts in the COVID-19 pandemic: an empirical study based on retail sales data. Available at SSRN 4053920 (2022). Accepted to the Intelligent Systems Conference (IntelliSys) 2022

    Google Scholar 

  40. Man, D.: Shelf Life. Wiley, New York (2015)

    Google Scholar 

  41. Martin, W.C., Ponder, N., Lueg, J.E.: Price fairness perceptions and customer loyalty in a retail context. J. Bus. Res. 62(6), 588–593 (2009)

    Article  Google Scholar 

  42. Morens, D.M., Fauci, A.S.: The 1918 influenza pandemic: insights for the 21st century. J. Infect. Dis. 195(7), 1018–1028 (2007)

    Article  Google Scholar 

  43. Moriarty, M.M.: Retail promotional effects on intrabrand and interbrand sales performance. J. Retail. 61(3), 27–47 (1985)

    Google Scholar 

  44. Neslin, S.A., Shoemaker, R.W.: Using a natural experiment to estimate price elasticity: the 1974 sugar shortage and the ready-to-eat cereal market. J. Mark. 47(1), 44–57 (1983)

    Article  Google Scholar 

  45. Pantazis, C., Townsend, P., Gordon, D.: The necessities of life in Britain. Bristol University, PSE Working Paper, vol. 1 (2000)

    Google Scholar 

  46. Prentice, C., et al.: Relevant, or irrelevant, external factors in panic buying. J. Retail. Consum. Serv. 61, 102587 (2021)

    Article  Google Scholar 

  47. Prentice, C., Quach, S., Thaichon, P.: Antecedents and consequences of panic buying: the case of COVID-19. Int. J. Consum. Stud. 46, 132–146 (2020)

    Article  Google Scholar 

  48. Rao, V.R.: Pricing research in marketing: the state of the art. J. Bus. 57, S39–S60 (1984)

    Article  Google Scholar 

  49. Rizou, M., Galanakis, I.M., Aldawoud, T.M.S., Galanakis, C.M.: Safety of foods, food supply chain and environment within the COVID-19 pandemic. Trends Food Sci. Technol. 102, 293–299 (2020)

    Article  Google Scholar 

  50. Roggeveen, A.L., Sethuraman, R.: How the COVID-19 pandemic may change the world of retailing. J. Retail. 96(2), 169 (2020)

    Article  Google Scholar 

  51. Rowntree, B.S.: 1901 Poverty: A Study of Town Life. Macmillan and Company Ltd., London and New York (1899)

    Google Scholar 

  52. Rummel, R.J.: Applied Factor Analysis. Northwestern University Press, Evanston (1988)

    Google Scholar 

  53. Sheth, J.: Impact of Covid-19 on consumer behavior: will the old habits return or die? J. Bus. Res. 117, 280–283 (2020)

    Article  Google Scholar 

  54. Sim, K., Chua, H.C., Vieta, E., Fernandez, G.: The anatomy of panic buying related to the current COVID-19 pandemic. Psychiatry Res. 288, 113015 (2020)

    Article  Google Scholar 

  55. Singh, G., Aiyub, A.S., Greig, T., Naidu, S., Sewak, A., Sharma, S.: Exploring panic buying behavior during the COVID-19 pandemic: a developing country perspective. Int. J. Emerg. Mark. (2021)

    Google Scholar 

  56. Sloof, M., Tijskens, L.M.M., Wilkinson, E.C.: Concepts for modelling the quality of perishable products. Trends Food Sci. Technol. 7(5), 165–171 (1996)

    Article  Google Scholar 

  57. Subramanian, R., Kakkagowder, C., Perumal, A., Gurusamy, P.: Consumption, expenditure and demand analysis of milk and milk products in India. Indian J. Econ. Dev. 15(2), 301–306 (2019)

    Article  Google Scholar 

  58. Wang, E., An, N., Gao, Z., Kiprop, E., Geng, X.: Consumer food stockpiling behavior and willingness to pay for food reserves in COVID-19. Food Secur. 12(4), 739–747 (2020). https://doi.org/10.1007/s12571-020-01092-1

    Article  Google Scholar 

  59. Wang, X., Huang, H.-C., Han, L., Lim, A.: Price optimization with practical constraints. arXiv preprint arXiv:2104.09597 (2021)

  60. Weersink, A., von Massow, M., McDougall, B.: Economic thoughts on the potential implications of COVID-19 on the Canadian dairy and poultry sectors. Can. J. Agric. Econ./Revue canadienne d’agroeconomie 68(2), 195–200 (2020)

    Article  Google Scholar 

  61. Whelan, J., Msefer, K., Chung, C.V.: Economic Supply & Demand. MIT, Cambridge (2001)

    Google Scholar 

  62. WHO: Coronavirus disease (COVID-19), January 2020. https://www.who.int/emergencies/diseases/novel-coronavirus-2019

  63. WHO: Update on Omicron, November 2021. https://www.who.int/news/item/28-11-2021-update-on-omicron

  64. Wittink, D.R., Addona, M.J., Hawkes, W.J., Porter, J.C.: SCAN*PRO: the estimation, validation and use of promotional effects based on scanner data. Internal Paper, Cornell University (1988)

    Google Scholar 

  65. Yuen, K.F., Wang, X., Ma, F., Li, K.X.: The psychological causes of panic buying following a health crisis. Int. J. Environ. Res. Public Health 17(10), 3513 (2020)

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Retailer Products Research and Development, NielsenIQ, Chicago, IL, 60606, USA

    Hao Chen & Alvin Lim

  2. Goizueta Business School, Emory University, Atlanta, GA, 30322, USA

    Alvin Lim

Authors
  1. Hao Chen
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Alvin Lim
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Hao Chen .

Editor information

Editors and Affiliations

  1. Saga University, Saga, Japan

    Kohei Arai

Appendix

Appendix

Table 5. The category-specific, period specific fair prices
Full size table
Table 6. The 9 fitted models for the Pre-COVID period. Control variable that was included for at least one model was reported. The last row is \(R^2\). Each parameter was tested against 0: * Significant at 0.1; ** Significant at 0.05; *** Significant at 0.01. S & C Stands for Shampoo & Conditioner
Full size table
Table 7. The 9 fitted models for the COVID period. Control variables that were included in at least one model are reported. The model \(R^2\) is reported in the last row. Each parameter was tested against 0: * Significant at 0.1; ** Significant at 0.05; *** Significant at 0.01. S & C Stands for Shampoo & Conditioner
Full size table

Rights and permissions

Reprints and permissions

Copyright information

© 2023 The Author(s), under exclusive license to Springer Nature Switzerland AG

About this paper

Check for updates. Verify currency and authenticity via CrossMark

Cite this paper

Chen, H., Lim, A. (2023). Were Consumers Less Price Sensitive to Life Necessities During the COVID-19 Pandemic? An Empirical Study on Dutch Consumers. In: Arai, K. (eds) Intelligent Systems and Applications. IntelliSys 2022. Lecture Notes in Networks and Systems, vol 544. Springer, Cham. https://doi.org/10.1007/978-3-031-16075-2_6

Download citation

Publish with us

Policies and ethics

Search

Navigation