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By Nick Carey, Richa Naidu and Siddharth Cavale
(Reuters) – Instant coffee, tomato sauce, Lululemon yoga pants and Nike Air Max sneakers are included.Burberry’s bottled water, diapers and luxurious trench coats are outside.
Welcome to the US pandemic client economy.Hus And it doesn’t look like anything you’ve noticed before.
“Everything we knew about source and demand, we can throw out the window because the customer’s habit has completely changed,” said Piotr Dworczak, assistant professor of economics at Northwestern University.
Reuters research into several product baskets shows how the COVID-19 crisis has overturned a decades-long customer style for everything from clothing to food, giving some corporations an unexpected force to increase costs or withdraw discounts.
Many new trends can be attributed to a single factor, to retail experts: running from home.
Almost overnight, a consumer-oriented economy with clearly explained paint and housing costs has been drastically replaced. Increasing demand for safe items, as well as disruptions in the global supply chain, have driven up prices.
Americans now spend more than a year ago on coffee, eggs, sliced ham, tomato sauce and cheese, for example, according to a Reuters research on the latest knowledge of Nielsen Co, the Brewers Association and StyleSage Co.
Still, it’s a complex picture, and some of the behavioral adjustments seem contradictory at a time of deep economic uncertainty.
Demand and costs have also increased for more items, or “folie,” such as the Nike Air Max men’s shoes for $106, the Lululemon yoga pants for $105 and even a Louis Vuitton bag for $1,500.
Economists characterize this obvious discrepancy in behavior by the fact that many people, who cannot spend abroad, have more cash in their hand.Even many licensed employees get unemployment benefits from their wages as a component of a federal stimulus package.
“If I had to take a look at the consumer scenario right now, they might somehow have a higher source of disposable income if they kept their jobs,” said Nirupama Rao, assistant professor of business economics and public policy at the University.Michigan.” Of course, we face mass layoffs, but at most other people have kept their wages and earnings.”
‘UNPRECEDENTED PRESSURE’
Buyers paid about 8% more on average for JM Smucker instant coffees, adding Folger’s and Dunkin’s, at physical outlets in the 4 weeks prior to August 8 to a year ago, according to Nielsen’s knowledge analyzed through Bernstein.
They paid about 10% more for Kraft Heinz sauces and about 5% more for Tyson Foods slice hams.
Such inflation may make publicity sense, given the increased demand for household commodities, but some customer experts complain that stores and major brands are cutting promotions and using their strength to consolidate profits into a fitness crisis that has led to millions of others.people to lose their livelihood.
“Brand brands have boosted their wallet with profits while putting unprecedented pressure on consumers to pay those higher prices,” said Burt Flickinger, Strategic Resource Group’s retail representative.
JM Smucker said it didn’t increase the costs of its instant coffees in the 4 weeks leading up to August 8, but cut some promotions for products on demand.Kraft Heinz declined to comment, but said the July effects of second-quarter costs increased due to some gifts and discounts for rare products.Tyson did not respond to a request for comment.
Other industry experts point out that corporations have had to deal with costly production adjustments to adapt to the new landscape and point out that before the pandemic, when costs were falling and there were more promotions and discounts, the Heinz sauce dropped.
Before COVID-19, tens of millions of travelers had a coffee to take on their way to work.Suddenly, from 20 pound (9.1 kg) coffee bags to restaurants or giant ketchup boxes, manufacturers had to transfer them to smaller, domestic bags.Packing.
As sales of ketchup, mayonnaise and vinegar increased, Kraft Heinz diverted resources to running those production lines 24 hours a day, while postponing others. He added more shifts for the factory to make bottles the length of a grocery store.
Egg suppliers, such as market leader Cal-Maine Foods Inc, have had to overcome a carton shortage.
“If you look at the eggs, they’re powdered to send them to restaurants first, and now they have to be placed in cardboard boxes to go to supermarkets,” said Daniel Bachman, America’s senior economist at Deloitte.provoke change.”
However, client corporations take calls for granted and may be affected by rising prices.
Prices for bottled water and disposable diapers have risen, while demand has declined over the pandemic peak.People aren’t willing to pay more when they can drink their own water at home and can opt for reusable or less expensive generic diapers at once.when there is a lack of child care, some economists say.
“Anyway, you’re home, so you don’t send your son somewhere with a failing diaper,” Rao said.
A COAT FOR $2,245, ALL OF YOU?
The blockades prevented many Americans from traveling, going out to dinner or going to the movies, and because they don’t take the kids to school or take the kids to school, many use less fuel in their cars.
So now you can get into things, maybe.
Michael Collins, a professor in the Department of Consumer Sciences at the University of Wisconsin, calls it a “replacement effect.”
“It’s pretty transparent that other people behave like they have other funds,” he said.”Now I don’t eat places to eat, so I have a few hundred dollars of new source of income that is not allocated to anything.you can upgrade that money with food to eat and other things.”
This effect can help increase demand and costs for Air Max.Nike sold about 63% of its online footwear stock in July, up from just 10% the previous year, according to clothing knowledge company StyleSage, which collects sales data on brands’ websites.
Air Max jumped 10.5% on average from the previous year.
Lululemon yoga pants costs rose to 7.2%, and about 45% of stocks sold in July to 15% last year.
Meanwhile, the value of Louis Vuitton’s Neverfull MM Monogram bag has increased to 5% on its online page since early May.In July, Louis Vuitton’s owner, LVMH, said sales momentum had accelerated since June, even as his flagship brand increased values for the third time the pandemic.
However, there are limits.
Burberry’s demand for women’s trench coat fell, with only 3% of online shares sold in July to 14% the previous year.
That’s a $2,245 cut, 3.5 percent less.
Nike and Burberry responded to comments, while LVMH declined to comment beyond their July comments.order yoga products from April. July’s sales reflected its “Warehouse Sale” offering that month.
HOW LONG IS THIS GOING TO LAST?
Lots of uncertain.
The U.S. epidemic and its economic consequences are moving targets, and it is known when, or even if, the lives and behavior of American consumers will return to “normal.”
Rao, from the University of Michigan, said food manufacturers have been reluctant to invest in permanent adjustments to reorganize plants.”They are ashamed that there is so much uncertainty about the duration of this.”
Consumer demand, as well as logo prices, can be replaced in the coming weeks and months, as many Americans revel in more monetary difficulties.
The first circular of COVID-19-related government benefits expired on July 31, leaving some 30 million Americans unemployed without the weekly accumulation of $600 that supported their families and encouraged some discretionary expenses.
With the cash tap off, analysts who spend in recession deserve to succeed as consumers cut their spending.
Collins, of the University of Wisconsin, said tolerance of home loans, credit cards, and student loans since the spring had helped consumers.
“Ultimately, it’s all over and other people may start adjusting again.”
(Report through Nick Carey, Richa Naidu and Siddharth Cavale; Additional report through Silvia Aloisi; Edited through Vanessa O’Connell and Pravin Char)