Yuki OmoriBack to index

  • Online Consumption During the COVID-19 Crisis: Evidence from Japan

    Abstract

    The spread of novel coronavirus (COVID-19) infections has led to substantial changes in consumption patterns. While demand for services that involve face-to-face contact has decreased sharply, online consumption of goods and services, such as through e-commerce, is increasing. The aim of this study is to investigate whether online consumption will continue to increase even after COVID-19 subsides, using credit card transaction data. Online consumption requires upfront costs, which have been regarded as one of the factors inhibiting the diffusion of online consumption. However, if many consumers made such upfront investments due to the coronavirus pandemic, they would have no reason to return to offline consumption after the pandemic has ended, and high levels of online consumption should continue. Our main findings are as follows. First, the main group responsible for the increase in online consumption are consumers who were already familiar with online consumption before the pandemic and purchased goods and service both online and offline. These consumers increased the share of online spending in their spending overall and/or stopped offline consumption completely and switched to online consumption only. Second, some consumers that had never used the internet for purchases before started to use the internet for their consumption activities due to COVID-19. However, the share of consumers making this switch was not very different from the trend before the crisis. Third, by age group, the switch to online consumption was more pronounced among youngsters than seniors. These findings suggest that it is not the case that during the pandemic a large number of consumers made the upfront investment necessary to switch to online consumption, so a certain portion of the increase in online consumption is likely to fall away again as COVID-19 subsides. 

    Introduction

    People’s consumption patterns have changed substantially as a result of the spread of the novel coronavirus (COVID-19). One such change is a reduction of the consumption of services that involve face-to-face (F2F) contact. For instance, “JCB Consumption NOW” data, credit card transaction data provided jointly by JCB Co., Ltd. and Nowcast Inc., show that, since February this year, spending on eating out, entertainment, travel, and lodging have shown substantial decreases. Even in the case of goods consumption, there has been a tendency to avoid face-to-face contact such as at convenience stores and supermarkets. For example, with regard to supermarket shopping, the amount of spending per consumer has increased, but the number of shoppers has decreased. Another important change is the increase in the consumption of services and goods that do not involve face-to-face contact. The credit card transaction data indicate that with regard to service consumption, spending on movies and theaters has decreased substantially, while spending on content delivery has increased. As for the consumption of goods, so-called e-commerce, i.e., purchases via the internet, has shown substantial increases.  

     

     

    WP023

  • How Much Did People Refrain from Service Consumption due to the Outbreak of COVID-19?

    Abstract

    With the spread of coronavirus infections, there has been a growing tendency to refrain from consuming services such as eating out that involve contact with people. Self-restraint in service consumption is essential to stop the spread of infections, and the national government as well as local governments such as the Tokyo government are calling for consumers as well as firms providing such services to exercise self-restraint. One way to measure the degree of self-restraint has been to look at changes in the flow of people using smart phone location data. As a more direct approach, this note uses credit card transaction data on service spending to examine the degree to which people exercise self-restraint. The results indicate that of men aged 35-39 living in the Tokyo metropolitan area, the share that used their credit card to pay for eating out in March 2020 was 27 percent. Using transaction data for January, i.e., before the full outbreak of the virus in Japan, yields an estimated share of 32 percent for March. This means that the number of people eating out fell by 15 percent. Apart from eating out, similar self-restraint effects can be observed in various other sectors such as entertainment, travel, and accommodation. Looking at the degree of self-restraint by age shows that the self-restraint effect was relatively large among those in their late 30s to early 50s. However, below that age bracket, the younger the age group, the smaller was the self-restraint effect. Moreover, the self-restraint effect was also small among those aged 55 and above. Further, the degree of self-restraint varies depending on the type of service; it is highest with regard to entertainment, travel, and accommodation. The number of people who spent on these services in March 2020 was about half of the number during normal times. However, the 80 percent reduction demanded by the government has not been achieved.

    Introduction

    With the spread of coronavirus infections, there has been a growing tendency to refrain from consuming services such as eating out that involve contact with people. Self-restraint in service consumption is essential to stop the spread of infections, and the national government as well as local governments such as the Tokyo government are calling for consumers as well as firms providing such services to exercise self-restraint.
    Specifically, Prime Minister Shinzo Abe declared a one-month long state of emergency in Tokyo and six other prefectures on April 7, 2020 and expanded it to the entire country on April 16. PM Abe stated in his speech on April 7 that “According to an estimate by the experts, if all of us make efforts and reduce opportunities for person-to-person contact by a minimum of 70 percent, or ideally 80 percent, we will cause the increase in the number of patients to reach its peak two weeks from now and shift over into a decrease. . . . I ask people to refrain from going out, aiming at a 70 to 80 percent decrease, for the limited period of one month between now and the end of Golden Week holidays on May 6.”
    The purpose of this note is to measure the degree to which people in Japan have been exercising self-restraint since the outbreak of COVID-19. One way to do so is to look at changes in the flow of people using mobile phone location data.2 As a more direct approach, we use credit card transaction data on service spending to examine the degree to which people exercise self-restraint.

     

     

    WP021

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