Business, Mistrust and Uncertainty

Although the restrictions imposed by the pandemic have been relaxed, consumers continue to show signs of mistrust in the current situation, behavior that could put pressure downward on spending on products and services considered to be discretionary.

Thursday, January 21, 2021

In 2020, when the effects of the pandemic that caused the spread of covid-19 began to become evident, it was anticipated that consumer habits would change, since in a complicated economic scenario full of uncertainty, people would be more careful when spending.

According to studies conducted by the firm Deloitte, globally, consumer spending in discretionary consumption categories, such as travel or fashion, has been considerably affected.

Businesses must face this change in consumer behavior, which is considerably influenced by the drop in confidence levels and uncertainty about the economic future.

You may be interested in "How do Purchasing Intentions Evolve?"

For example, in Panama, the Panamanian Consumer Confidence Index (ICCP), calculated by the Chamber of Commerce, Industries and Agriculture of Panama and The Marketing Group, increased by 7% between November 2020 and January 2021. Although the increase is considerable, the indicator still remains in a zone of distrust.

According to Domingo Barrios, General Manager of the Marketing Group, "... the index remains at levels of slight distrust in view of the limited economic reactivation of the country and the new closures observed. This indicator remains below the confidence line, although with a slight improvement, since the economic reactivation, little by little, is generating a higher level of positivism in the consumer."

Expectations on the probability of saving money show, once again, a result of 78 points, below the break-even point, for the January 2021 measurement, so it remains at marked levels of distrust.

The situation of Panamanian consumers is similar to that of Costa Ricans. According to the "Consumer Confidence Survey - November 2020" prepared by the University of Costa Rica, after nine months of experiencing the effects of Covid-19 in the country, the November survey reveals that, on a scale of zero to 100, consumer confidence registers 34.8 points, a magnitude that evidences pessimism towards the national economy.

You may be interested in "Online Sales: What are Consumers Looking for?"

For 2021, one of the main challenges for companies will be to place their products or sell their services, in a context of distrust, uncertainty and full of consumers who carefully analyze each of the purchases they make.

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