Let’s take a flashback to the year 2020. I’m sure neither of us wants to remember what happened to the world. Every single person was locked inside their homes and was not allowed to even go out for a day. The businesses of all of us were shut and the world’s economy literally got frozen. The lack of economic activities in the world had a very serious impact on the economy of different countries, with our country being among the worst-hit countries. There were no transactions taking place in the country. People only ordered necessities that too online which directly harmed the economy.
The world made a non-spending record and all the vacations were cancelled. This came as an opportunity for the affluent population in the society to save money for their future while the poor people being the worst hit during the pandemic were forced to use their previously made savings in order to sustain their basic lives.
After a lot of wait and with much testing in the laboratories, the vaccine started to roll out. The vaccine in our country started to roll out in the last months of 2020, however with some restrictions. Only healthcare and frontline workers got jabbed at the beginning of vaccine roll out but later these restrictions were lifted. Such vaccine rollout happened across the world and this vaccine made the opening up of the economy.
Now, as a result of the vaccine rollout, the restrictions imposed on the economy in order to curb the virus are lifting which is helping the world to revive back. With the opening up of shops, resuming of businesses and the employees getting back to work the economy is reviving back and is back on the path of development.
However, the rising consumption pattern which developed after people came out of the prolonged lockdown has increased the demand for a lot of products worldwide. The rising demand of the consumers is known as revenge spending. Revenge spending usually follows an unprecedented event as people try to reclaim control and a sense of normalcy. This sense of normalcy is what we all are craving for a very long time and no one will lose this opportunity.
Variety of products
With the rise in consumer goods, a wide variety of goods will gain market popularity and will be therefore benefitted from the newly risen demand of the consumer. The demand will range from as low as food products and clothes to luxury items like mobile phones and cars. The demand has suddenly boosted up and would be very beneficial. Everyone has been at home for quite a long time now, and with the opening up of travel restrictions, people will travel too. Therefore everything related to tourism– flights, railways, hotels and all other services, will be benefitted from this rising demand.
Businesses in the nation
When it comes to revenge spending, the previous sale forecasts will not be beneficial. The sale during the revenge spending reaches the top level, which is never seen before. If a company relies on its previous forecasts, it might lead to a shortage of supply of the product. A shortage during this time when the demand is all-time high would directly lead to loss of the business.
The businesses have already witnessed a lot of loss during the last year, with the trade restrictions being imposed worldwide. There was no consumer demand in the last year, only the necessities. This forced the companies to introduce salary cuts and removing a lot of their employees in order to cut the cost of operations.
With the companies bearing lots and lots of losses during the last year, it is not possible for them to undergo loss again. Therefore everything needs to be planned. There is a strong need to identify the demand pattern and the level of demand during the revenge spending in order to prepare and implement proper plans.
What is popular and is trending on social media, what are the actual sale patterns and how and where will the sale rise? Answer to all these questions will help the businesses to prepare a demand pattern. One thing is sure, e-commerce has been playing a very major role in the development of a digital economy. Even during the pandemic, most people preferred online trade and transactions and are still in favour of it.
In one of our previous articles, we have discussed how the shortage of electronic chips led to an unbalanced supply of the automobile industries leading to losses. Responding to a fluctuating demand is a challenge in itself, as the companies have to be prepared for the best and the worst. During the demand, the demand for new cars was almost zero and therefore literally crashed. However, it rose once the economy started to open up but due to the shortage of electronic chip supplies.
The demand not only rose for the automobile industries but for all other smartphones too which divided the supply of semiconductors and therefore the automobile industries were not able to cope up with the rising demand, and therefore failed to avail the benefit of it. This has resulted in the supply and demand imbalance for new vehicles.
Keeping risk in mind amidst the economy crisis
We have seen how the Industries across the globe suffered during the pandemic and how they were not able to cope up with the unprecedented situation. The pandemic has been beneficial in one way, it revealed weaknesses and risks in many global supply chains. Many countries have now become reliant on suppliers and contractors from halfway around the globe. Therefore, when the lockdown was imposed and borders were closed, these companies completely failed. The major reason behind this failure of these industries is the lack of any substitute plan, or as we say in our layman language- a plan B.
Lessons should be taken from the pandemic and new contingent plans should be developed by every economy, as we have already seen how uncertain the world is, and therefore there should always be a plan B. Risk management should be made a natural part of any industry, new sources of supply should be identified and new markets should be created to raise the demand for their goods. Companies are also incorporating inventory optimization strategies in recent years across global networks. It will help to buffer against disruptive events and will establish inventory safeguards.
We all know how precious time is, and it plays a major role in today’s success of businesses. However, it is never too late to become more careful about your business. As modern ERP systems are continuously evolving every single day, there is a great opportunity to achieve better autonomy which significantly helps the businesses be more knowledgeable and reduces the time taken by them to complete their actions.
The use of future looking strategies will definitely benefit businesses and will help them to grow more, especially during a time when everything is uncertain and the demand is fluctuating. The unforgettable condition of the industries during the time of pandemic should be considered as a lesson and companies should try to learn from their previous mistakes and make new strategies according to the current market pattern, which has changed quite a lot after the pandemic.