THE INFLUENCE OF COVID-19 PANDEMIC ON ONLINE RETAIL PRICES

ABSTRACT

The coronavirus 2019 (COVID-19) pandemic had a powerful impact on most economic sectors. Chaotic consumer behavior was one of the consequences and it was probably the most prominent in the retail industry, determined by news about restrictive measures such as lockdowns, the closing of stores and restaurants, and other economic activities. This study is designed to assess the hypothesis that the Government-imposed restrictions related to the COVID-19 Pandemic, in its early stages, had a relatively low impact on online retail prices, compared to the current economic turmoil, determined by abnormally high demand in certain sectors. The article analyzes the fluctuation of online retail prices during the Lockdown and High Alert phases in Romania, and for a few weeks after that, comparing the given timeframe to the current situation, more than a year later, when supply chain disruptions in several markets were observed. During the initial period of high uncertainty, although rare cases of price fluctuations as high as 40% were be observed, the overall market was marginally affected by the COVID-19 Pandemic, with some exceptions, such as electrical and electronical devices. Analyzing the retail industry more than a year later, consumer prices during the month of May 2021 rose at the fastest rate in nearly 13 years, and some policymakers are worried that the hyperinflation of the 1970s is just around the corner. Our results point to a low degree of correlation between the rise in demand for certain products and COVID-19 related restrictions. The retailer’s decision on adjusting their prices for certain products can indicate either a decrease in demand or the retailer’s anticipation of such. This research was based on the prices of a well-established online retailer, which were weekly monitored for a period of 12 weeks. © 2022, Bucharest University of Economic Studies. All rights reserved.