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Zombies companies and consumer preferences shifts in the post covid-19 world
This article tries to shed light on the nature of the consumer preferences changes during the covid-19 crisis: are these changes transitory or are they permanent? Understanding these changes will be very relevant for some sectors and firms in order to avoid zombies companies (no viable but consuming public resources) and for the future design of the fiscal policy and public support measures.
Through a sample of 1,500 households surveys in five countries (France, Germany, Italy, the Netherlands and Spain) the article reveals how “the experience of the covid-19 crisis may fundamentally change consumer preferences” in the long run and how “many consumers do not miss certain goods and services they have cut down on since the covid-19 outbreak”.
The survey conducted by the authors last July 2020, after the end of the lockdowns, asked households how their current consumption compares to before the covid-19 outbreak for five key sectors (tourism, hospitality, services, retail, and public transport). The survey´s results suggest long term and fundamental changes in consumer preferences.
In light of the results the authors suggest the following conclusions that policymakers should keep in mind:
- Not to maintain broad-based horizontal fiscal support to firms for an extended period as some firms will become obsolete in the altered post-covid-19 and they must be allowed to fail fast so that resources can be reallocated to more efficient uses.”
- Governments should consider controlling infection risk as a prerequisite to preserving economic prosperity.
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