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Effects Of Global Events On Consumer Behavior

With globally connected supply chains and consumer markets, a single global economic, political, or environmental event can cause a ripple effect throughout the markets. This immediately affects consumer behavior and the trends in buying along with the preference for specific products or items. Thus with globalization and its notion of free-flow of goods and services across borders, the profits have increased manifold with the connected supply chains, however, the loss ratio also rises due to the same reason.

Let’s explore how global events impact consumer trends and behaviors on a broader level…

Global Economic Events

Economies are highly connected and interdependent in the modern era. They are not just connected through physical trade routes and transit agreements among nations, but through a more complex technological aspect as well. With the use of digital marketing, media awareness and influence, global share markets, MNCs, NGOs, cryptocurrency, and the economic models of global organizations like the IMF and WTO, the economies have never been interdependent ever before.

In such a tightly-knit economic system, if one market crashes, so do many. For instance, in the 2008 economic crisis, the mortgage industry was severely hit which shut down the global markets and thus created a jammed economy worth billions of dollars worldwide.

Similarly, if the oil-exporting countries like the OPEC nations face the issues of low oil prices, the global market goes down. Of course, almost half of the world imports oil from these countries of the Middle East and the Arab peninsula, to keep up with their domestic oil needs. 

Thus the consumer behavior of the oil-importing companies is negatively changed which means enough oil is not imported. This situation creates either inflation or scarcity of oil for domestic use.

Global Political Events

Broadly speaking, the domestic and international political factors affect consumer trends. For instance, these factors include tax laws, regulation policies, labor laws, trade restrictions and regulations, environmental laws, tariffs, and overall political stability on the national level, while the bilateral/ multilateral ties among nations on a global level.

For instance, the ongoing US-China trade war has changed the choice of imported and exported items among these countries. China has stopped the purchase of specific items so has the US. In the fight to downgrade each others’ economies, both countries are bound to change their preferences of trade. This has ultimately impacted consumer behavior on the local levels in both countries. 

Global Environmental Events

The ongoing Covid-19 pandemic is the most striking example of how adversely the global supply chains and markets have been affected. The same is the case with climatic events and unplanned seasonal events which destroy the trade infrastructures.

In such cases, the supply may not fulfill the demand gap and thus either people abandon the consumption or find alternatives until the issues are resolved. This happens more on a local scale where a common consumer is hit by the broken supply chains the most.

During the peak of the pandemic in 2020, the world a halt in global trade which marked a historic decrease in global profits. Some experts even concluded that this crisis was even bigger than the 2008 economic fallout. In such a situation, the oil, textile, automobile, and real estate industries were hit the most on a global scale. While on a more local level, the perishable food items, clothing, pharmaceutical, and medical equipment industries were seen to badly struggling to cater to the needs of the public. 

Thus the common consumer was forced to either squeeze his needs or buy in surplus to sustain for a long time. This created imbalanced and unfair consumer trends which often lead to conflicts among the traders and the buyers. 

The globally connected supply chain markets have their positives and negatives. But in times of crisis, every sector and stakeholder is affected through a ripple effect. That is why the global economic, political, and environmental conditions impact the markets, therefore the consumer behavior in every country.