As countries around the world begin to reopen businesses, restart economies and assess the cost of COVID-19, there are many unknowns. However, we all recognise that the impact on small businesses has been severe, and that many are facing an uncertain future.
To gain a deeper understanding of the impact of the pandemic on commerce across the Central Europe, Middle East and Africa (CEMEA) region, Visa has conducted a survey of merchants and consumers – the COVID-19 CEMEA Impact Tracker. The findings show just how severely some of our local businesses have been affected by COVID-19.
At least half of the merchants surveyed have suffered a high impact on their business, and 70 percent and above say they have suffered medium-to high impact. These small businesses have also seen less visits from customers, and customers are spending less when they do shop – between 60 percent and 89 percent of merchants say they have seen average spending decline, and it is an issue that has impacted almost every segment of commerce.
With such a decline, it is no surprise that many entrepreneurs are experiencing an enormous amount of anxiety about their future. Merchants are concerned about cash flow, whether they can afford to pay salaries or to keep all of their staff, and not being able to engage with their customers. At least half say they are suffering severe anxiety and stress since the outbreak.
Although many countries are attempting to reignite business, recovery may not be straightforward. Visa’s survey has also shown that COVID-19 has changed the way that many consumers shop. The majority say that they have optimised their purchasing – buying in bulk, cutting out impulse purchases and luxuries, and buying non-perishable food. Depending on the local market, between half and three-quarters of shoppers are trying to avoid the busiest periods in the store.
Customers are also more particular about the hygiene of where they shop. Over half state a preference for outlets that enforce hygiene measures and are avoiding unwrapped produce. For dining out, people are even more particular.
Since the start of the pandemic, there’s been an increase of consumers who have purchased from online groceries and pharmacies for the first time – in some markets as many as 70 percent of consumers have begun shopping online in these categories due to COVID-19. In response, more merchants are developing or acquiring eCommerce capabilities. Prospects for future growth remain optimistic, with merchants, from 21 percent to 31 percent anticipating an incremental increase in online retail across CEMEA.
Visa recognises the importance of supporting these local merchants in the communities where they are present. Small businesses are a vital part of our economy. According to the World Bank’s International Finance Corporation, small-to-medium enterprises contribute more than half of employment and GDP in most countries irrespective of income levels. Small businesses create jobs and support innovation, and as we have seen during the COVID-19 crisis, local businesses can be a focal point for community interaction and initiatives.
With all of this in mind, and to help small businesses to tackle the challenges facing them today, Visa has launched “Where You Shop Matters.” Through this initiative, we aim to provide focused support for small businesses and to encourage consumers to support the businesses in their communities.
We have conducted our survey to understand the needs of consumers and businesses. Based on the findings and insights, we will be rolling out a number of different programs to help get local economies adapting faster during and after the crisis, and to build resilience for a better future. This includes a “Small Business Hub”, which will include resources for small businesses, including a digital toolkit with information and articles on how owners can enhance their business or start a new enterprise, and how to adapt to new digital ways of working.
We will be encouraging consumers to think about where they spend, and how shopping local can support sustainability, build community spirit and create economic opportunities for all. At Visa we are committed to making a difference, and we hope “Where You Shop Matters” can contribute to helping business owners and their customers become a part of rebuilding local economies and create businesses that can thrive.
Okusanya is the vice president and country manager, Visa West Africa.