Introduction – Literature Review
COVID-19 is a new strain of infectious diseases that affects the victim’s respiratory systems. The virus is transmitted through droplets from infected persons, especially during coughing, sneezing, and exhalation. As such, close proximity to such infected individuals can result in possible infection. The COVID-19 pandemic is affecting the socio-economic fabrics and stability of most societies. The pandemic will most likely increase the income gap and entrench poverty and inequality globally. Kuwait reported its first COVID-19 case on February 24 (Gasana & Shehab, 2020). The government of Kuwait was very swift in responding to the first case of the COVID-19 outbreak through various progressive measures. Some of these measures included the suspension of inbound commercial flights and a ban on gatherings and public celebrations. Other measures were the immediate suspension of nonessential work in public companies and the implementation of a strict 24-hour curfew (pandemic lockdown).
While these measures aimed to control the spread of contagious disease, they have affected different sectors of Kuwait’s economy. The country experienced forced business closures and implemented strict travel restrictions (Gasana & Shehab, 2020). Besides, the disruption of the supply chain processes affected Kuwait’s retail industry, especially for luxury products. Typically, luxury commodities elicit the feeling of exclusivity and a higher socio-economic class among most consumers. Brand identity, awareness, and perceived quality are critical factors that influence the purchase patterns of these luxury products. The market or industry of luxury commodities has been experiencing exponential growth in Kuwait. However, the COVID-19 crisis has hit the country’s luxury market hard, especially with the reduction in purchasing power among most consumers. Besides, the decline in Kuwait’s gross domestic product and the fluctuations in the global financial markets are further affecting consumers’ willingness to spend on luxury goods. Arguably, most consumers are understandably speculating hard economic times. As such, they would rather spend on other important household needs, such as food and clothing, rather than on luxuries. The current public health pandemic implies that companies producing luxury products must redefine their strategies and take appropriate actions to remain viable.
The Effects of COVID-19 Pandemic Lockdown
Lockdown is one of the containment measures implemented in most countries to mitigate the spread of the COVID-19 pandemic. The measure involves a government-backed requirement for the citizens to stay at home to minimize the risk of contracting the virus (Anderson, Heesterbeek, Klinkenberg, & Hollingsworth, 2020). The current preventive lockdown implemented in most countries is a preemptive action plan that primarily aims to ensure the safety and health of the most vulnerable people, such as the elderly. The lockdown requirement allows policymakers and professionals to adopt appropriate responses to the COVID-19 pandemic (Antonio and Daniel, 2020). Accordingly, the Kuwait government issued guidelines on lockdown restrictions for passengers seeking to travel abroad and within the country.
While the stringent pandemic interventions have been effective in containing the spread of the disease and fatalities in Kuwait, the economic impacts are many. The world economy will struggle to recover from the widespread economic losses. The collapse of the global oil prices majorly triggered by COVID-19 has further affected consumption patterns and purchase power. For instance, travel restrictions in most countries imply a reduction in the global demand for oil and related production processes. The ripple effect of these pandemic containment measures is huge, particularly in Kuwait. For instance, global travel restrictions imply a reduction in the number of tourists visiting Kuwait and other countries (Baker et al., 2020). Most consumers are reassessing their spending priorities partly because of the economic uncertainties and speculations surrounding the COVID-19 crisis. In Kuwait, the government closed most shopping malls and trading centers, which are major sources of luxury goods.
The loss of job opportunities in the oil, travel, hospitality, and tourism industries implies a reduction in disposable income and spending power in most households in the country. For example, some middle-class households would prefer to spend on food and other basic commodities rather than buying luxury goods (Coibion, Gorodnichenko, & Weber, 2020). Similarly, the government of Kuwait is reassessing its priorities while focusing on financing various emergency and recovery programs to minimize the economic impacts of the COVID-19 pandemic. The reduction in the global supply chain is also exerting pressure on consumers to reassess their spending and consumption behaviors towards various commodities (Baldwin & di Mauro, 2020). The decline in the disposal income is forcing some households to consume their savings. Most consumers may find it hard to spend their savings on luxury products while facing economic uncertainties over theCOVID-19 pandemic. The increase in the prices of basic household items implies reduced desires among most consumers in Kuwait to spend on luxury products. From the case of Kuwait, it is clear that the reduction in robust consumer spending and economic growth in any country can affect most consumers’ buying power or purchase patterns.
Buying Power of Luxury Products
Buying power refers to the aggregate amount of commodities that individual consumers can purchase with a particular unit of currency. Various factors can affect the buying powers of consumers. For instance, a reduction in the prices of certain commodities translates into greater buying power (Castillo Jr, 2018). Similarly, economic factors, such as inflation, can reduce the buyers’ power to purchase and consume their preferred products. A high buying power means that most consumers are confident with their income and savings. It also implies an increase in disposable income due to high employment and a thriving economy.
While luxury products are not basics, they are highly desirable within a particular social class or society. These products are costly and mostly attract wealthy households with higher disposable incomes (Dhaliwal, Singh, & Paul, 2020). The commodities promote conspicuous consumption, which entails purchasing behavior to show off one’s wealth or social status. Some of these items include sports cars, wine, watches, clothes, and jewelry, among others. These luxury commodities have a higher elasticity of demand. In particular, the products are very sensitive to price changes and any other fluctuations in the economy. For instance, a decrease in sports cars’ prices can translate into an increase in demand (Dhaliwal et al., 2020). However, a decrease in disposable income will also cause a reduction in the demand for luxury goods in Kuwait. The current COVID-19 pandemic is affecting the demand for such commodities in Kuwait and globally. The economic challenges arising from the pandemic containment measures, such as increased unemployment, are encouraging individuals and households to spend on basic commodities.
Problem Definition – the Big Question
Kuwait is fast becoming one of the most important luxury products markets because of the thriving economy. The COVID-19 pandemic lockdown is causing suspension and shutdown of businesses, including luxury shops. The collapse in such economic activities because of the reduction in revenue is causing economic uncertainty among consumers (Fernandes, 2020). Kuwait’s retail sector is the most affected sector of the economy. According to most consumers, the current government policies on lockdown are harming business and reducing job opportunities. Before the COVID-19 pandemic, Kuwait millionaires and visiting consumers were spending on luxury products, such as sports cars. The global luxury industry also experienced massive growth because of the thriving economic activities in Kuwait and worldwide. Therefore, the research on the impact of the COVID-19 pandemic on consumers’ power to buy luxury products is novel and requires a comprehensive understanding. The study requires a comprehensive understanding of the current socio-economic trends, especially towards the demand and supply of luxury commodities to understand the changing buying powers of consumers in Kuwait.
Research Objectives
The following research objectives will guide the study on the effects of COVID-19 Pandemic lockdown on the buying powers of consumers of luxury products.
- To study the impacts of pandemic lockdown on customers of luxury products in Kuwait.
- To establish the motivations affecting the buying powers of consumers towards luxury products in Kuwait.
- To examine whether the current COVID-19 containment measures or lockdown are affecting economic activities, such as sales of luxury goods in Kuwait.
- To determine how the current COVID-19 containment measures or lockdown is influencing the buying powers of consumers in Kuwait.
Research Methodology and Design
The research relies on quantitative research design to determine the impacts of COVID-19pandemic lockdown measures on the buying powers of consumers of luxury products in Kuwait. The selected research design’s primary objective is to generate relevant descriptive data on the research variables (Bell, Bryman, & Harley, 2018). Accordingly, the study adopts a random sampling method to select respondents for the research. The respondents include typical Kuwait citizens and visitors at the points of entry. The study relied on a sample size of approximately 200 respondents subjected to a comprehensive survey to determine how the COVID-19pandemic lockdown affects the buying powers of consumers of luxury products.
The primary data and information collected through the questionnaires were generated from various social networks and blogs due to the current measures of social distancing and lockdown in different parts of Kuwait. Some respondents also received hard copies of the questionnaires. The researcher divided the questionnaires into approximately two sections, with the first section requiring the respondents to record the details of their demographic data and information. In the last part, the respondents responded to different questions on the research objectives. The research also relied on a five-point Likert scale (ranging from strongly agree to strongly disagree) to ascertain the respondents’ responses on how COVID-19pandemic lockdown affects the buying powers of consumers of luxury products. In particular, the respondents specified their feelings towards the survey questions in section 2 as either “Strongly Agree”, “Agree”, “Neutral”, “Disagree”, or “Strongly Disagree”. The researcher ordered the items on the Likert scale ranging from most agree to least. The research objectives will act as independent variables, and the buying powers of consumers of luxury products will act as the dependent variable. The researcher will then subject the data and information generated from the questionnaires to the statistical program and Chi-Square methods for analysis and subsequent discussions.
Framework
The research adopts Fritz Heider’s theory of attribution to ascertain causal explanations on how the COVID-19pandemic lockdown affects the buying powers of consumers of luxury products. In particular, the theory is relevant in explaining the causes of certain behaviors and events in various situations (Krohn, 2017). The theory can also explain the relationship between COVID-19pandemic lockdown measures and the buying powers of consumers of luxury products in Kuwait. The researcher can also use the theory to understand how the lockdown and related pandemic measures affect people’s perceptions towards the consumption and purchase of the commodities. Furthermore, Fritz Heider’s theory of attribution theory can provide accurate explanations of the relationship between the research objectives.
Assumptions
The study assumes that various lockdown containment measures in Kuwait are affecting the progression of various economic activities. Some of these measures include restrictions on local and international traveling and the closure of some shopping malls and related businesses. Based on these assumptions, the research can ascertain how factors, such as the reduction in economic activities, affect consumers’ buying powers and the subsequent impacts on the consumption of luxury products. Lastly, the research assumes that consumers of luxury goods are sensitive to prices and other fluctuations in the economy.
Limitations
Some of the factors that will limit the successful execution of this research include time constraints, human resources, and capital. For instance, the researcher will require money to print many copies of the questionnaires for the targeted respondents (a sample size of about 200). The researcher should seek a research grant from academic institutions or any other interested party to ensure the smooth execution of the activities. The researcher will also require adequate time to generate responses from the questionnaires. Therefore, the researcher should rely on online platforms, such as the survey monkey website, to generate responses from the targeted respondents. Lastly, some respondents may fail to submit their questionnaires after the survey. Thus, the researcher should provide incentives, such as a promise of shopping vouchers, to selected respondents to generate positive reactions and responses.
Research Questions
The main research question that this study will attempt to answer is, ‘How do COVID-19 Pandemic lockdown measures affect the buying powers of consumers of luxury products in Kuwait?’ Similarly, the study will attempt to answer the following specific research questions:
- How do the pandemic lockdown measures or restrictions affect the customers of luxury products in Kuwait?
- What are the motivations behind the buying powers of consumers towards luxury products in Kuwait?
- How do the current COVID-19 containment measures or lockdown affect the progression of economic activities, such as sales of luxury goods in Kuwait?
- How do the current COVID-19 containment measures or lockdown influence the buying powers of consumers in Kuwait?
Hypotheses
H0: No significant relationship exists between pandemic lockdown measures and the consumers of luxury products in Kuwait
Ha: A significant relationship exists between pandemic lockdown measures and the consumers of luxury products in Kuwait
H0. No significant relationship exists between the motivations affecting consumers’ buying powers and the consumption of luxury products in Kuwait.
Ha: A significant relationship exists between the motivations affecting consumers’ buying powers and the consumption of luxury products in Kuwait.
H0. No significant relationship exists between current COVID-19 containment measures or lockdown and the reduction of economic activities such as sales of luxury goods in Kuwait.
Ha: A significant relationship exists between current COVID-19 containment measures or lockdown and the reduction of economic activities such as sales of luxury goods in Kuwait
H0. No relationship exists between current COVID-19 containment measures or lockdown and the buying powers of consumers in Kuwait.
Ha: A relationship exists between current COVID-19 containment measures or lockdown and the buying powers of consumers in Kuwait.
Data Collection
The collection of data and information in this study will be through an online survey. Under this arrangement, the researcher will facilitate the electronic distribution of the questionnaires to the selected respondents through online websites, such as survey monkey. The online survey will enable the researcher to record a higher response and retrieval rate because of the potentially high number of study participants.
Time-Line
The researcher will rely on the subsequent outline to execute key deliverables.
| Research Activity | Approximate Time |
| Literature Review | Two weeks |
| Data Collection | One month |
| Data Analysis | Two weeks |
| Data Presentation and Discussion | One week |
References
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Antonio, A, & Daniel, Z. (2020). A perspective for the luxury-goods industry during—and after—coronavirus. McKinsey & Company. Retrieved from https://www.mckinsey.com/industries/retail/our-insights/a-perspective-for-the-luxury-goods-industry-during-and-after-coronavirus#
Baker, S. R., Bloom, N., Davis, S. J., & Terry, S. J. (2020). Covid-induced economic uncertainty (No. w26983). National Bureau of Economic Research.
Baldwin, R., & di Mauro, B. W. (2020). Mitigating the COVID economic crisis: Act fast and do whatever it takes. VoxEU. org eBook.
Bell, E., Bryman, A., & Harley, B. (2018). Business research methods. Oxford university press.
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Coibion, O., Gorodnichenko, Y., & Weber, M. (2020). The cost of the covid-19 crisis: Lockdowns, macroeconomic expectations, and consumer spending (No. w27141). National Bureau of Economic Research.
Dhaliwal, A., Singh, D. P., & Paul, J. (2020). The consumer behavior of luxury goods: a review and research agenda. Journal of Strategic Marketing, 1-27.
Fernandes, N. (2020). Economic effects of coronavirus outbreak (COVID-19) on the world economy. Available at SSRN 3557504.
Gasana, J., & Shehab, M. (2020). Coronavirus Disease (COVID 19): Handling Challenges in Kuwait. Sci, 2(2), 40.
Krohn, C. (2017). Attribution style, theory and empirical findings (Master’s thesis, Høgskolen i Oslo og Akershus. Institutt for atferdsvitenskap).