Transforming traditional business into online: The impact of COVID-19 pandemic on consumer behavior

How to cite this paper: Bytyçi, S., Shala, V., Ziberi, B., & Myftaraj, E. (2021). Transforming traditional business into online: The impact of COVID-19 pandemic on consumer behavior [Special issue]. Journal of Governance & Regulation, 10(2),


INTRODUCTION
The COVID-19 pandemic as a sudden event shook the world. The COVID-19 outbreak, declared a pandemic on March 11, 2020, has led to economic disruptions that continue to affect financial and labor markets across the globe (Mitchell, O'Donnell, Taves, Weselake-George, & Xu, 2020). The COVID-19 pandemic did not leave the realm of life untouched and without consequences. Fear of losing one's life alluded to great consequences in every other aspect of social, economic and political life. Strict closure and anti-COVID measures make people change their attitudes towards any phenomenon that surrounds them, including the purchase and type of products. Citizens, with or without their consent, have been obliged to respect anti-COVID-19 measures, including social distancing and limited movement. Internal movement restrictions -whether announced by domestic or foreign governmentsgenerate substantial short-run panic that largely vanishes in a week to ten days. Internal movement restrictions announced early in the pandemic generated more panic than those announced later (Keane & Neal, 2021).
The closure of a large number of businesses, starting with educational institutions, restaurants, bars, shopping malls, etc., made people increase the demand for online shopping and consequently businesses had to work there to respond to the demand. The sharp decline in movement after the WHO (World Health Organization) declared COVID-19 to be a pandemic can be attributed to risk attitudes, especially for visiting places classified as retail and recreation, transit stations and workplaces (Chan, Skali, Savage, Stadelmann, & Torgler, 2020). On the other hand, unlike disasters that immediately impact every entity in supply chains covering producers, vendors, distribution centres and retailers, pandemics did not render supply chains affected immediately but rather increased consumers' willingness to shop online to avoid virus (Hao, Wang, & Zhou, 2020).
In this light, the main aim of this study is to analyze how the change in consumer behavior during the COVID-19 pandemic will impose the need for businesses in the future to move from traditional to hybrid businesses, combining traditional with online sales strategies.
Using an online questionnaire to identify the consumer behavior we try to build a theory that the COVID-19 pandemic not only causes the consumer behavior to shift from traditional to online one but also that in the future this will imply the traditional business to shift their activity form purely traditional to hybrid which means both traditional and online.
The The study is structured as follows. Section 1 presents the introduction, including the main aim of the paper, research questions and hypotheses. In Section 2 the literature review is presented. In Section 3 demonstrates the methodology and methods, the data and the way of collection, the analysis and the program used. Section 4 of the paper provides the results, Section 5 presents the discussion and Section 6 concludes the study.

REVIEW OF RELATED LITERATURE
There were three main motives for online shopping in the period during COVID-19: too many stores are working only online, reducing health risk, and saving time. Sharma (2020) analyses how the epidemic has affected the purchasing habits of consumers and their consumption behaviour. The study concludes that going back to the previous purchase and consumption practices will be subjected to the new guideline in regards to COVID-19. Therefore, the behaviours are being modified in the way people do shopping or buy goods and services thus the pandemic is likely to come with innovative and creative ways of operating, such as brand digitalization, that will modify the existing behaviour.
Jaravel and O'Connell (2020) used time scanner data in Great Britain during the COVID-19 pandemic and investigated the drivers of the inflationary spike at the beginning of lockdown and quantified the impact of high-frequency changes in shopping behaviours and promotions on inflation measurement, thus the study demonstrated substantial consumers' switching towards online shopping and across retailers but showed this was not a key driver of the inflationary spike. Another study that analysed panic buying, herd mentality and altered patterns of consumer discretionary spending (according to Maslow's theory) involved an analysis of consumer spending data, largely focused on Australian and American market, and concludes that, to date, consumer behavior during the COVID-19 crisis appears to align with behaviours exhibited during historic shock event (Loxton et al., 2020).
Ivanović and Antonijević (2020) analysed if the virus and implemented measures of reducing the spread of contagion brought by the Government of the Republic of Serbia resulted in changes in consumer behavior. The data were collected from 408 respondents from the Republic of Serbia using an online questionnaire. The questionnaire lasted from April 7 until May 4. The data were analysed using the chi-square test. Results of this study revealed that there is a significant association between purchasing online before and after the appearance of the COVID-19. Also, the authors conclude that there is no significant association between gender and the decision to purchase after the appearance of the COVID-19.
Consumers are staying and working from home more, prioritizing savings over spending and doing business digitally even more than before. For businesses, it is more than ever important to understand what is driving their customers and then to look at their strategy and business model to determine how they need to adapt it to keep pace with shifting customers' demands (-COVID-19 is changing consumer behavior‖, 2020).
Kohli, Timelin, Fabius, and Veranen (2020) in their study conclude that COVID-19 is changing the way how consumers behave across all spheres of life, including shopping and consumption such as:  surge in e-commerce;  preference for trusted brands;  decline in discretionary spending;  trading down larger basket;  reduced shopping frequency;  shift to stores closer to home;  polarization of sustainability. Taha, Pencarelli, Škerháková, Fedorko, and Košíková (2021) using a survey, with a sample of 937 respondents from two countries, examined how the pandemic affected shopping behavior and consumer preferences in Italy and Slovakia. This paper aims to explore the impact of social media on consumer behavior, more specifically, it examines the influence of social media on the preference of specific e-shops during the first wave of the COVID-19 pandemic. Spearman's rank correlation coefficient was used to determine a statistically significant relationship between the variables and the Mann-Whitney U test and the Kruskal-Wallis H test to assess the significance of differences between respondents in terms of demographic characteristics (residence, age, and gender). The results revealed the existence of statistically significant differences in the use of social media during the first wave of the COVID-19 pandemic in terms of various demographic factors as well as a relatively weak relationship between the social media used and the purchase in the e-shop promoted on the social media. High-wage workers experienced a -V-shaped‖ recession that lasted a few weeks, whereas low-wage workers experienced much larger job losses that persisted for several months (Chetty, Friedman, Hendren, & Stepner, 2020).

RESEARCH METHODOLOGY AND DATA
In this paper, broad literature is reviewed based on the pandemic and the impact on consumer behavior. In this study, the questionnaire tool was used for data collection. The questionnaire was prepared online in the Google form and was shared on the social media Facebook in a random sample. It lasted from June 15 till October 15, 2020 to collect the data and get to the target number of responses. The target number of the questionnaires was 1500 since there are three countries in the analysis but the number of completed questionnaires is 1250 (valid questionnaire). We received a smaller number of answers from the citizens of North Macedonia.
The main hypotheses in this study are: H1: The change in consumer behavior will transform traditional businesses into hybrids (traditional vs. online).
H2: The COVID-19 pandemic has positively impacted the consumers' confidence during online shopping, thus it is a good base that people will continue with their habits after the COVID-19 pandemic.
H3: There is a significant difference between age and online shopping during the pandemic.
The hypotheses are testing based on Pearson correlation and chi-square tests of independence in the following sections of the study.
The study presents descriptive statistics, frequencies of the conceptual variables, chi-square tests for hypotheses testing, Pearson correlation or the bivariate Pearson correlation which produces a sample correlation coefficient r, which measures the strength and direction of linear relationships between pairs of continuous variables, thus, the Pearson correlation evaluates whether there is statistical evidence for a linear relationship among the same pairs of variables in the population, represented by a population correlation coefficient ρ (-rho‖). The Pearson correlation is a parametric measure (Kent State University Libraries, 2021).
In this study, the Cronbach's alpha is also used in order to measure the internal consistency of the variables.
The Cronbach's alpha is a measure used to assess the reliability, or internal consistency, of a set of scale or test items that suggest α coefficient of reliability ranges from 0 to 1 in providing this overall assessment of a measure's reliability. If all the scale items are entirely independent from one another (i.e., are not correlated or share no covariance), then α = 0; and if all the items have high covariances, then α will approach 1 as the number of items in the scale approaches infinity. In other words, the higher the α coefficient, the more items have shared covariance and probably measure the same underlying concept (Goforth, 2015).
In addition, futures studies can also use the ANOVA test for hypotheses testing. The one-way ANOVA is commonly used to test the following (Kent State University Libraries, 2021):  statistical differences among the means of two or more groups;  statistical differences among the means of two or more interventions;  statistical differences among the means of two or more change scores.
The software used for statistical analysis is SPSS. In the following section of the study, we go through the results.

Results of the study
In this section, we will interpret the results of the study. We will interpret the descriptive statistics of the demographic variables, the frequencies of the conceptual variables, Cronbach's alpha and Pearson correlation matrix. In the above table, we presented the descriptive statistics of the variables used in this study. Each question represents a variable in our survey research. The questionnaire includes in total 15 structured questions in a total sample of 1250 respondents.    In Figure 4 we present the products mostly shopped online during the pandemic. From the data collected, we can see that 39.2 percent have bought clothes products, 24.8 percent -accessories, 20 percent -digital devices and 16 percent -food products. We also have the option -Other‖ in this question but we have 0 responses thus we do not interpret the option -Other‖.   In Figure 7 we can see that 67.2 percent of the respondents have shopped online at domestic firms and 32.8 percent -at foreign firms. This percentage is a good base for further recommendations as domestic firms should shift their business from purely traditional to a hybrid one (traditional and online).  Figure 8. Has the habit you acquired during online shopping due to the pandemic influenced you to continue shopping online even after the pandemic?
In Figure 8 we have the data about the habit respondents acquired during online shopping due to the pandemic. Thus, 43.2 percent of the respondents agree, 27.2 percent are neutral, 13.6 percent totally agree, other 13.6 percent do not agree and 2.4 percent do not agree at all.  In Figure 10 we can see that almost 82 percent of the total number of the respondents think that the COVID-19 pandemic will impact doing business in general, no comment gave 13 percent and -No‖ answered only 5 percent. Figure 11. Do you think that after the pandemic it is necessary for local businesses to develop new sales strategies and move from traditional sales to hybrid (traditional and online)?
From Figure 11 we can conclude that 45 percent agree and this is a good base for further recommendations that local business should develop new sales strategies and shift from a traditional to a hybrid model, 22 percent totally agree, 17 percent are neutral, 14 percent do not agree and only 1 percent do not agree at all. The variable Education level is positively correlated with the variable Family budget (in euro) as it is expected that the higher the level of education, the higher the salary, thus the family budget. The Pearson coefficient of 0.338 shows a positive relationship. The variable Education level is positive but in a week relationship with the variable Have you bought products online during the COVID-19 pandemic? at the level of the coefficient 0.093, thus the level of education did not impact the decision factor for buying online. The level of education is negatively correlated with the variables 4, 5 and 6, thus we can conclude that there is no relationship between the level of education and the habits during online shopping at all.
The second variable -Family budget -is negatively correlated with the variables 3, 4, 5, and 6, thus the family budget does not impact the consumer behavior during the pandemic. The variable Have you bought products online during the COVID-19 pandemic? is negatively correlated with the variable Has the habit you acquired during online shopping due to the pandemic influenced you to continue shopping online even after the pandemic? at the level of Pearson coefficient -0.137, thus we can conclude that consumer behavior during the pandemic do not impact the buyers' behavior in the near future.
The variable 3 is positive but in a week correlation with the variable 5 at the level of 0.04 and also the consumers' confidence has increased during the online shopping process.

Hypothesis testing
Based on the Pearson correlation, the variable Has the habit you acquired during online shopping due to the pandemic influenced you to continue shopping online even after the pandemic? is in a positive relationship with the variable Do you think that after the pandemic it is necessary for local businesses to develop new sales strategies and move from traditional sales to hybrid (traditional and online)? at the level of the coefficient 0.33, thus we can accept H1.
The variable Has the habit you acquired during online shopping due to the pandemic influenced you to continue shopping online even after the pandemic? is in a positive relationship with the variable Does the COVID-19 pandemic impact increasing your confidence in online shopping? at the level of the coefficient 0.35.
We can conclude that the habits of consumers during the pandemic for online shopping suggest the local businesses develop new sales strategies and move from traditional sales to hybrid (traditional and online) based on the Pearson correlation results, so we accept the H2. In order to test H3, we go through a test of independence. In accordance with the results from asymptotic significance (2-sided) = 0.000 the conditions alpha is less than or equal to 0.05 are met, thus we can accept the H3.

DISCUSSION
From the obtained results from the Pearson correlation, we conclude that the variable Has the habit you acquired during online shopping due to the pandemic influenced you to continue shopping online even after the pandemic? is in a positive relationship with the variable Do you think that after the pandemic it is necessary for local businesses to develop new sales strategies and move from traditional sales to hybrid (traditional and online)?, thus the habits of consumers during the pandemic regarding online shopping suggest for local businesses to develop new sales strategies and move from traditional sales to hybrid (traditional and online). And also the consumer behavior increases the confidence during the online shopping process.
At least the variable Do you think that after the pandemic it is necessary for local businesses to develop new sales strategies and move from traditional sales to hybrid (traditional and online)? is in a positive relationship with the variable Does the COVID-19 pandemic impact increasing your confidence in online shopping?, this means that confidence plays a crucial role for the after-COVID time period, thus people will continue with online shopping based on their confidence experienced during COVID-19 and this will impose the business to move from a traditional to a hybrid model including traditional and online sales strategies in order to meet the trade requirements.

CONCLUSION
This study is very important due to the nature of the research. The main aim of this study is to analyze how the COVID-19 pandemic is changing the consumer behavior thus imposing changes in doing business, exactly how the business (the domestic as well foreign companies) will shift from traditional to online. In this study, broad literature has been consulted, thus the online questionnaire was well designed to meet the research aim. The questions were combined in their structure in order to conduct the analysis and hypotheses testing. The questionnaire was distributed online using social media and to get the responses we had to wait 4-5 months. The sample was randomly chosen. We do not find differences between countries in the analysis. Using Cronbach's alpha we can conclude that our conceptual variables fulfill the conditions to be relevant. Also in regard to Pearson correlation, we find no relationship between the level of education and consumer behavior at all. We conclude that the COVID-19 pandemic imposed the need for online shopping, thus consumers were obliged to fulfill their basic needs via online shopping. The habits gained during the pandemic make people raise their confidence in regard to online shopping, thus it is of great interest and a great base for further recommendations. In line with our findings there is also a study by Puttaiah, Raverkar, and Avramakis (2020) that concludes among others that companies have invested in logistics and supply chains and widened their product ranges, attracted so large numbers of consumers and many of them were likely to continue to buy online for non-health reasons, such as convenience, time savings and wider product ranges. In this point of view, people will continue with online shopping, thus imposing for businesses to shift from purely traditional to a hybrid model in order to meet the consumers' needs. In line with our findings there is a study by Taha et al. (2021) that suggests that business managers should use social media to optimize the entire customers' experience at all different stages of the purchasing cycle, starting from the problem analysis phase, then proceeding to information search, evaluation of alternatives, purchase, and post-purchase, thus for each of these stages, social media managers can choose the most effective social channel to allow potential buyers to take in the information they need to optimize their purchase decision, such as reviews, opinions from friends or experts, or influencers, encourage the use of e-commerce platforms and gather opinions on the post-purchase behaviour. Individuals and organizations cannot avoid the era of the Fourth Industrial Revolution (Industry 4.0) in any part of the world by utilizing the latest technological bases (Sarwani & Husain, 2021).
The main limitation of this study is that we do not have included into analysis the types of products and services when buying online.
The study suggests for further study to focus on products and service differentiation in order to analyze also online shopping for different kinds of products and services. This study shed light on how the COVID-19 pandemic impacts the buying behavior thus impacting the business to shift from purely traditional to hybrid.