DROGERIE ONLINE SALES DYNAMICS DURING THE COVID-19 OUTBREAK

ДИНАМИКА ОНЛАЙН-ПРОДАЖ DROGERIE ВО ВРЕМЯ ВСПЫШКИ COVID-19

Плесская Ольга Вадимовна

студент, институт информационных систем, Государственный университет управления,

РФ, г. Москва

Фомичев Алексей Олегович

студент, институт информационных систем, Государственный университет управления,

РФ, г. Москва

Сухарева Наталья Александровна

научный руководитель, доц., Государственный университет управления,

РФ, г. Москва

ABSTRACT

The study investigated the impact of the COVID-19 pandemic on the online sales of a drogerie store in Russia. The authors conducted a regression analysis, where the relationship between the number of COVID-19 cases and the online sales was determined. The conclusion made deals with the necessity for further development of e-commerce, which is of great importance for our business environment.

АННОТАЦИЯ

В исследовании изучалось влияние пандемии COVID-19 на онлайн-продажи магазина drogerie в России. Авторы провели регрессионный анализ, в ходе которого была определена взаимосвязь между количеством случаев COVID-19 и онлайн-продажами. Вывод касается необходимости дальнейшего развития электронной коммерции, которая имеет большое значение для нашей бизнес-среды.

Keywords: pandemic, covid-19, coronavirus, drogerie, online sales, e-commerce.

Ключевые слова: пандемия, Ковид-19, коронавирус, дрогери, онлайн продажи, е-коммерция.

The problems related to the impact of the COVID-19 outbreak on the world economy and its consequences are still relevant. Unfortunately, the coronavirus epidemic has had a significant negative impact on social and economic life, along with the Great Depression and World Wars. The ongoing changes have not only affected the structure of existing forms of retail business, but also contributed to the development of new formats.

The first novel coronavirus, known as COVID-19, outbreak was recorded in Wuhan, China in December 2019. In January 2020, the World Health Organization (WHO) recognized the outbreak a Public Health Emergency of International Concern.[1] In March 2020, the novel coronavirus pandemic was declared. COVID-19 was so widespread that a state of lockdown was announced in many parts of the world. It encompassed severe restrictive measures aimed primarily at preventing the spread of coronavirus. As part of the ongoing isolation and self-isolation, many people could not leave their homes to protect themselves and their loved ones, especially the elderly, from COVID-19. During the pandemic there was also a massive forced temporary closure of government and educational institutions, shopping centers, catering establishments and entertainment venues.

As for February 26, 2023, more than 680 million COVID-19 cases had been registered worldwide, with more than 6.8 million COVID-19 deaths being officially confirmed.[2]

The pandemic has dealt a severe blow to all sectors of the national and world economy, including retail trade. Most of the stores were forced to temporarily cease their operations. Many industries and countries experienced a shortage of goods and disruptions in logistics supply ad delivery chains. Offline sales declined significantly, as the number of consumers shopping in brick-and-mortar stores decreased, and their income dropped during the state of lockdown and self-isolation. In turn, it prompted companies to actively develop and expand into the e-commerce sector. To a large extent, the self-isolation mode forced many people to start actively using online services for the purchase and delivery of various goods.

The COVID-19 outbreak significantly accelerated the pace of changes in the e-commerce market, both at the national and international levels. Thus, in 2020, all segments of e-commerce showed positive sales dynamics, and this trend continued in 2021. For example, according to the Association of e-commerce companies (AKIT), the Russian e-commerce market grew by 44% in January-February 2021 as compared to the same period in 2020.[3]

The authors studied the effect of COVID-19 on drogerie sales (“drogerie” in German - “drug store”). It originated in Western Europe in the 1970s, and then became widespread throughout the world, including Russia.[4] A drogerie is usually a small store or a chain of small stores selling essential goods, namely: personal hygiene products, cosmetics, haircare products, household items, etc. As opposed to American drugstores, drogeries in Russia do not sell medicines. Most of the goods in these stores belong to the middle price segment. The stores are distinguished by a simple interior and layout that does not require a large storage space. Drogerie stores are often located in residential areas. In Russia, the top 5 drogerie chains in terms of the number of stores are Magnit Cosmetic, Rainbow Smile, Ruble Boom, Novex, and Seven Days.[5] The market leader is the chain Magnit Cosmetic, which operated approximately 6,700 stores with the sales of 144.62 billion rubles in 2021.[6] Its closest competitor - Rainbow Smile – operated approximately 1 000 stores with the sales of 37.2 billion rubles in 2021.[7]

Taking into account the impact of the pandemic processes on online and offline trade, the authors of the study put forward a hypothesis that online sales in the drogerie grew as the cumulative number of COVID-19 cases increased. In other words, the share of online sales is directly related to the number of cases. To confirm this hypothesis, the authors analyzed the dataset of an anonymous drogerie chain, namely its weekly total sales in Moscow, weekly online sales in Moscow, and a weekly share of online sales in Moscow. In addition, the official statistics on the number of COVID-19 cases in Moscow were used in the study. As of 01/01/2021, 815,676 COVID-19 cases had been detected in Moscow since the beginning of the pandemic. This number was taken as a starting point. Then, the weekly increase in the number of new cases was taken into consideration.

The regression analysis was the main research method used in the study. It is a statistical method that helps determine the relationship between various variables. Also, this method can be used for the subsequent assessment of the degree of relationship between the initial variables and determination of their interdependence.[8] As a result of the regression analysis, a linear regression model was developed. It pointed out that an increase in the number of cases by 1 person would lead, on average, to an increase in online sales of the drogerie by 2 rubles. At the same time, the expected sales value was taken into account if only the number of cases was equal to zero. As the main indicator of the study, the coefficient of determination was considered. It reflects the quality of the regression model and shows how strong the linear relationship between the number of COVID-19 cases and online sales of the drogerie is.

Based on the results of the analysis, it can be concluded that there is a direct relationship between the number of COVID-19 cases and the online sales in the drogerie studied. For example, the number of cases of the novel coronavirus in Moscow was 824,879 in the first week of 2021. For the same period, the online sales of the drogerie equaled 0.415 million rubles. In the 52nd week of 2021, the number of COVID-19 cases grew to 2,019,602 people, and the drogerie online sales increased by more than 5 times and amounted to 2.160 million rubles. The trend could be accounted for by a number of reasons. Firstly, the people who fell ill were unable to visit offline stores and make purchases there. Secondly, healthy people who had been in direct contact with the patients were forced to comply with the quarantine measures and had to shop online as well. Thirdly, social distancing did not make offline shopping a popular option.

The COVID-19 pandemic has once again proved that e-commerce is a prerequisite for the existence of many retail companies under the conditions of economic instability. E-commerce helped many firms to survive the lockdown period and not only to retain customers, but also to reach new customers and increase sales. Thus, the conclusion is online sales will continue its growth after the COVID-19 pandemic.

Список литературы:

1. Getting your workplace ready for COVID-19 - World Health Organization, https://www.who.int/docs/default-source/coronaviruse/getting-workplace-ready-for-covid-19.pdf?sfvrsn=359a81e7_6 (date of access: 02.26.2023)
2. Coronavirus statistics in the world // gogov URL: https://gogov.ru/covid-19/ (date of access: 02.26.2023).
3. Electronic resource: Impact of the COVID-19 pandemic on the Russian e-commerce market // Roscongress URL: https://roscongress.org/materials/vliyanie-pandemii-covid-19-na-rossiyskiy-rynok-internet-torgovli/ (date of access: 02.26.2023).
4. Electronic resource: Drogerie store format - what is it // Yandex ZenURL: https://zen.yandex.ru/media/saving_money/drogeri-format-magazina-chto-eto-takoe-5ec52888de50fd335207d756   (date of access: 02.26.2023).
5. Electronic resource: Top 10 drogerie store chains // marketmedia URL: https://marketmedia.ru/media-content/top-10-setey-magazinov-drogeri/ (date of access: 02.26.2023).
6. Electronic resource: MAGNET ANNOUNCES 9.6% TOTAL REVENUE, 5.2% FFL AND7.1% EBITDA MARGIN IN Q2 2021 // Magnit URL: https://www.magnit.com/upload/iblock/e8c/Magnit_Press%20Release_2Q2021_29Jul2021_rus.pdf    (date of access: 02.26.2023).
7. Electronic resource: Rainbow Smile summed up the results of 2021 and spoke about development plans // retail URL: https://www.retail.ru/news/ulybka-radugi-podvela-itogi-2021-goda-i-rasskazala-o-planakh-razvitiya-18-fevralya-2022-214105/  (date of access: 02.25.2023)
8. Electronic resource: What is regression analysis? // vc.ru URL: https://vc.ru/u/425321-sf-education/224225-chto-takoe-regressionnyy-analiz  (date of access: 02.25.2023)