The displacement of retail spending by students in host cities owing to Covid-19: A case study

The regulations implemented by governments in response to COVID-19 to limit the movement of people affected the nature of consumer spending. Consumption behaviour change, resulting from disasters or government-enforced regulation, is visible through spending displacement and response to fast-moving changes in circumstances. This study examines student spending in the host cities of universities and how a pandemic, such as COVID-19, may reduce or eliminate the spending injections into the economy through displaced spending. The pre-Covid-19 student survey spending results revealed that 81 per cent of students’ monthly retail spending takes place inside the host city with the rest spent outside. The Covid-19 enforced move towards online learning, and the potentially longer-term shifts from contact to online learning, will have a significant spending displacement effect on the host city. The results show that students are indifferent to spending during the week or on weekends and that most students are content to stay within the host city during weekends. No obvious time preference between the week and weekend for spending was found. The results show that student spending represents significant spending in the host city and for the time the COVID-19 restrictions remain in place, the spending displacement and loss of income for local businesses will be significant. The loss of student spending amounts to approximately R2 million daily. This not only highlights the cost of enforced lockdown measures, but also provides important indicators to university management upon considering replacing the existing tuition model of contact learning with one of online learning. Such a decision will lead to a significant negative impact on the economic activity of the Potchefstroom business community with far-reaching implications for employment, income generation and wealth disbursement in this university city.