Assessing Consumer Behaviour on Speculation and Shortages of Commodities: A Study of Households in Umoja and Kibera, Nairobi

Abstract

Speculation and shortages of commodities is one of the biggest challenges facing the Kenyan economy. This has therefore resulted in a change in behavior by many consumers as a result of this imminent shortage and speculation. The main objectives of this study were, to establish the reaction of consumers when there was speculation that there would be a shortage of commodities, to differentiate the buying behavior of consumers in Umoja and Kibera on speculation and shortages of commodities, and lastly to determine the factors that influenced the decision making of consumers. This consumer behavior study was aimed at helping the government and the various stakeholders in the economy to better understand the behavior of consumers under these harsh circumstances. The key findings of the research showed that any speculation about an imminent shortage of commodities in the economy was bound to spark reaction from consumers in the market. When there was speculation that price of a commodity would go up consumers who earned between Ksh.25, 000 to Ksh. 250,000 would buy commodities in large quantities as compared to those who earned below Ksh. 20,000. This is because they had more disposable income compared to those earning below Ksh. 20,000. Lastly, price played a big role when it came to decision making on the purchase of a commodity. From the findings of the research, the researcher recommended that speculation should be avoided as it can make a bad situation worse. When there is looming shortage of commodities it is appropriate for consumers not to resort to panic buying as it will create a crisis because the scarce commodity will be bought in large quantities and this will result in prolonged shortage of the commodity.