What happened this week? For Germany it was a short spring week with a holiday on Thursday and only the necessary minimum of people worked on Friday. For many companies, this was a welcomed additional break. It was the opposite for tourist spots enjoying the easing restrictions, though, as many people sought such destinations for a short trip. 

Monday was the day when the coastal regions were reopened under certain conditions and, with the holiday on Thursday and school holidays in some parts of the country, many travellers headed that way. Although it will not be a full turning point, at least hotels, restaurants and shops in the resorts can welcome a few more customers. 

This will also be a very decisive phase to learn whether the spread of the virus will return with more people moving and restrictions lifted, or if the discipline of people and following physical distance regulations can keep infections low despite a more normalised daily life. In roughly ten days to two weeks we will know. So far, the country still enjoys a low infection rate, although the daily published numbers are only dropping to zero in isolated regions. Without seeing people wearing masks everywhere one would think that all is almost back to normal. 

The numbers in private spending and consumption speak a different language. Those who did not know or who were unwilling to try to understand are about to get a quick lesson about (a) the importance of psychology and (b) how production does not command consumption forever. 

For many years, growth and cheap money have created an environment of spending which resulted in the system of a production budget followed by the simple marketing tools. What was not sold just trickled down the price and distribution grid, and there was even still enough room for the sale of cheaper copies. The consumer swallowed it all. Cars and electronics and the like were managed in a different pattern commanded by speed and model innovations that were, for the most part, not really adding any value. However it worked. What FFF [a model for consumer behaviour] did not manage, covid-19 did. 

Consumption has slowed, the focus has changed, and everyone is now waiting and discussing if the routine will return or if the consumer is questioning whether a continuous run for 'always new' should really top their priority list. 

The community is totally divided in their opinions. Some believe the shopper will quickly return to their habits. Others are convinced that the lock-down — the limited shopping experience in combination with fewer social contacts — will lead to more selective and reduced shopping activity and a change of priorities. For the leather industry, it means a chance to focus on natural value-for-money products, as this is the possible future. 

For the moment the situation is bleak and the pipeline congested. European tanners resume very slowly and Asian tanners remain price obsessed without a clear strategy. They just hope that cheap raw material will pay later, and so their sole interest is to buy cheaper without a clue what will happen. Sales have been minimal, because in Europe only the precious regular clients can be served, and from Asia the attempt to again buy $3-$4 below the last levels did not allow any sales at the end.  

The kill: The kill begins very slowly to recover. Several of the coronavirus-hit abattoirs are slowly beginning to resume production and the beef industry is now hoping for a recovery of the consumption of prime cuts. Even if restaurants can only serve about 50% of their clients, a bit of business should be seen. 

What do we expect: Our concern that it might get worse before it gets better seems to materialise. Hopes that the easing of restrictions would quickly convert into more sales are so far disappointed. People are insecure about their future and prefer to keep their wallets closed until they know more. Tanners miss orders and need to wait until the sky clears up. This may still need a few weeks of patience.

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