The arrival and effects of coronavirus has left the world in a state of panic and anxiety. Not only are people’s lives directly affected, but major industries driving our economies are hard hit by it too. Schools are shutdown, work is halted, and countries are being put under quarantine. This has had a major impact on the business world.
Source: Economic Times
The coronavirus is a highly communicable disease that originated in the city of Wuhan, China. It was initially a virus found exclusively in animals, which then mutated and started infecting humans. Since then, it has mutated several times causing an outbreak in the human species. This black swan effect has had a deep impact on the world.
So, which are the industries affected by the unprecedented global crisis, COVID-19?
Many industries, right from BFSI to automobile, have been affected by Covid-19 outbreak in varied ways. Following is the roundup of some of the major industries and the impact they have suffered on account of the Corona Virus outbreak:
- Luxury: Due to the outbreak of the coronavirus pandemic, all the unsuspecting industries were hard hit and the luxury industry was not spared either. According to research by BCG-Altagamma, it is predicted that the industry is expected to face a 32.5 billion USD fall in the global sales. This pandemic could leave behind some permanent consumer behavioral changes, affecting the industry further, as customers have already resorted to sitting at homes, watching live streams of runway shows, shopping online and socializing via video calls.
Source: RBC Capital
- Telecom & Technology: Due to its huge population, China has many factories with cheap labor. Being the hardest hit by the epidemic, manufacturing businesses in China have come to a slow roll or have closed completely. Some of these production plants were being used by notable tech firms including Apple, Xiaomi, and Alibaba. With this tech giants’ production halted, the industry is sure to face massive cutbacks. Social distancing has postponed many technology conferences.
On the other hand, the epidemic has raised an urgency to connect people through technology and with huge numbers of people working from home, an upsurge has been witnessed in cloud services and workplace collaboration and communication tools.
Source: IHS Markit, 2019
- Sports: The professional Sports industry has been badly affected by the fallout of the Covid-19 pandemic. The Tokyo 2020 Olympics have been rescheduled for the safety of the contenders and viewers. Other sporting events have been canceled or postponed due to the avoidance of large gatherings. Many events that were carried out were also played in empty stadiums, resulting in a great loss and no ticket sales.
But while outdoor activities are suffering due to multiple countries exercising lockdown, the gaming and video streaming businesses are booming. Indoor activities have been a leisure option for many, but considering recent events, they are becoming more popular by the minute. Though social gathering events like the E3 have been canceled and the development of gaming gear has stagnated, people still turn to them for entertainment.
- Digital Media: The quarantine, whether self or forced, has been very fruitful for the digital media industry. With everyone spending the majority, if not all their time, at home, television and other digital forms of media are skyrocketing. The demand for video streaming will increase as people search for entertainment and news.
Social media platforms such as Facebook and Instagram usage will hike because the public will look for ways to connect with their friends and families. But advertising is also a major piece in the media backdrop. Due to a halt in production and sports programming ad revenue might see a significant drop in numbers.
- Airlines: The virus originated in China and spread through travel. This has driven the airline industry towards a huge loss. The airline industry is probably the most affected by the Covid-19 pandemic. Most of the airlines have grounded their flights. A predicted loss of $63 billion in passenger revenue is set hit the industry. Even without the quarantine and the grounded flights, people have become afraid of travelling internationally.
Source: Economic Times
- Payments: Covid-19 is a highly contagious virus, spreading through droplets. This has initiated a potential spike in cashless transactions (estimated to grow to over 1 trillion transactions by 2023). People will be scared to hand out cash in the fear of catching the virus. A surge in e-commerce will be observed. Society will prefer purchasing items without visiting a store and bringing home products potentially exposed to the virus. Delivery services will become more popular resulting in reduced human contact.
- Banks: Due to quarantine, banks have reduced their working hours, reduced workforce or shut down remote and other branches with low footfall. But customers still need access to their funds. This has caused a visible upsurge in digital banking. Banks will need to focus on expanding their online capabilities to serve their customers through the digital platform. The drop-in customers can result in savings account interest rate cuts like Goldman Sachs’ Marcus program which had a 2.15% interest rate which dropped to 1.75%.
- Fintech: Fintech was on a steady rise, with a 30% funding increase from 2018 to 2019. However, the coronavirus pandemic has caused an economic downfall. An extremely, but expectedly volatile stock market has caused a sudden decrease in investment leading to consumers forecasting a market crash and global recession. The recession will most likely affect SMBs the most since customers will reduce the purchasing of products. However, this will positively impact all lending businesses as the shortage in funds will have the SMBs looking for loans.
- Automobiles: 2020 was to be a great year for cars. The 2020 Geneva motor show to be held in early March was canceled. While the US and China shows have been postponed, global automotive markets have halted due to supply chain complications in China. Companies have issued work-from-home policies to support their employees. The industry is doing its best to keep from drowning, but the epidemic has caused a shutdown in the production of the biggest automobile companies out there.
- Healthcare: The healthcare industry is also disrupted by the spread of the pandemic, as even during lockdowns, health checkups are essential. Also, as the number of patients affected with coronavirus is on the rise, OPDs for general check-ups have closed their doors in numerous hospitals. Even more so, the cost of equipment for treatments is increasing. Though demands for hospitals are high, their services could be only marginally profitable. Biotech firms are facing their share of profits and losses, and drug suppliers are already facing the brunt of it.
Covid-19 pandemic has caused widespread panic across the globe. Most or all industries have been affected by the pandemic but protecting human life has taken precedence over everything else for the time being. Humans have proved time and time again, that even when markets crash, they can be rebuilt.
The important thing right now is to follow the precautionary measures including isolation, social distancing and hygiene directives in order arrest the spread of the contagion to flatten the curve.
When all of this is over and we reach a ‘new’ normal, sometime in the future, it will be interesting to watch how the markets and sectors will rebuild themselves in the post-Covid-19 world.
Dr. Sidhartha Dutta
SGA Digital Marketing Team