While all industries have been affected by the Covid-19 pandemic, some of them have been hit hardest. Find out three of the most affected and how they should reinvent themselves to mitigate the economic effects on their businesses.
Covid-19 is the widely-known name given to the novel virus SARS-CoV-2, a virus not previously known to infect humans. By 1st April, there were over 850,000 cases globally (and still growing). There is neither treatment nor vaccine for the disease, although clinical trials are ongoing. The only prevention is for people to limit exposure by improving their hygiene and limiting contact with others through social distancing.
To combat the spread of Coronavirus, many countries have instituted full or partial lockdowns to confine citizens to their homes, exceptions (health workers, and those that give/require essential services). Globally, companies have rolled out compulsory work-from-home directives, for those with the capacity to do so.
Unfortunately, the effects of this necessary quarantine are already being felt in many industries. It is difficult to predict the full impact of the pandemic on the global economy but if current trends are anything to go by, we can expect several industries to be most severely affected.
Here, we postulate how these industries may apply software tools and digitization to mitigate the effects on their businesses.
Air transportation
Air transportation has been, so far, the most affected industry, and it will continue to take a hit as countries restrict both international and domestic flights. The pain is evident to carriers: revenues are tanking, thanks to the travel restrictions and the fear of infections without social distancing on planes. Even for countries that have not restricted flights, the rules of social distancing make flights impractical to run and not profitable. Therefore most carriers have grounded their fleets.
The IATA estimated the possible global hit to $113B by the end of the crisis – four times higher than their February estimate. CAPA Center for Aviation made even grimmer predictions: many airline carriers will go bankrupt by May 2020 without government intervention.
Many carriers have sent the majority of their workers on forced leave, and many are bracing for possible layoffs. For example, Norwegian Airlines laid off 90 percent of its workers. The skeleton staff left are mostly handling cargo planes to supply essential goods.
Those carriers that survive the COVID-19 crisis should prepare themselves to embrace extraordinary measures to help their businesses recover. This includes embracing data and analytics to find out what travelers’ new habits are. In addition, aggressive marketing campaigns and reward schemes can improve uptake, although whether former numbers will be regained remains to be seen.
Hospitality and leisure
The hotel and hospitality industry is a major earner for countries worldwide, given its symbiotic relationship with the tourism industry. In the US, for example, it contributes over 2.8 percent of total gross GDP and employs over 1.6 million workers. Globally, about 10 percent of workers and employed directly or indirectly by the tourism sector.
Still, because of the challenges of social proximity, there has been a sharp decline in the demand for hotel and restaurant services. Hotels and restaurants have laid off dozens of workers, and many more are preparing to send workers home – either as layoffs or on voluntary unpaid leave. Even hotel workers in major tourist destinations will not be spared, simply because of the limitations on movement.
Restaurants may stand a chance to survive these harsh times since their kitchens are allowed to stay open for deliveries only. However, countries that are in total lockdown have not left restaurants much choice but to close down. Billions will be lost in wages by the most vulnerable members of the food service industry – many of whom earn minimum wage at hourly rates and work for tips.
To survive the pandemic, restaurants and full-service hotels will need decisive measures. A robust online ordering platform with discounts gives incentives for people to order from home. Your software platform should prioritize user experience and provide opportunities for up-sales.
Retail
The Covid-19 outbreak has had an unprecedented effect on the retail industry – not even the 9/11 terror attack had a similar impact on business. As the claws of the disease continue to spread, stores have had to change their operating hours, limit the number of customers in the store and suffer hiccups in the supply chain because suppliers are short-staffed thanks to the quarantine.
Even major retailers in sporting goods, tech, and fashion had to close their shops for a while to limit risks to consumers. Some retailers have declared that they will pay workers some wages in the short term. But many other retailers won’t or simply can’t offer such subsidies because much of their revenue is already going down the drain.
There is some reprieve for retailers providing essential services – groceries and wholesale stores like Walmart and Costco. Being essential, many of them can stay open and hence keep employees on the payroll – at no small risk to their own health.
This is the time to improve online shopping platforms and work on empowering delivery systems to limit the number of people visiting the store. Many consumers would welcome the opportunity to make their orders online and have them carried to them, even at a small fee.
For those businesses without the manpower to deploy their own e-commerce system, partnering with a registered logistics handler might offer the much-needed lifeline to survive this unprecedented season.
Taking into account this scenario, retail leaders– no matter the size of the company – should think about improving their own systems in order to ensure their business can keep running no matter what the situation is: maintaining enough inventory to satisfy the online high demand, protecting the supply chain and adapting it to the new virtual reality, and satisfying customers on time, just as they were present in the physical store, among others. This might be the perfect time to reevaluate if your software systems are capable of supporting this kind of crisis.
Final thoughts
Virtually all industries will take some hit from the COVID-19 pandemic, simply because of the interdependent nature of industries and the people factor behind the crisis. Tourism and leisure – gambling, sporting activities, etc. – have already taken a severe hit. The tech industry hasn’t been spared either – many of the major tech players have their manufacturing arms in China, where everything was in complete lockdown for over two months, and countries like India, where they are facing technological issues related to supporting people staying at home for work
The full impact of the pandemic on the global economy is anyone’s guess, but we are already on a downward path similar to the global recession of 2008/2009. The only way we can all get through this is to hunker down and aggressively find ways to make the digital space work for our businesses. This is the time to build robust software platforms that will outlive the crisis, and provide your customers with yet another way to get in touch with your business, even post-COVID-19.
That being said, if you can’t do anything else, you can stay home, stay safe, and stay positive.
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