COVID – 19 Impacting Industries.

Prof. S. Thilak, Assistant Professor, SIMS

Consumer spending is one of the most important energetic forces for global economic growth but

this pandemic has changed our daily life as lockdown have restricted us to shopping, sky travel etc.  The Consumers are struggling with uncertainty, their buying behavior has become more unreliable and they have reduced spending on all non-essential products and services. Indian consumers are displaying higher levels of optimism, with more households planning to increase use that is also evident in China, Indonesia, and Nigeria. Meanwhile, American consumers are still more optimistic about the future than Europeans. 37% of Americans believe that the country will recover in 2 or 3 months, with optimism levels at the highest for people who earn over $100K. Globally consumers are continuing to spend more on necessities such as groceries and household supplies etc.

Categories showing a disturbing turn down include restaurants and out-of-home entertainment. These are two particularly hard-hit industries worth noting that are showing declines across every category and country. The unavoidable decline in the travel and transportation industry is a reflection of mass social isolation levels and tightening travel restrictions. The U.S. travel industry can expect to see an average decline in revenue of 81% during April and May. Throughout 2020, losses equate to roughly around $519 billion translating to a broader $1.2 trillion contraction in total economic impact. According to the World Travel and Tourism Council, a staggering 50 million jobs are at risk in the industry, with 30 million of those jobs belonging to employees in Asia. Considering the travel and tourism industry accounts for 10.4% of global GDP, a slow recovery could have serious ramifications. Apparel is experiencing a similarly worrying slowdown, with consumption 40-50% lower in China compared to pre-pandemic levels. Both online and offline sales for businesses across the world are also taking a major hit. As consumers hold back on their spending, clothing brands of all shapes and sizes are forced to scale back production, and reimaging their position themselves.

If this situation still continues many industries like Travel Industries, Large Hotel Industries, Apparels, Non-food child products, Household supplies, Personal Care products, Skin Care and Make-up, Snacks, Tobacco products, Alcohol, Restaurants, Home Entertainment, Outside Entertainment, Books and prints, Consumer electronics, Pet care, Fitness and wellness, personal care, Vehicle purchase, Short-term home rentals, Cruises, Adventures and Tours, International and Domestic Flights, Foot wear, Apparel, Jeweler, Accessories all this will decline and it would be very difficult to regain these industries to support the global economy.

But as each country moves along the COVID-19 curve to see a glimmer of increasing optimism levels, which in turn is linked to higher spending.

 Economic cost of the corona-virus pandemic have meant consumers are less inclined to spend more, with many expecting their household income to continue to fall in the coming months. Time spent at home has caused us to spend more on home entertainment and groceries. Consumer pinch pennies their reduced spending could decimate many industries. On the other hand a few will benefits from increased spending in certain categories. 30-50% of consumers expect their household income to continue to fall in April.

Beyond impacting some of the factors that determine consumer spend such as consumer confidence, unemployment levels, or the cost of living. The COVID-19 pandemic has also severely altered the consumers choose to spend their hard-earned cash. The data from a global survey by McKinsey & Company that analyzes the consumers are control in their spending, causing confusion across every industry imaginable. While some industries are in a well again conditions due to the impact of this storm, others could struggle to survive in the market. Consumers struggle with uncertainty, their buying behavior becomes more unreliable and they have reduced spending on all non-essential products and services. But as each country moves along the COVID-19 curve to see a glimmer of increasing optimism levels, which in turn is linked to higher spending. India’s consumers are displaying higher levels of optimism, with more households planning to increase use that is also evident in China, Indonesia, and Nigeria. Meanwhile, American consumers are still more optimistic about the future than Europeans. 37% of Americans believe the country will recover in 2 or 3 months, with optimism levels at the highest for people who earn over $100K.

Globally consumers continue to spend and in some cases, spend more compared to pre-pandemic levels on some necessities such as groceries and household supplies. Due to changes in media consumption habits, consumers in almost all countries surveyed say, they will increase their spend on at-home entertainment. This is true for Korea, a country that already boasts a massive gaming culture. As restrictions in China lift, many categories such as gas, health care, and pet-care services appear to be bouncing back, this could be a positive sign for other countries following a similar course. But while consumers speak up their spending on the things they need, they also anticipate spending less in other categories.

Categories showing a disturbing turn down include restaurants and out-of-home entertainment. There are two particularly hard-hit industries worth noting that are showing declines across every category and country. The unavoidable decline in the travel and transportation industry is a reflection of mass social isolation levels and tightening travel restrictions. The U.S. travel industry can expect to see an average decline in revenue of 81% for April and May. Throughout 2020, losses will equate to roughly $519 billion translating to a broader $1.2 trillion contraction in total economic impact. According to the World Travel and Tourism Council, a staggering 50 million jobs are at risk in the industry, with 30 million of those jobs belonging to employees in Asia. Considering the travel and tourism industry accounts for 10.4% of global GDP, a slow recovery could have serious ramifications. Apparel is experiencing a similarly worrying slowdown, with consumption 40-50% lower in China compared to pre-pandemic levels. Both online and offline sales for businesses the world over are also taking a major hit. As consumers hold back on their spending, clothing brands of all shapes and sizes are forced to scale back production, and reimaging their position themselves.

If this situation still continues happen many industries like Travel industries, Large Hotel industries, Apparels, Non-food child products, Household supplies, Personal Care products, Skin care and Make-up, Snacks, Tobacco products, Alcohol, Restaurants, Home Entertainment, Outside Entertainment, Books and prints, Consumer electronics, Pet care, Fitness and wellness, personal care, Vehicle purchase, Short-term home rentals, Cruises, Adventures and Tours, International and Domestic Flights, Foot wear, Apparel, Jeweler, Accessories all this will decline and it would be very difficult to regain these industries to support the global economy.