It’s fair to say the COVID-19 pandemic really threw a wrench into the works.
Besides halting globalisation in its tracks and endangering the lives of billions, the pandemic has also permeated into almost every facet of our lives and our livelihoods.
Australian business owners are facing a 69% reduction in demand for goods and services, 72% reduction in cashflow, 41% reduction in the ability to pay their expenses and a 24% reduction in access to loans, credits, or liquid funds (Australian Bureau of Statistics).
And while no industry has remained unscathed, IBIS has identified a lucky few who’s industry performance is expected to bounce back and exceed expectations in the remainder of 2020 as restrictions begin to ease.
With the sudden closure of Australia’s hospitality industry and the barrage of hoarding in our grocery stores, there has been a fundamental shift in how we feed ourselves.
Online Grocery Stores
Supermarkets are benefiting from both a COVID and post-COVID economy as more people have cut frivolous spending and chosen to cook at home instead. Online grocers especially are seeing huge spikes in demand. The industry performance is expected to increase by 56% as people continue to opt to have their produce brought to them rather than shop in-store.
These delivery services also encompass UberEats and Deliveroo which are surging as people continue to order takeaway. They provide a significant lifeline to restaurants who have pivoted to a takeout menu and embraced the extra stream of revenue food delivery companies can supply. As more restaurants open up, it’s expected to unilaterally drive up the revenue for online delivery and the industry performance is expected to increase into 2021 and beyond.
One positive thing to note is that as grocery stores were stripped bare during the height of the pandemic, Australians could take comfort in the amount of homegrown food available to them. As the conversation now shifts to creating supply chains and putting a stoppage on exported resources, we can rest assured that more than 90% of fresh produce sold in supermarkets is homegrown.
While Australia Post is still dealing with massive delays, a spike in online shopping has seen a flourishing trade of third party parcel couriers as the demand for faster delivery increases. Data from RetailWire shows that, on average, people are willing to wait 4.1 days for their package to be delivered. And since logistics was deemed an essential service, courier companies are projecting an industry revenue increase of 2.8% over the next five years.
Retail as a whole has taken a large hit during the pandemic, but there are a few areas that are superseding industry performance. Notably, books and electronic entertainment as parents struggle to adapt to working from home with their children.
Paper and sanitary Products
We all vividly remember toilet-paper gate, but no more so than the industries that produce pulp-based products like paper towels, napkins, and toilet paper. With most main players switching to a 24/7 round the clock production schedule to meet demand, the industry performance has seen a 250% jump in manufacturing.
Home Hardware Supplies
As everyone transitioned to work from home environments, workplace productivity might have slipped, but home improvements have been on the rise. With more time dedicated to DIY projects, we’ve seen a large spike in sales for Bunnings and other home improvement industries. Consumers are benefiting from low-interest rates on their renovation loans, however, on the retail side, we’re again seeing a glaring disparity between our resource demand and the strength of our supply chains. Overall though, this industry is projected to rise 0.5% annually over the next five years.
Alternative Commerce Payments
How we’re choosing to pay for our goods is also shifting. Alternative payments like PayPal and Apple Pay, or delayed payments like AfterPay are on the rise. This increase is due to consumers moving away from traditional credit cards and bolstered by the steady incline of online shopping. While we are seeing less frivolous spending from cost-conscious Australians, we can still expect online purchases of essential products to remain steady.
We know major players like Amazon are thriving in a COVID-19 environment, both for their e-commerce sales, as well as their data and web services, and it’s no surprise that any company working in telecommunications has managed to stay afloat, yet COVID-19 has helped to accelerate other areas of the tech space that may have taken much longer to develop.
Considering remote work has been increasing 44% over the last five years already, COVID-19 has forced the hand of many business owners who quickly realised, it was digitise or die.
Companies now rely heavily on video conferencing, chat, or collaboration services as well as CRMs and other connectivity software. Leveraging all different types of software has become a bridge over troubled waters for business owners. And considering we still don’t know how much this will disrupt how we work in the long term, technology usage is not about to decline in demand or value.
Other technological advances like delivery drones or telemedical services are now embedding themselves into our societies and we’ve fast-tracked the adoption of artificial intelligence to help alleviate workplace burden. The once futuristic concept of Robotic Process Automation is now being adopted by big-budget firms as well as mum and pop shops across every sector. In fact, this study suggests 85% of customer interactions will be handled by robots by the end of 2020.
As Australia steers towards normal, the government is slowly easing restrictions. Commercial businesses may be jumping for joy, but not all of them will be happy with our return to “business as kind of normal.” Almost 40% of hospitality businesses say they still can’t access enough credit, while 70% said they couldn’t pay their bills. Even if they can re-open, strict social distancing measures will be put into place, accounting for a 15.3% decline in revenue for the rest of the year.
Travel and tourism are expected to slowly begin to recover as the more than 1-million Australians who travel overseas per month will now have to look locally instead. Although this could be hampered by a rise in fare prices. The country’s second-biggest airline, Virgin Australia has entered voluntary admission, potentially creating a Qantas-run monopoly just as domestic flights are beginning to ramp up.
Finally, a number of sports are expected to resume by July 2020. Much to the delight of many Australian couch-dwellers who haven’t been able to get outsides themselves. AFL, NRL and the A-League are all slated to play behind closed doors in empty stadiums.
Even with the restrictions, this is supposed to help jumpstart gambling industry performance as sports betting will once again be on the cards. COVID-19 has had a significant effect on the sporting industry internationally, so it will be interesting to see how Australian sporting leagues will weather this downturn with major sponsors on the brink.
So where does that leave your business?
There is a lot of doom and gloom floating around, but there is also a tentative light at the end of the tunnel. Businesses have begun reopening and industries are slowly beginning to turn the wheels of the economy once again.
No one knows how Australia will bounce back, but the main focus of the government will be on maintaining jobs and addressing major national concerns the pandemic brought to light.
As public discourse turns to homemade manufacturing, domestic food production, and halting the chain of exported goods, it’s worth considering how you can align your business model to these national interests. In this transitional period, we encourage you to stay abreast of these budding industries that are opening their doors first. Maybe you’re in one, maybe you're not.
Regardless, ask yourself how these emerging trends will affect your current business model. Do you have customers or suppliers somewhere in this chain? What can you do to make yourself invaluable to these industries as they test out our shaky economy?
Surviving COVID-19 and its fallout will require business pivots and a reliance on business and government relationships in order to build resilient businesses to weather the storm. Lean into your strengths and know when it’s time to make the changes necessary to survive.
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