COVID19 has sucked out the cream of the economy. Multiple sectors that contributed to the growth and helped in achieving the targeted growth are now loitering. With such a poor condition of these sectors, the market players are getting it tough to sustain.
Certain sectors have a very high cost to exit. Those sectors are seeing an increase in bankruptcy declaration or pink slips to employees. On the other hand, few sectors have started to arrest the downfall by cutting down on the cost.
Is it that all the sectors are spiraling down?
Certain sectors have been highly benefitted during these trying times. Sectors like pharmaceutical and healthcare have shooting profits during the pandemic. Sectors like technology and the internet along with housing rentals have boomed due and might see a new surge in the upcoming times.
Airbnb and OYO might start out spreading into the office rental industry. This might be a new norm since the office buildings might slowly become redundant, especially for the IT sector.
Let us have a look at the 7 different sectors that got affected due to the pandemic:
1. Hotel industry:
The hotel industry can be bifurcated into two sections: Luxury and economic hotels. Both these kinds of hotels have been paralyzed, reporting negative growth rates and crippled revenue per available room. Though economic recoveries might help them in the long term, it would need a change in consumer behavior to drive-in numbers equivalent to the pre-COVID era. As per a recent study by McKinsey, the reported recovery might take until 2023, under the worst-case scenario.
2. Fast food industry:
This industry, just like its counter-part hotel industry, will be heavily impacted due to consumer behavior. The increased requirement for hygiene and the providence against street vendors will give a hard time for this industry to get back to its normal pace. Moreover, there might be an increased cost which will be reflected in the pricing of the food. This might put forward a challenge for retention; especially if the consumer finds a lower switching cost for a better experience.
3. Grooming industry:
Would you prefer to go to a barber if you got the news that there have been cases near his shop? With a new value of more than $20 billion, the grooming industry has seen a spiral in the downward direction due to COVID 19. It is important to note that Assuming that your city’s 0.005% of the population visit a particular grooming outlet daily, it would still be close to 5 to 8 people at a grooming outlet daily.
Most people visit the nearest grooming outlet, and this makes it even riskier. With the COVID19, the use of PPE kits in grooming outlets might be a reality. But, it would lead to an increased cost, thus raising the charges, exorbitantly.
4. Retail sector:
Showing negative growths in terms of revenue and PBIT, the retail sector might have to shift to online delivery completely. Or it might have to find out ways in order to make them operate 24 hours, else meeting the revenue loss will be improbable. Moreover, there is a very high exit cost related to the retail sector, which might lead to the bankruptcy declaration, mergers in the retail sector too.
5. Aviation sector:
With the curb on international travel and the ever-increasing fluctuation in crude oil, the aviation sector will come under tremendous pressure. With the flights taken at a long-term lease, the domino effect in terms of the revenue has been worrisome for the aviation sector. With an average of 56% reduction in flights globally and revenue loss of more than $250 BN, the airline sector is going through its worst.
This is one sector that has been the talk of the town. With the best of the insurers failing to live up to their promise, a sign of mistrust is visible amongst the users. With the increasing pay-out in terms of life insurance, there is a decrease in the renewal rate, especially due to the lack of cash. The increase in the claims will result in loss ratios of the sector, but there is an excellent growth opportunity. In terms of awareness, COVID19 has been a blessing in disguise for this sector. Though, there will be issues regarding the solvency of the industry players too. An increase of credit risk due to the increase of credit spread, reduction in the asset value coupled with additional capital value pressure might see impacts in the future.
7. Cloud computing:
This is another sector that will see positive growth due to COVID19. An increase of WFH might lead to shared spaces like AWS, Google Cloud, and Azure coming to rescue for the corporate world. What is interesting to note is that, since there is a higher initial investment on this domain, businesses might not witness recidivation to old norms, once cloud computing is adapted.
Not every business has been troubled by the COVID19. The ones which promote light life with enhanced flexibility have seen greater revenue generation during the pandemic.