Covid-19 has dealt a huge blow to the global economy. Social distancing, self-isolation and travel restrictions have led to a reduced workforce across all industries. Economic damage caused by the pandemic is largely driven by a fall in demand – declining consumers to purchase the goods and services available in the global economy[1]. Businesses across industries were being challenged.
Impacted Industries
Figure 1 explains how these industries were impacted based on its profitability level and liquidity impact. It can be seen that Tourism & Travel Industry was the most impacted from both aspects while Pharma & Medtech was the least.
Unlike past pandemic crisis, Covid-19 resulted on dominant effect due to the travel restrictions and border closures revealing on large common shocks (globalization effect) on the domestic tourism industry[2]. It had long-lasting negative effects on the tourism industry and economy whereby a revival of the tourism industry worldwide will need cooperation rather than competition to minimize the costs of Covid-19.
Source: https://www.rolandberger.com/en/Insights/Publications/This-crisis-is-different-Comparing-the-coronavirus-crisis-with-the-financial.html
Figure 2 and 3 give comparisons between the Great Financial Crisis in 2008 vs Covid-19 Pandemic, where it hit many industries harder and most industries will take longer to recover from the losses they sustained. The pandemic exerted a more radical and abrupt effect. It had put the real economy out of action immediately and completely – evaporating supply and demand simultaneously.
New Consumer Behaviour
Most consumers were deeply concerned and anxious while facing COVID-19 economic disaster which resulted on affecting their attitudes, behaviours, and purchasing habits – and this will sustain even in post-pandemic.
Figure 4 and 5 explain on how buying patterns have dramatically shifted as people became more conscious in buying and embraced digital commerce.
Source: Accenture COVID-19 Consumer Pulse Research, conducted 2nd-8th June 2020.
https://www.accenture.com/id-en/insights/retail/coronavirus-consumer-habits
Omnichannel options have seen a boost due to the increase use of its services such as home delivery, chat features and virtual consultations, and consumers are highly likely to continue using these in the future[3]. Figure 6 shows a data that suggests a huge increase of 169% in ecommerce purchases from new or long frequency users, post outbreak.
Bouncing Back
The pandemic has taught companies across industries to be more agile, flexible and fast. These characteristics can only be achieved with the adoption of digital transformation. A study called, ‘The Next Normal: The Recovering Will Be Digital’[4] highlighted five (5) elements of digital transformation, such as:
- Digital speed. Companies must be able to operate faster, from reviewing strategies to allocating resources. For example, reallocating talent and capital four times more quickly than the peers.
- Ready to reinvent. While businesses need to maintain the profitable elements of their business, business as usual is a dangerous posture. Companies must invest as much in upgrading the core of their business as they are in innovation, often by harnessing technology.
- All in. It’s not only about making decisions faster; the decisions must be bolder. Two of the most important areas where this kind of commitment shines through are major acquisitions and capital bets.
- Data-driven decisions. The road to recovery is paved with data. Data is providing the fuel to power better and faster decisions. High-performing organizations are three times more likely than others to say their data and analytics initiatives have contributed at least 20 percent to EBIT (from 2016–19).
- Customer followers. Being ‘customer centric’ is well established. But competing pressures and priorities mean that the customer can often be sidelined. Top companies that sustain a comprehensive focus on the customer (in addition to operational and IT improvements) can generate economic gains ranging from 20 to 50 percent of the cost base.
Digital Transformation is the Key
When it comes to digital transformation, companies need to embrace it as their vision – by having some guideposts for what the vision looks like and to grow that vision over time. This should be aligned with several efforts: investing in human resources, committing transparency, measuring risks, willingly open towards collaboration, and pursuing business resilience. Finally, companies should take a more holistic and expansive approach in adopting transformation in order to see significant and sustainable improvement in business towards the years ahead in the post-pandemic era.
[1] Rodriguez et al. (2020) Impact of the Coronavirus Pandemic on the Global Economy – Statistics & Facts, Retrieved from https://www.statista.com/topics/6139/covid-19-impact-on-the-global-economy/#dossierSummary
[2] Skare et al. (2020) Impact of COVID-19 on the Travel and Tourism Industry , Retrieved from https://www.sciencedirect.com/science/article/pii/S0040162520312956
[3]Accenture Research (2020) COVID-19: 10 Consumer Trends Impacting CPGs, Retrieved from https://www.accenture.com/id-en/insights/consumer-goods-services/coronavirus-consumer-trends-impacting-cpgs
[4] McKinsey Digital Report (2020) How Six Companies Are Using Technology and Data to Transform themselves , Retrieved from https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/how-six-companies-are-using-technology-and-data-to-transform-themselves
