There are over 3.25 million businesses in the U.S. across all different industries. How is the global pandemic impacting them?
Business news shows the effects of COVID-19 on consumer behavior and various industries are not as straightforward as you might think. While most industries are suffering considerable losses, others — like the grocery store and home entertainment industries — are doing better than ever.
Similarly, according to IBIS World, the Consumer Confidence Index, a measure of shoppers’ confidence in their current economic standing, continues to drop. By the end of 2020, projections show it may drop by as much as 25.1%. Ironically, while consumers may not feel particularly confident about their finances, their spending habits do not reflect this lack of confidence. In fact, spending is up 1.8% so far this year.
These figures suggest that the economic effects of COVID-19 are unpredictable and may vary considerably by industry. Let’s take a closer look at the outcomes for specific industries.
Industries That Are Hurting
What industries are hurting the most?
Small businesses, brick-and-mortar stores and retailers, bars and restaurants. According to the National Restaurant Association, restaurants that are closed, open only for delivery or takeout, or even serving dine-in customers at limited capacity may lose up to $225 billion in profits by June. Plus, managers may be tasked with the unfortunate reality of cutting as many as seven million jobs, also by June. The outlook for small retailers and brick-and-mortar stores is similarly bleak. Clothing purchases, for example, are down 40 to 50%, according to the Visual Capitalist.
Assisted Living Businesses And Long-Term Care. It is well-known that assisted living centers and nursing homes are among the businesses most vulnerable to the spread of COVID-19. While these outbreaks are far from desirable, they have served the important purpose of highlighting what needs to change. Moving forward, these facilities are doing what they can do address problem areas. COVID-19 is likely to inspire greater sanitation and cleanliness standards. The next few months will see fewer communal or group activities, and a shift to taking full advantage of technology to stay in touch with family and friends and to socialize. According to Senior Housing News, the pandemic may inspire the creation of more pocket neighborhood-based facilities. In other words, instead of nursing homes or institutions that house tens — or even hundreds — of seniors, newer facilities may favor smaller, intimate group settings.
Airlines and other travel-related industries. Even with “stay at home” or “safer at home” orders being relaxed in some states, the prevailing recommendation is to avoid unnecessary travel. Overwhelmingly, Americans are not taking vacations or traveling out of state unless it is absolutely necessary. Projections by Oxford Economist show that revenue was down 81% in April and that percentage will remain fairly constant until the end of May. Although estimates show a slight improvement in June and July, 60 and 55% decreases in airline revenue remain highly likely. In 2020, airlines may lose billions in profits. American Airlines has temporarily banned international flights due to a lack of demand. Recently, Boeing CEO Dave Calhoun predicted that a major U.S. airline will fold this year and flights will remain below 25% of their normal capacity well into September. As travel restrictions are lifted, CNBC postulates that travelers are likely to start out conservatively, by taking road trips or weekend trips to nearby destinations. Americans will continue to avoid flying whenever possible. Travelers are also likely to rent out vacation homes than book accommodations at a busy resort or hotel. There is likely to be a slight exception among “flying from die-hard bargain seekers,” CNBC continues. The bump from bargain seekers will not be significant enough — not nearly significant enough — to make up for losses, however.
Leisure. Leisure-related venues, like casinos and stadiums, will continue to take a hit for the foreseeable future. Even as sports resume, it is likely that they will take place without a live audience.
The legal sector. While legal proceedings will always be necessary, the scope of practice is changing for now. Many legal institutions, like courthouses and the department of motor vehicles (DMV), are temporarily closed. Without the ability to closely work with these institutions, delays are inevitable. Certain areas of law may see less traffic. For example, a criminal defense attorney may not defend as many clients in drunk driving or impaired driving cases because fewer people are driving and fewer bars are open and serving drinks to customers. Businesses are likely to seek out help from a business law firm, on the other hand, as long as businesses have tricky day-to-day challenges, like financing, sales, and mergers. Depending on your state and current level of restrictions, lawyers may conduct business over-the-phone or through video conferencing. Resources will be distributed via email rather than in-person.
An Uncertain Future
While COVID-19 raises many uncertainties, business news demonstrates that some industries’ futures are clearer than others. Some industries have understandably experienced some decline, but their services remain in demand. Others are experiencing an uptick in some areas with losses in others. Here are some examples.
Essential Maintenance Around The Home
Even during the worst of COVID-19, some home maintenance is absolutely necessary. Landlords may even make exceptions for emergency requests, like major plumbing issues or broken air conditioning units. As such, plumbing companies are taking due precautions, like maintaining social distancing and wearing gloves and masks, but still making regular house calls.
Similarly, air conditioning is largely deemed necessary — especially in areas that are particularly hot, stuffy, and humid. Tenants who report air conditioning troubles will likely get a visit from HVAC companies. Homeowners with major air conditioning issues are not likely to put off repairs until the end of the pandemic, especially without concrete answers concerning when that might be.
As states begin to slowly reopen their economies, non-emergency maintenance is likely to pick back up again. For example, roofing businesses may begin conducting inspections, repairing leaks, and replacing torn, missing, or blistering shingles. Pay attention to local business news to get an idea of when to expect roofing companies to resume repairs and maintenance in your area. Most of these activities can be resumed while safely following social distancing rules.
Use a common-sense approach about businesses like pest control services. Many have continued to work during shutdowns or have recently resumed their work. Consumers are likely to resume using these services based on the urgency of their needs. Apartment complexes are likely to resume using pest control companies as restrictions are lifted but may have temporarily suspended them during “stay at home” orders.
Insurance companies are thriving or stagnating, depending on their area of practice. The latest business news in the insurance industry shows what you would expect: consumers are purchasing health insurance plans, life insurance plans, and business insurance plans at higher rates than ever before. The insurance industry is doing whatever it can to meet this increased demand and sales are easily climbing.
While the pandemic may increase sales at your local business insurance agency, it is having the opposite effect on the auto insurance industry. Many auto insurance companies extended temporary relief to customers who are staying at home and staying off the roads. Others adjusted premiums to match the lower risk of auto accidents and auto accident-related injuries and fatalities.
According to an article in Forbes and other recent business news reports, auto insurance companies are extending grace periods for late-payments and, in many cases, waiving late fees altogether. Companies are also encouraging customers to use this time to reassess their needs and take advantage of discounts. Drivers may be eligible for discounts for safe driving, safety features, low monthly or annual mileage, new cars, or having multiple cars insured with the same carrier.
An Unlikely Time To Prosper
Of course, while many industries are faltering right now and trying to minimize losses, there are a few industries that are profiting from the current state of affairs. The grocery store industry, alcohol industry, and home entertainment industries are experiencing unprecedented growth. Here is a look at emerging trends.
Off-the-charts grocery demand. Grocery stores are not even close to hurting amid the COVID-19 pandemic. Famously, toilet paper and hand sanitizer disappeared from shelves nationwide within just a few days of reports about the global pandemic. “In the week ending March 14, toilet paper saw a 212% increase in demand in the U.S. compared with the same weeklong period last year,” according to ABC News and Neilsen data. In addition to increased demand for toilet paper, hand sanitizer, and pantry staples like canned tuna and dried beans, grocery stores, and retailers are also seeing a skyrocketing demand for curbside pickup and grocery delivery services. In a survey conducted the week of March 13, 33% of consumers say they purchased food from the grocery store online the past week. Among those who purchased groceries online that week, 41% described themselves as “first-time online food and grocery shoppers,” according to Forbes.
Alcohol. Alcohol sales were up 52% at the end of March, Neilsen’s data reveals. As with groceries, the demand for online alcohol sales and delivery services is through the roof. “Online alcoholic beverage sales increased 387% for the week ending April 11,” CNN reports.
At-home entertainment. Consumers are increasingly turning to streaming services and at-home entertainment options. Netflix, Amazon Prime, and Hulu have all experienced a significant uptick in subscriptions and users. Paid Zoom subscriptions and interactive apps and services, like the famous workout app Peloton, are experiencing a spike in services and sales during this time.
Remote Work Enjoys Its Moment
In other business news, COVID-19 forced many companies to make the shift to remote work. Making that transition spur of the moment was a costly venture for some. With those with full or partial work-from-home policies already in place, the transition was much smoother and much less expensive.
Online-based industries and businesses, like web design companies, were well-equipped to adjust to the change. Other industries, on the other hand, incurred extra expenses for home systems, employee laptops, and other necessary equipment — and they incurred these costs all at once.
Even so, most industries can ultimately cut costs by allowing remote work. According to Fast Company, renting office space eats up 10 to 15% of a business’s profits. By switching to fully remote work, companies can save on these costs. For those who (eventually) want to implement a partial work-from-home policy, using less electricity and resources during the day still significantly curbs costs, according to recent business news.
A staggering 75% of business owners and leaders expect COVID-19 to significantly impact day-to-day operations, PwC writes. While some industries are likely to feel these effects more than others, there are things business owners can do across industry lines to help keep their businesses afloat. Here are a few things to keep in mind:
Stay on top of current business news and marketing trends. Forbes suggests that it is time to stay as current as possible. Tailor new marketing campaigns to recent events and recent concerns. Rebrand if necessary.
Use the power of comparison. Identify businesses in your industry that are doing particularly well — or even flourishing — in spite of the current circumstances. Take notes. See if you can adopt any of their strategies or adapt any of their strategies for your business.
Think about the big picture. The amount of business news surrounding COVID-19 or business advice about the pandemic can be overwhelming. Make sure to consider the possible long-term effects of the pandemic, not just what is happening in the next few months or weeks. Your business will do best if you can reasonably anticipate how things might change — if they will change — for good in your industry after the pandemic is over and a sense of normality begins to return.
Recent business news is like any other news right now: brimming with uncertainty. While we do not know exactly how the pandemic will play out and how exactly businesses will operate after, we do know what industries are faring better than others and what small steps businesses owners can take to protect the future of their company.