Although previous virus outbreaks have disrupted the world, Covid-19 is unprecedented, in a short space of time completely rearranging the focus of government, rupturing national economies, hindering world trade and mercilessly destroying businesses.
Once the pandemic is under control, however, it is likely that it will hasten a consumer revolution that had already begun. Some commentators say the virus is attacking the very foundations of capitalism. Certainly, it is highlighting both the shortcomings in the way economies have organized societies and the way we govern ourselves. Those involved in any economic activity such as manufacturing, supply chain logistics, retail, service industries and entertainment are starting to suffer deeply, both emotionally and financially. Even religion is getting into the act, with pastors broadcasting their sermons online from empty churches.
While the virus has brought social distancing, self-isolation, lockdowns, restricted travel, closed borders and other restrictions, it is also intensifying the transition to cashless purchasing, e-commerce, online shopping, food home deliveries, teleconferencing, video streaming entertainment platforms and social media taking up so much attention.
Specialty retail is the first part of the retail sector to be really hit. Australia-based Tigerlily swimwear just collapsed into administration, with many sure to follow. Taxis in Kuala Lumpur, Manila and many other cities across the region are receiving no income. Social distancing regulations are closing theaters and other entertainment venues, with Hollywood and Bollywood studios postponing their latest blockbuster releases. Football, hockey, basketball, golf, horse racing, major city marathons, and the Olympics are cancelled.
Universities have cancelled classes, quickly assembling online teaching methods. Many private universities with their massive infrastructure capitalizations are in danger of financially collapsing. Ironically private hospitals in Malaysia, forced to cancel elective surgeries, have empty rooms generating zero income, putting them under financial stress.
Some of the change that has occurred will quickly return to normal. Specialty retail was quick to revive after the SARS scare over a decade ago. Many events have just been responses to the crisis. However, some changes are here to stay, and have led to new sets of consumer habits. This is going to become the economic environment where new business models, new ways of doing things, often killing off long established business models in the process.
Following the Covid-19 crisis will be a heightened period of evolutionary innovation that will reshape the world business environment. This is going to occur across a number of industries, requiring businesses to redeploy around new needs.
These needs may have always been submerged but are coming out under the stress of the crisis. One of the most profound changes is likely to be in so-called telemedicine. If anything, the coronavirus scare has taught patients that arguably the most dangerous place in their environment is a hospital. As the crisis has progressed, those with common ailments have begun to switch their appointments to their cellphone cameras.
For example, students today are much more demanding of online lectures and materials than students before them. Being in one particular location is great for socialization, but isn’t really important for learning content. While before online learning was the province of a handful of often-unsavory internet universities, necessity has suddenly pushed learning online.
Universities have invested heavily to provide locations for students to congregate and students have borrowed heavily to attend. Both universities and students are financially strained by this business model. The crisis has demonstrated that online teaching works. Its much more cost effective. Expect the higher education business model to drastically change and challenge the traditional university concept. Companies like China’s Kuaishou, a social video platform are going to grow exponentially.
Grab, Uber Eats, and Panda Foods deliveries have been a convenience now for several years. Covid-19 has turned them into a necessity. Likewise, restaurants in many locations have been forbidden to have dine-in customers, causing them to move to takeout. The concept of virtual restaurants has been born, and non-dine-in restaurants are another potential growth industry, when coupled with food delivery industry in future.
SARS, which struck China and its immediate neighbors in 2002-2004, enabled Ali Baba to connect manufacturers from China with customers around the world who didn’t want to travel, very conveniently and made Jack Ma one of the world’s richest men. Online purchasing in all forms is set to grow. Amazon, already a behemoth was growing exponentially in this crisis until the pandemic caused it to cut back for the safety of its workers, and it could soon be the world’s largest company. Others are set to follow.
Video online streaming has been with us since YouTube. The crisis is giving Netflix financial viability. With the closing down of theatres around the world, Hollywood studios have postponed blockbuster releases. We may soon see studio streaming sites becoming the launch vehicle for future new releases.
With concerns that banknotes are a potential carrier of Covid-19, cashless payment systems are ripe to take hold within the ASEAN region, just as they have in China and to a lesser extent Europe, the Unite States and Australia. It won’t be the convenience that is winning consumers, but rather the health aspects that created this need.
Its time for business owners to reimagine their businesses within the new environment. There is a need to rapidly innovate to survive. New consumption patterns need to be spotted and exploited with new business models. This may be simple, where Airbnbs are promoted as safe, clean and virus-free environments. This may mean redeploying sales through completely different channels as Master Kong, a leading instant noodle and Beveridge manufacturer did, in moving away from large retailers towards online to offline e-commerce and small store networks.
This is likely to mean accelerating the abandonment of fixed retail locations in favor of online marketing, using retail staff to push products through social media like Wechat, as Cosmo Lady, a large Chinese underwear and lingerie manufacture did.
Private hospitals will have to look at new market segments like the uninsured and deploy innovate products to attract these clients. Maybe out-service will become mobile through shopping centers with budget priced consultations.
With massive temporary unemployment in lockdown, those with specific industry experience and knowledge will be thinking of new ideas of how to tap into changing consumer habits. Lockdowns are now serving as incubators for new ideas that will no doubt emerge as new businesses after the crisis has passed. There will be no going back.
Originally published in the Asia Sentinel