By Dr Eugene Brink
It is certain that the economic impact of the Covid-19 pandemic will be far-reaching and intense for some time to come.
No sector will be left unscathed, but it is also a fact that some sectors will flourish whilst others suffer and even become extinct as the structure and exigencies of the economy changes. In short, there will be winners and losers in this crisis while some could go either way depending on how they adapt during the pandemic and its aftermath.
Employers and employees alike should be cognisant of the disappearing and newly appearing needs in this economy. This way, they can adapt to these changes and adjust their business strategies, skills and job-hunting. Here is a concise delineation of the respective industries that benefit from, and flounder, in this crisis.
E-commerce enterprises have been growing in popularity for a while but Covid-19 and its attendant lockdowns in countries all over the world have taken this industry to the next level.
“People are moving online to do their shopping. Already, Amazon is adding 100 000 new jobs to manage the extra demand. Some other marketplaces are struggling to add capacity. For example, online grocer Ocado has suspended new orders until it can clear its backlog of deliveries,” writes Michael Wade, professor of Innovation and Strategy at the International Institute for Management Development (IMD).
Online education and remote learning, still very much in its infancy in large parts of the world and South Africa, has also experienced a fillip. Nataly Yousef, an analyst with Pitango Venture Capital, one of Israel’s leading venture capital firms, says edtech companies “have found an opportunity here as worldwide traditional learning/training institutions are trying to adapt and accelerate their transformation to remote teaching”.
In South Africa, Curro Holdings has launched Curro Online – the group’s first online school aiming at offering flexible yet structured education and utilising the current Curro teachers.
Tied to this is the increased use of video conferencing. “Video conferencing start-up Zoom has benefited massively. The company’s sales and share price are already up over 50% in 2020. Webex from Cisco and Skype and Teams from Microsoft are also seeing major upticks in sales. Most are offering special deals for their conferencing services during the outbreak,” Wade says.
Entertainment streaming platforms such as Netflix and Disney+ have reported increased viewership. The transport and logistics industry has also seen its business increase, Wade says.
It is fair to assume that the very factors providing succour to the winners, are seriously impairing the losers. Prime examples of the latter include the tourism and hospitality industries. As people’s freedom of movement has been curtailed, they were less able to travel freely, and this has hurt these industries tremendously.
“Measures such as travel restrictions, flight cancellations and the closing of tourism businesses have had an immediate impact and have significantly diminished the supply of, and demand for, domestic and international tourism services,” said the International Labour Organisation (ILO) in a report on this issue. Airlines, trains and cruise ships have also taken a heavy blow as bookings fell dramatically.
The retail sector has also been equally hard-hit during this period. “With people confined to their homes, there isn’t much point keeping traditional retail stores open,” Wade says.
Manufacturing and the property sector mirror the performance of the local and international economy. With the Deeds Office only having opened under level 4 and estate agents only able to let clients view properties under level 2, property transactions have dwindled significantly, says Samuel Seeff, chair of Seeff Properties.
IOL recently reported that the lockdown has brought the manufacturing and retail sectors to a virtual standstill. Car manufacturing, a cornerstone of government’s industrialisation drive, has been deeply affected. “Those plans will be impacted massively,” said the National Association of Automobile Manufacturers of South Africa (NAAMSA) chief executive Mike Mabasa. “Particularly for the short to medium term, that plan is completely out of the window.”
Bizcommunity, 22 May 2020, “Curro launches online education solution”, https://www.bizcommunity.com/Article/196/660/204288.html.
Business Times, 17 May 2020, “Real estate sector now on shaky ground”.
ILO, 9 April 2020, “COVID-19 and the tourism sector”, https://www.ilo.org/wcmsp5/groups/public/—ed_dialogue/—sector/documents/briefingnote/wcms_741468.pdf.
IOL, 6 May 2020, “Covid-19 has put South Africa’s car manufacturing plans in jeopardy”, https://www.iol.co.za/motoring/industry-news/covid-19-has-put-south-africas-car-manufacturing-plans-in-jeopardy-47607141.
Michael Wade, 20 March 2020, “Coronavirus: your guide to winners and losers in the business world”, https://theconversation.com/coronavirus-your-guide-to-winners-and-losers-in-the-business-world-134205.
Natalie Yousef, 15 March 2020, “Coronavirus economy: These 5 industries are currently thriving”, https://nocamels.com/2020/03/coronavirus-economy-5-industries-thriving/.