On 11 March 2020 the World Health Organisation declared the Coronavirus outbreak a global pandemic. This has massive consequences around the world affecting entire nations and having a significant impact on businesses.
A range of different industries will be affected in one way or another due to this virus. This includes sectors such as travel, events, technology, retail, restaurants, financial and property markets.
Disruption to financial markets
On 9 March 2020, the stock market had its worst day since the 2008 financial crisis. It had such a dramatic fall in prices, that is was known as ‘Black Monday’ in reference to the dramatic drop in oil prices.
The reason for ‘Black Monday’ was the growing concern over the spread of Covid-19 and the economic impacts this will undoubtedly bring. Black Monday saw US stocks close down nearly 8% after circuit breakers paused trading for a time. In London, the FTSE 100 closed down 7.7%. In Asia, equity markets bounced back. Bond yields also found the floor after the rate on 10-year US Treasuries slid to a low of 0.318%.
However, the following day, President Donald Trump announced his pledge of economic measures including a discussion of a payroll tax cut to help the economy during the difficult period of time. In addition, The Bank of England has already announced a coronavirus-related interest rate cut from 0.75% to 0.25%, as well as the US central bank cutting interest rates. In theory, this will make borrowing cheaper and hopefully encourage spending to boost the economy.
Global supply chains
In addition to the financial markets, the global supply chain is being considerably affected. China makes up a third of manufacturing globally, and is the world's largest exporter of goods. During the Coronavirus outbreak, the factories in China have had to slow down and pause their operations to contain the spread of Covid-19.
The restrictions of the supply of goods and the supply chains means that some big companies have been affected badly including industrial equipment manufacturer JCB and the Car manufacturer Nissan. Both of these major companies rely on China's production and its 300 million migrant workers. Jaguar Land Rover even said it had flown car parts in suitcases as some factories run out of parts for vehicles.
In addition, the shipments of smartphones across the globe have also been affected and are expected to take a big hit in the first half of 2020 with a steady recovery later on in the year.
In terms of retail, except for grocery stores, many retail businesses have also been hit by the spread of coronavirus. Gyms, fitness centres and shopping malls are closed for weeks/months as business owners and shoppers need to remain at home.
E-commerce is taking advantage of the current situation and in many countries there are big spikes in e-commerce ordering. The rise in delivery services around the world means that they are experiencing a rapid increase in new orders. They need to perform at high capacity to maintain the trust of business owners and customers. However, the supply chain is also affected because there are some product shortages due to the temporary closures of some manufacturing facilities. This eventually causes the gradual increase of prices.
Adapting to change
Companies across the globe have had to change the way they operate due to the pandemic we currently face. For example, Starbucks announced that it would offer "catastrophe pay" for employees in the case of a possible quarantine. The company has also banned the use of reusable cups as a health measure.
Starbucks President and CEO, Kevin Johnson also warned investors of an estimated 50% decline in same-store sales in China due to mass closures in January and February at the height of the outbreak in the region, although according to CNBC it noted signs of recovery.
Moreover, CNBC also reported, Adidas, the sportswear company, expects first-quarter sales to drop by $1.14 billion in greater China. An Adidas representative said, "The safety and health of our people always comes first.”
The restaurant and fast food chain has also been affected, including KFC, Pizza Hut and Taco Bell. CFO of Yum China, Ka Wai Yeung says the coronavirus has "caused significant interruptions to our business. However, he explained “delivery is holding up well’’ and in order to adapt to this change he said, "To better serve our customer and employees, we rolled out contactless delivery, which is very well received by our customers. We also rolled out order online, pick up in store, contactless services and saw some encouraging early results as well."
Forward Leading’s Solution
The events industry including hosting summits and conferences has undoubtedly also been affected by this outbreak. This is due to mass gatherings not being permitted to stop the spread of the virus.
In order to tackle this situation, Forward Leading has decided to take the opportunity of hosting our upcoming Forward Marketing Summit Singapore online. This summit will be streamed in June as an online conference.
An online conference has many advantages. To learn more about these, you can read our dedicated article about online conferences here.
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References: Investec, BBC News and Business Insider