Five Winners of the Covid-19 Crisis

Global News and Perspectives

It came. It spread. It destroyed.

As COVID has torn through countries and forced billions of people to stay indoors, it has sounded the death knell for thousands of businesses worldwide – even the traditionally immune-to-recession ones. Like education. Usually, when the slow down hits, more people return to grad school. Not this time. COVID has struck institutions and students alike.

But, there’ve still been those who have found their fortunes rise in this tidal wave. Two weeks ago, we covered the story of Zoom and how remote-work proved to be the tipping point for this video conferencing platform (and a few others who have seen a tremendous upswing too).

Now let’s look at some other sectors that have gained from the brutal virus.

1. E-commerce – they're lovin’ it

Not a conceptual surprise, this one. If the horse can’t go to the water, then the water must come to the horse. As people have been confined to their homes (306 million people are home in the US alone) e-commerce and delivery platforms have become their lifelines. The US and Canada, for instance, have seen a huge spike in e-commerce orders. As of 21st April, the growth in online retail orders in these markets alone was 146%.The year-on-year online growth that US retailers saw in April was similar to the last holiday season (in a pre-COVID, less cautious world).

Grocery shopping doesn’t quite explain this spike – so what are people buying?

Everything from washing machines (up 18 times) and dishwashers (grew by 35 times), refrigerators, food processors and, unsurprisingly, exercise equipment. All the stuff you need to be home – kitchen and fitness things. Here’s an interesting list of the top 25 high performing products – it’s an eclectic mix – from Swiss balls, stationary cycles and video-game consoles to soap dispensers, mason jars and make up mirrors.

The Lipstick effect

Recessions have traditionally led to a surge in the sales of lipsticks. COVID has done something similar – but in nails. Nail polish is to COVID what lipstick was to earlier recessions – in fact the whole nail-care industry is seeing a dramatic increase in demand. Nails Inc, England-based nail bar chain, has stated that its e-commerce sales in the U.S. have increased 571% over the last month or so, compared to the same period last year. Another cosmetics brand, Butter London, also saw an increase in nail-related e-commerce sales and witnessed a 150% increase in April sales as compared to March.

People are home and they need things – they also have the time to cook, take up new hobbies, binge-watch, work on their fitness and reflect on life. E-commerce is ferrying it all and, in turn, riding that gravy train. At the forefront of that is Amazon, whose stock was already on a high, having grown 500% in the past five years and even as other retailers have run into tailwinds and laid off staff Amazon has hired 100,000 people for distribution and plans on hiring another 75,000 as orders keep pouring in. Of course, Amazon is not alone in seeing this upswing. The segment is on the rise, so others are riding the wave too. India’s Big basket, for instance, saw a 900% increase in orders. Shopify, a Canadian multinational e-commerce company headquartered in Ottawa, is also seeing tremendous growth and is seeing ‘Black Friday’ kind of traffic on a daily basis.

Online shopping has also led to a boom in the ancillary systems that support it, like logistics companies, which are also witnessing a spike (and also facing a challenge with finding people and keeping them safe at this time).

2. Entertainment – bring it on..

Nothing has seen a bigger disruption than the way we entertain ourselves. You’d expect Netflix and Spotify to see a spike, and they have. People are glued to the idiot-box more than ever, and are also listening to music a lot more. Unsurprisingly, Netflix gained 15 million new subscribers in Q1 of this year while Spotify gained 6 million (taking its total monthly subscribers to 130 million and active users to 286 million). But, what’s been interesting to see is how we’ve brought the traditional into the digital domain, especially the way we socialize (and even mourn) – from Zoom parties, Cloud raves and online night clubs to virtual museums, online gaming, concerts and even funerals – it’s all happening online.

The numbers are telling and they speak of a radical shift in consumer behavior and trend. Spotify, for instance, found that the usage in car and wearables was down, while that through television and gaming is up almost 50%. People are listening to music more around activities like cooking and doing chores. Or, as Gaming Monk, an India-based gaming company, discovered that not only is there a surge in the number of users, but they are also logging on at different times than they used to before COVID. Earlier, most users would usually log in at night. Now people are playing games in the daytime as well (interesting observation – wonder if this can be tied in with one of the challenges of remote work!)

3. Pharmaceuticals – investing in hope

COVID-19 has led to a surge in valuation of Pharmaceutical stocks. In India, the Pharma index is expected to post its biggest monthly gain in 21 years, as investors bet on Pharma companies producing drugs to treat the virus. On the 30th of April, for instance, shares of Glenmark Pharmaceuticals rose 9% after it announced that it had got the approval from DCGI (Drug Controller General of India) to conduct clinical trials on Favipiravir Antiviral tablets for COVID-19 patients. This would make Glenmark the first pharmaceutical company in India to be given this approval.

Some other global pharmaceutical companies that are taking on the Covid-19 fight are Gilead and Eli Lilly, both of which are seeing tremendous growth. Gilead’s fortune is linked to its drug Remdesivir, which is showing promise in treating COVID patients. Its stock has risen by 11% because it’s seen as being ahead of the race in finding a treatment for the deadly virus.

The tide could turn the other way too, so it’s a space that’s being watched closely – those who are not able to stay in the COVID race will probably not see this upswing.

4. Health Insurance – riding the uncertainty wave

It’s easy to see why this sector is experiencing tremendous growth. As the number of positive cases rise, and fear of the virus spreads, so does the need for health and life insurance policies. Unsurprisingly, there’s been a 30% rise in the sale of online health insurance sales and general insurance saw a year-on-year (YoY) growth of 11.7%. Policybazaar, a Gurgaon-based insurance aggregator, says its platform has seen a 35-40% jump in health insurance, while life insurance saw 20% growth in this time. .

The growth, say experts, may not only be a temporary reaction to the current crisis, but could lead to a larger shift in people’s belief in the need for an insurance policy. COVID is sure to leave an indelible mark on the mindsets of people which could trigger a long-term growth for the sector. In a post-COVID world, chances are that people will be left with a feeling of uncertainty and be less prone to live on the edge. The risk? They may not have a job to pay the premiums, so it’ll be interesting to see how this pans out – will this growth level off or fall in six months from now? Tough to say.

5. Digital payments – don’t touch that money

Talking of being cautious – another outcome of COVID has been the rise of digital payments and the fall of cash transactions. People are scared of touching money that’s been handled by millions of people – a fear that is fuelling the growth of digital payments around the world, with many shop owners putting up signs like – ‘No Cash Accepted’.

RTi Research, an American market research firm, backs this idea. A study it conducted found that 30% of consumers were very or extremely worried about catching COVID-19 from cash – a trend is likely to stay post-COVID, and could alter the payments landscape irreversibly. Another survey, by the Economist Intelligence Unit, showed that digital currencies showed the maximum growth opportunity for payments, as compared to other means. What was interesting to note in this report was that awareness of digital currencies in the developing world had reached 92% – a finding that India seems to prove right. Ever since India has gone into lockdown, 42% Indians have upped their use of digital payments platforms.

PayTm, an Indian payments and financial services platform, has (once again) been a huge gainer. For the period between end March to Mid April the company saw a 42% rise in mobile recharges, a 200% jump in payments made for data and broadband services and a 230% surge in payments made for video streaming.

According to Digidhan, an Indian platform that monitors and reports all digital payments transactions occurring in the country, digital payments went up by 31% in FY 2020 as compared to 2019.

Wary new world (with due apologies to Aldous Huxley)

2020 has been a defining year already (frightening that it’s not even half gone) – it will go down in the annals of history as the year the world changed, as it does once every 100 years or so. It will find itself mentioned in the list of life-altering years like 1914 or 1929. For us, who are alive now but not old enough to remember the Great Depression, there will be two kinds of worlds, one pre-COVID and the other post-COVID. It’s the lens we will use to look at everything from hence on.

In the latter world there will be radical shifts in consumer behaviors that will feed the rise and fall of industries. Just like post-war changes led to a new way of life (and thus, to the golden age of capitalism) a post-COVID world will lead to many ‘new normals’ – the way we travel, learn, work, shop, connect, eat, pay and greet will change forever.
It’s a new, cautions world.

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