Our Analysis of How Industry is Responding to the Coronavirus Pandemic
Arts & Entertainment
- Shift away from in-person entertainment creating significant impact to many theater, arts, and events providers. Theater, arts and events are struggling to find paying alternatives to provide their content to consumers.
- Most theater companies delaying or cancelling performances, and offering to apply funds to future performances and/or donate funds.
- Some musicians moving to live stream their concerts, but most are delaying or cancelling performances.
- Forums and related catering and food services significantly impacted.
- Economic impact on communities which depend on events ranges from $3M to $300M per event for major events.
- Increased demand and acceleration of content release for in-home and online entertainment. Media companies determining whether to release content through online methods only or hold release until after the crisis.
- Advertising sales being impacted primarily due to decline in linear ad sales (ex. cancellation of sporting events leads to loss of key ad space).
- Publishing is running fairly normally as the industry typically relies on networks of freelancers and telecommuters.
- As of end of February, Moody’s expected global vehicle sales to decline by 2.5% in 2020. This follows a 4.6% drop in 2019 and, moreover, is a significant downward revision from the original estimate of 0.9%.
- Sales strategies are changing, including shift of resources and funds to digital sales.
- Automotive dealers and distributors are mostly holding inventory, and in more extreme cases are liquidating inventory.
- Automotive supply chain is further impacted by suppliers who may not be able to weather the storm compounded by parts supply, global trade wars, distribution of parts, and manufacturing facility shut-downs due to not being considered essential business in some states.
- Automotive companies looking for market analytics and data-driven decision-making tools (such as pricing intelligence and data), in both retail and wholesale, in order to make future projections and sales strategy changes.
- Similar to the mortgage crisis of 2007, lenders are having to evaluate strategies with borrowers to mitigate loan defaults. Lenders are having calls with borrowers discussing payment, payment deferrals, workouts, etc.
Note: This creates a new opportunity for outsourced call-center services and unified communication solutions to capitalize on, in order to make outbound calls to verify default risk and perform pre-qualification process.
- Banking regulators in areas like Beijing are stating that this may be a temporary condition and financial risks can be absorbed.
- Increase in utilization of omnichannel alternatives to retail banking including ATMs.
- Shift in utilization of payment methods to more digital payments and less handling of cash.
- Increased demand in unified communications and major increase in bandwidth keeping supporting network providers, manufacturers and extended services in stable position.
- Significant increase in in-home communication demands (wifi, computer).
- Communication providers offering complimentary services such as free internet or bandwidth upgrade packages with goal to gain future subscribers by deferring payment.
- Diversification of communications to all available platforms (social media, voice, video, UC, SMS).
- All forms of learning (lower and higher education, music lessons, etc.) moving to distance learning temporarily, with majority projected to be distance learning through end of April, and some projecting through the summertime.
- Increase in demand for distance learning tools and technologies.
- Decrease in school-related supply demand (backpacks, lunch bags).
- Significant increase in demand for government services related to unemployment and social services.
- Increase in alternatives to in-person healthcare.
- Increase in telehealth services and service/platform providers.
- Demand increasing for market data, voice of customer and predictive analytics.
- Companies seeking intelligence and guidance for determining pricing of products in current market conditions.
- IT services related to healthcare seeing increased demand for essential services (ex. telehealth).
- Major increase in demand for manufacturing of scarce and health related items (health and hygiene related, medical equipment)
- Rapid retooling of manufacturing facilities to meet demand for health and hygiene items.
- Increase in demand for dry goods and pantry prep in response to stockpiling.
- Trade combined with supply shortages are driving up prices of durables.
- Manufacturing staggering workforce hours, shifts and implementing work-from-home policies for management and administrative staff to enforce social distancing.
Oil & Gas
- Demand dropping significantly due to impacts on transportation industry while supply is increasing faster than demand, which will keep oil prices low longer than under normal conditions.
- Uncertainty on the size of world energy demand in the year ahead.
- US Government taking advantage of historically low gas prices to stockpile reserves.
- Significant impact to traditional retail excluding big-chain groceries.
- Restaurants shifting to reduced hours and moving to carry out, drive-through and delivery models.
- Many company’s offering workers in food industry or grocery hazard pay.
- Grocers have least amount of impact, with spike in sales for big-box grocers. Shift to alternative and omni-channel delivery (ex. home delivery and buy online pick up in-store).
- Most traditional retailers implementing reduced store hours, while shifting focus of their workforce to taking calls and on-line orders.
- Pockets of opportunity in retail:
- Increase in demand for self-entertainment (ex. art supplies, home improvement materials, music supplies, video games, etc).
- Increase in demand for alternatives to scarce goods (ex. fabric store demand increasing for DIY face masks).
- Increase in demand for gun and ammo sales, as well as survival gear.
- Increase in medical and recreational drug sales (ex. cannabis) and alcohol.
- Shift away from team sports and related equipment and services impacting all collegiate and professional sports related industries (ex. equipment, forums, advertising, etc).
- Increase in individual outdoor sports (ex. hiking and cycling), with major shift in sporting good sales to ecommerce.
- Fitness centers impacted by voluntary and mandatory shutdowns of facilities are pushing customers to online routines and remote personal training offers.
- Shift away from permanent staffing and increased demand for temporary staffing.
- Layoffs leading to high availability of skilled workforce.
- Many outsourcing / off-shoring moves by companies being put on hold.
- Most US companies have instituted policies to limit travel to essential and mission critical travel, impacting the transportation, travel and hospitality industries as a whole. Given that a significant portion of revenues come from the services that surround ticket and room sales, there is a major impact on downstream revenues for the entire supply chain.
- There is an estimated revenue loss for the passenger business of between $63 billion and $113 billion.
- Airlines are focused on reducing losses through varied cost cutting strategies.
- Many states in process of or have implemented shut-down orders for hotels and casinos. U.S. hotels severely impacted but should get a lifeline from the government via the relief package.
- Ripple effect impacting construction and development project funding and execution.
- Most hospitality companies relying heavily on their rewards programs as means to communicate with consumers, and are delaying point/credit expiration, banking on future opportunity.
- As travel fares and oil prices drop, some people are taking advantage of the opportunity to get cheap vacations.
- Non-public transportation alternatives such as private air charters spike.