01 Apr 20 Random thoughts on Life in the post-Covid19 world

It is now clear that we’re seeing the worst health and economic crisis, ever. Entire countries are shut, businesses cannot function, unemployment is rising dramatically, value chains have been wrecked… and worst of all – there is no end in sight!

It’s natural that a calamity on this scale will invite a barrage of conversation. This has been accentuated by media (social and otherwise) – and the bad news keeps piling in.

More sick, more dead, layoffs, food crises, insufficient hospital beds and ventilators, videos on economyhow to protect yourselves, and on and on… till a point, where we are all numbed. We don’t want to hear more bad news, but it’s all around us and nobody wants to talk about anything else.

Even though some are still in denial, the world has fundamentally changed! Without in any way trivializing the difficulties we’re facing (some more than others), I believe we need to think seriously about our lives post Covid-19. Being prepared (as best we can) for the future is the only way forward.

To start with, I’ve summarized a few of the key changes that we can expect. This is not a complete list, and I’d welcome additions.

It’s interesting that several existing mega-trends (remote working, robotic manufacturing, digital payments, etc.) now have stronger tail-winds thanks to the Corona crisis.

Work from home
– The lockdowns have provided an inflection point for work-from-home. After experiencing this, many will prefer this option. Companies will have learnt how to manage this and may see an opportunity to reduce rental and other fixed costs. Of course, this applies to skills and outputs that can be transmitted via a computer.
Gainers will include facilitators like Zoom, Skype, Zoho, Salesforce, Microsoft Teams, Webex, Google, and such like – the cloud will become mainstream!
Internet providers, suppliers of networking products, data security providers and others that make up the cloud infrastructure will all benefit. Unfortunately, this mad scramble will be good for hackers!
Desktops will give way completely to laptops.
Silver Lining: Cleaner air in our cities, less crowded roads.

Entertainment & Lifestyle
– Forget about going to the movies for a long while! Likewise for theatres, concerts, sporting events, and any other mass gatherings. TV and online audiences already contribute more than ticket sales, and will now grow even more dominant.
Online channels and even traditional TV channels and satellite TV providers will all gain, as people turn into greater couch potatoes.
Gaming companies will be big winners, including gambling businesses like poker, rummy and many others.
Amidst greater social isolation, people will increasingly spend time on spiritual and religious activities. Health will be at the top of the agenda, so expect more people exercising (from home) and trying to stay fit. Expect more streaming Yoga, Qi Gong, home gyms, Zumba, HIIT – recorded and live!
Disco nights on Zoom is a reality!

Healthcare
– The major silver lining is that healthcare investments will get a big boost. Governments are pumping in money to upgrade hospitals, buy new equipment, train and hire more workers, develop vaccines and other drugs.
Citizens and governments alike will remain paranoid and the pressure to expand and upgrade health systems will continue.
This is one sector where employment demand will surge, as will spending on R&D and infrastructure.
For a long time to come, sanitation and hygiene will be top of mind – so transmission of other diseases will also slow down.

Education
– Universities across the world are trying to stay on schedule via online classes. Parents with kids at home are trying out ed-tech options for the first time.
The providers of online courses now have to deal with larger volumes and more complex demands. Ed-tech was always a second cousin to the real thing, but the current crisis will create massive scale and incentivize innovation.
Of course, people will go back to schools and colleges – but traditional providers will become savvier about digital tools and use them to complement in-class education.
For those that are unable to afford expensive schools, the improved quality and quantity of relatively inexpensive online education will be a game changer.

Hospitality, Restaurants and Travel
– No silver lining for airlines and airports. Even when the pandemic subsides, it could take months (years?) for people to feel safe about traveling, or letting in foreigners. In the meantime, most of these companies will not survive without government bailouts.
Cruise lines will face the same situation, but governments may not bail them out.
Highly indebted hotel companies will go under. Hotel leases will be cut, and many hotels will shut down.
Restaurants will face similar challenges, and many will shut – temporarily or permanently. Online orders will help – and cloud kitchen will grow rapidly. Aggregators like UberEats, Grubhub, Justeat, Zomato, Swiggy will become even more dominant.
Stricter borders: Countries will become stricter on entry visas. New requirements like health certificates, quotas of different kinds, mandatory testing will make travel more complicated. Domestic tourism is likely to bounce back before international tourism.
Overall, a dismal outlook for all tourism and travel related industries. Given their high employment intensity, this is very bad news.

Retail & Consumer goods
– Ultimately, people have to buy food, cosmetics, white goods, clothes and other stuff. Companies supplying essentials will be least affected, while others will recover with a lag. Budgets may be constrained, but cash infusions by governments will limit the demand downside.
The shift to e-commerce will accelerate sharply. Not only will we get more comfortable buying online, many will prefer not going to crowded shops even if allowed to do so. E-commerce companies like Jingdong, Amazon, Alibaba, eBay, Zalando, Flipkart, BigBasket will grow even stronger, and many physical retailers will have to scale down.

Manufacturing: Supply chains re-jig
– The negative sentiment (especially in the US) against China will only get worse. Companies will develop alternate supply sources (India, SE Asia?) to reduce dependence on China. Nationalist fervor and the need to create local jobs will drive in-sourcing – not just in the US or Europe, but even in emerging markets – most of which have huge trade deficits with China.
However, this is not going to happen in a hurry. China has significant advantages in a wide array of manufacturing sectors, and creating capacity elsewhere will not be easy given the likely cash crunch in all economies.
And of course, all over the world, manufacturing automation will get a boost. Think robotics, IoT, 3D printing, smart factories and so on.

Technology
– Like it or not, technology has saved the day. Without the Internet, and the zillions of apps – we wouldn’t be able to work from home. Online deliveries would not have been possible.
In fact, we’d not be able to transact anything without the digital payment infrastructure.
Despite near term hiccups, technology and digitalization will become even more ubiquitous, and companies will invest more in back-up capacity. Good news for a wide range of tech companies, especially platforms, but also product and services players. The major exception to this will be those that cater to travel and tourism.

The above is not a comprehensive analysis, but some “random” thoughts – I’d love to hear more ideas about how our world will change post Covid19. (Please post comments or send a mail.)

Regardless of how this plays out, many of our past assumptions no longer hold true. Individuals, companies and governments need to think about how they will adapt, survive and prosper in future. But we can’t wait for someone else to tell us what to do. Each one of us has to assess the trends and try to answer questions like:
– What skills or capabilities will be required (or not required) in future?
– How do I limit the downside?
– How can I make the most of emerging opportunities?
– How do I find alternate suppliers?

Answering these questions is not easy, and will require further research or analysis to suit your specific situation – but the sooner we start, the better. Thinking about how to face the future with positivity is a far more productive use of time than obsessing with daily Corona statistics and media bombing.

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Arun Jethmalani

Arun is one of the founders of ValueNotes. Apart from trying to build a high-quality research business, he has spent the last 27 years researching, analyzing, and dissecting companies and industries. He has worked with clients of all shapes and sizes, from all parts of the world – in providing them insights that make a difference to their business.
Prior to ValueNotes, he was an equity analyst/advisor, and wrote extensively on investing – including a column titled “Value for Money” which ran for 10 years in the Sunday edition of the Economic Times. To this day, he remains an avid “value” investor.
He has also been published in several other publications, and is a regular speaker at events related to technology, investing, competitive intelligence, business process management, Internet, etc. See: Valuenotes Events
He has been instrumental in developing a community of research and intelligence professionals in India, and is the founder and current chairman of the SCIP (India) Chapter. Arun holds a B Tech from IIT, Bombay and an MS from Duke University, NC, USA. LinkedIn Profile

1Comment
  • Milind Dange
    Posted at 21:41h, 02 April Reply

    Well articulated, Arun! Look forward to further thoughts, as this situation evolves.

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