Unless you’ve been living under a rock, you cannot help but notice the world’s panicked reaction to the coronavirus. What started in Wuhan in China has reached every continent apart from Antarctica and is turning into a global crisis.
As the coronavirus continues to spread, China’s status as the epicentre of major supply chains is causing significant changes to businesses and consumer behaviour. This is not only putting a strain on multiple industries within the country, but multinationals operating out of and doing business in China are feeling the effects as well.
Obviously, Global tourism and retail have been hit particularly hard, as Chinese tourists provide a major source of income for many markets. Between January 23 and February 13, daily departures and arrivals for domestic and international flights in China dwindled from an average of 15,071 to 2,004. Additionally, several retailers have temporarily closed locations, and Apple announced that it won’t meet its Q1 revenue guidance due to disruptions happening across its supply chains in China.
Traditional Retail
The brick-and-mortar retailers and restaurants are dealing with the harsh realities of cities across China being placed under lockdown, as local governments enforce quarantine measures and restrict trips outdoors. Major retailers like Starbucks, Uniqlo, Nike and Apple temporarily shut their stores, while small and medium-sized retailers are being hit particularly hard as foot traffic dwindles. The current situation is expected to last at least another 4 months. Bottom of Form
Online Grocery Sales Multiply
With many Chinese consumers remaining housebound, they are turning to online groceries for their daily food supply. Chinese online retailer JD.com reported that its online grocery sales grew 215% year over year to 15,000 tons during a 10-day period between late January and early February.
Many people have concerns about food delivery due to possible food contamination which has generated a greater demand for contactless pickup and delivery services. Companies like McDonald’s and Starbucks are increasing delivery services that limit human-to-human contact, and orders are packaged to keep them free of contamination.
Time Spent Online and with TV Increasing
Places of entertainment like movie theatres and theme parks have been shut down to prevent the spread of the virus, which has already altered online behaviour for Chinese consumers. Mobile internet usage is rising due to self-quarantine.
Aside from increases in mobile internet usage, traditional media is getting a boost too. Stats show that TV viewership grew at a time when there would normally be a dip.
Travel
Overnight, the travel industry in China nearly came to a halt: The government placed major cities across the country on lockdown, and airlines cancelled flights in and outside of China. This will potentially create a big ripple effect across the world, as Chinese travellers account for roughly 10% of international tourists and are a huge source of income for local tourism and retail.
Smartphone Sales Will Reduce
Due to supply-chain issues and lack of foot traffic to physical retailers during the lockdown, smartphone sales are expected to decline by over 20% in China for Q1 2020, compared with a 5% drop globally. Apple recently warned investors that it might not meet its revenue guidance for Q1, citing weak foot traffic to its stores and disruptions to its supply chains across Asia.
Robot Usage to Curb Human-to-Human Contact
To minimise human-to-human contact in eCommerce delivery, companies such as JD.com and Meituan are experimenting with end-to-end “contactless” solutions using unmanned vehicles and drones. Some hospitals are also using robots to guide patrons or transport medical supplies within their facilities. This could potentially be an area of opportunity for companies looking to develop technology that could automate tasks in a public setting.
As the virus continues to spread globally, it won’t just be the Chinese market that’s affected. Other countries including Italy, South Korea and Tenerife are in lockdown and the human cost of this virus is still unknown.
