This year has brought about challenges for the globe that previously only sci-fi writers imagined. In spring, the world economy seemed to screech to a halt, scores of companies saw their existence in danger, millions of workers were unable to work, and raw materials procured from abroad failed to arrive or did so with a delay of several months. Meanwhile some sectors profited from the global mayhem and a potential second wave is set to fortify their gains.
While some economic actors were fighting for their survival in the spring months of 2020, other sectors saw their profitability soar at a previously unimaginable rate. The sale of flour jumped by 168% in March alone in Hungary and in April 200 new web shops opened each day, according to a study by PwC Hungary focusing on the winners of the pandemic.
During the worst weeks of the epidemic, countless articles and studies were written about the negative economic impact of COVID-19, and there was a general consensus as to which sectors stood to profit from the crisis, such as mask and hand disinfectant manufacturers, or e-commerce. The recent study released by the Hungarian unit of the global consultancy firm offers a glimpse at the sectors and companies that have indirectly benefited from the changed circumstances brought about by the pandemic.
Changing values – security above all
The global spread of the coronavirus rendered security the absolute priority worldwide, leading to the emergence of new trends in many areas of life. Due to the complexity and systemic integration of society, the biggest challenge has been to create network security. “In the new social order created by the epidemic, direct social connections were pushed into the background, and due to this social distancing, it was necessary to build digital support processes. Cyber security providers were sought after as home office became widespread, and so were drones that were used in a wide variety of services, such as drug delivery and social distancing monitoring. The fintech sector in general and QR code solutions used for epidemiological surveillance also gained significant momentum,” said Ádám Osztovits, strategic director for Central and Eastern Europe at PwC. The executive stressed that one of the specific consequences of the epidemic is that society accepted moderate restrictions on individual freedoms in exchange for the heightened security of society at large.
Fintech in the limelight
A distinct trend that emerged in the wake of the COVID-19 crisis was a surge in the popularity of novel financial solutions offered by fintech companies, such as loan applications and account openings processed in a matter of minutes or various stock exchange applications. Freetrade, a UK-based financial technology company, which offers a stock dealing service, saw a 125% surge in the number of downloads in March. The use of drones also posted a spectacular increase as these flying devices were deployed for disinfection purposes and the measurement of human body temperature.
However, the experts at PwC also point out that while many fintech solutions have gained consumer confidence, trends in investment markets showed a mixed picture. While risk minimization prompted some investors to invest in gold, others boldly turned to less conventional products, such as cryptocurrencies. As a result of the health crisis, companies with a chemical or healthcare profile were also able to gain investor confidence.
Leisure in a different light
In addition to education and work, entertainment also moved into cyberspace and there was outstanding customer demand for digital leisure solutions. Besides traditional entertainment platforms such as online content streaming, new players like China’s TikTok have also come into focus - the total number of downloads of the app was 112 million in May. The dwindling of sports and travel opportunities led to the rise of video games and online gambling and the spread of educational apps also accelerated. In March, 32 million new Microsoft Teams users were registered, while the share price of Zoom rose from USD108 to USD250 between March and June.
The authors of the study stressed that the crisis infiltrated people’s daily lives; changing rules and the new lifestyle were clearly felt by all members of society. Having experienced quarantine and curfew, people not only developed new habits, but in many cases even changed their values: many now focus on a slower pace in life and practice meditation or attend virtual yoga classes. “The minimalist lifestyle and the DIY trend gained new momentum, as many people started gardening, baking bread and cutting their own hair at home. There has also been a shift on the global-local axis: local products came to the fore and, unlike in previous years, most people chose a local holiday destination,” said Júlia Perger, business consultant at PwC Hungary and one of the authors of the study.
As a second wave of the epidemic looms large on the horizon, newly developed habits and values may become more cemented and companies that are quick to adapt to this changed reality stand to emerge victorious from the crisis.