The pandemic has forced governments to quarantine entire countries, disrupted supply chains, slashed business and consumer confidence and affected financial markets. Euromonitor International’s baseline forecast for global real economic growth in 2020 is in the range of 1.5 to .5%.
The restrictions have led to the collapse of the travel industry, but the impact will not be as severe in retailing. Retailers sell across categories, meaning that the pandemic will negatively impact some channels more than others.
The Global Financial Crisis had a severe impact on consumer markets. The overall retail industry declined by 3% in 2009, but rebounded in 2010, with 6% growth. Past public health emergencies, like the SARS and MERS outbreaks, also provide clues as to how retailing may fair amid the crisis.
The uncertainty of COVID 19’s impact on the economy has prompted retailers to withdraw their earnings outlooks for the quarter and/or whole year. Some are exploring filing for bankruptcy to restructure debt and others are borrowing against their lines of credit to ensure proper cash flow.
Big consumer shifts are already under way as society evolves from a carefree world to one under lockdown. This phase is likely to lead to a permanent boost in ecommerce and contactless payments as well a potential divergence of the supply chain or a reimagined store pick up.
Technology is here to stay. This crisis has underscored the important role that technology plays in how consumers live, work, shop and play. Some companies are already making acquisitions to boost their tech capabilities.
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