By now, most of us are aware that the impact of COVID-19 will be terrible as people around the world lose loved ones, savings and jobs. In these times of turmoil, the ability for businesses to act quickly and adapt is more important than ever.
Technological infrastructure has emerged as critical in times when everyone is connected and working online. Companies like Microsoft, Apple and Google will continue to assert their dominance and increase their impact on our lives over time. On the flip side, there are many industries that are suffering greatly and I’d like to share my thoughts and analysis on 4 that have interested me the most:
1. Travel - This is an obvious one. Not only are flights down more than 90% but the economy and workforce will be in a bad shape so I don’t see this sector stabilizing at all this year. We have to beat the virus and get the insane unemployment numbers in control before we can even imagine a recovery. Fear of travelling combined with the growth of video conferencing suggests that business travel might never fully recover to its 2019 levels.
2. Automotive - As the economy slows down and people get used to working from home, I expect car usage and purchases to be significantly impacted. Over the coming years, car ownership will become unnecessary for many of us and I’m not sure the automotive industry has positioned itself to take advantage of that (apart from Tesla with their autonomous taxi network). People use cars to go shopping and to go to work (mostly). Do you really need a car for that today? Nope. You can WFH and order everything online. It’s cheaper to grab an Uber from time to time and of course, there’s public transport.
3. Oil - Hugely impacted by political games and maneuvers between the US, Russia and the Saudis, I expect this industry to be highly volatile in the coming months. Lot’s of jobs will be lost and maybe we’ll see bankruptcies. Bear in mind that the sector is also impacted by the transition to electric and the growing sustainability trend which will only increase because of societal pressure worldwide. If you have investments in these companies because of their dividends, expect to see them cut.
4. Office REITs - The office is changing and it might never be the same again. Managers all over the world are realizing that the big, open offices are expensive and unnecessary. Distributed teams will allow companies to have smaller, boutique offices in more areas, more so a showroom where valuable clients can be invited than a place where people will commute to work. This decentralization will also open up untapped talent pools covering more countries and time zones. I expect demand for office space will be significantly impacted in the coming years and might just follow the same trajectory as demand for retail spaces within malls.
2020 will be a very memorable year for the whole world and it’s interesting to see how things unfold. In general, I am optimistic — we will find a vaccine and we will get through these tough times together. I can’t tell the future, but one thing is for sure — we will be different on the other side. Whether we’ll be better or worse depends on us.
Thanks for staying till the end, would love to hear your take in a comment.