Winners and losers: Which businesses have boomed during COVID-19?
Beyond the headline-grabbing losses, some businesses are booming during COVID-19. But who are they, and how are they achieving this?
To quote from the famed Kenny Rogers song The Gambler, “Every hand’s a winner; every hand’s a loser.” As we emerge from the COVID-19 pandemic, we can reflect on not just who losers were, but who the winners were too.
The most obvious business losers were those dependent on service exports. Australian tourism — valued at $31 billion in 2019 prior to COVID-19 — lost a staggering 611,000 jobs as the sector ground to a halt.
Airlines have lost billions as all forms of travel — business, leisure, and tourism — shut down.
In my industry, education exports (i.e. international students) — valued even higher at $37.6 billion in the same year — lost a further 17,000-plus jobs.
The flow-on effects have hit smaller businesses particularly hard. While tourism involved over 300,000 businesses, many are SMEs. As the universities contract, they in turn spend less on everything from stationary to infrastructure.
Similarly, vacant CBD offices have devastated corner stores, cafes, gyms, and the like.
Beyond these headline-grabbing losses though, other businesses are booming during COVID-19. But who are they? How are they achieving this? Can they sustain this?
Right place, right time
Pandemics and personal protective equipment (PPE) go hand-in-hand. As a critical service provider, these manufacturers — together with other healthcare services — benefitted not only from soaring demand but government funding to facilitate increased production.
Sanitisers, cleaning products and even toilet paper became prized commodities, contributing to higher sales volumes at supermarkets.
But the luck of right place, right time rippled into other businesses too.
Bunnings reported almost 20% year-on-year earnings growth as Australians used their forced isolation on home improvements.
Poultry breeders and plant nurseries prospered as households turned to backyard chickens and home grown produce.
And unlike their city-based peers, suburban cafes have flourished as more people worked from home.
To boom means to innovate
However, luck doesn’t account for everything. Soaring demand is only helpful if your business can meet that sudden surge: businesses with no stock to sell fair no better than those with no customers to sell to.
For instance, COVID-19 highlighted problems with:
- Developed countries and western businesses outsourcing supply chains to cheaper labour forces;
- Postal and courier services buckling under the weight of ballooning parcel volumes; and
- Remote-working empowered city dwellers flooding regional property markets, causing prices to soar and supply constraints impacting locals.
That’s why for every business that boomed from the luck of right place right time, many more boomed from being adaptable.
Many distillers, for instance, pivoted their operations to produce sanitiser instead of alcoholic beverages. Stage set producer Stagekings pivoted to produce home office furniture. High-end restaurants became takeaway meal providers. Physical retailers became e-commerce platforms.
Indeed, nearly half of Australian small businesses pivoted their approach to business in response to the pandemic, with a distinct shift towards online.
Embracing change
However, change is constant. To continue booming, the most profitable businesses embrace change. They continually pursue new revenue streams and adapt to changing customer needs.
Some restaurants now offer pre-prepared meal kits alongside dine-in options. StageKings continues to sell home furniture through aptly named sister brand Isoking, even as television and theatre productions resume.
Company headquarters and office-based businesses are also deciding whether to adapt.
“Very swiftly we saw firms and practices around our capital cities react in decisive ways. Giants like KPMG and Deloitte sent their staff home indefinitely. Although not the first to do so, the signal was strong and from there, the writing was on the wall for all to see,” notes APS Software.
Now, these accounting firms and similar businesses are implementing a hybrid approach, where working from home isn’t just a luxury but a regular component of the working environment.
Acknowledging the impact reduced CBD patronage has and will continue to have on SMEs, and the difficulty to entice some workers back to the office, campaigns such as ELMO Software’s #bigforsmall promotion have emerged to encourage staff to spend at CBD small businesses.
Whilst we have winners and losers today, the situation is as always subject to further change. As Kenny Roger’s The Gambler continues, “Never count your money at the table; there will be time enough for counting when the dealing’s done”.
