The author is the head of the industry team of the JoongAng Ilbo.
“Wellbeing of the neighbor is my wellbeing.” This never has been more of a naked truth rather than mere rhetoric. My carefulness doesn’t help much when it comes to a contagious disease. My thorough hand-washing habit and my family’s stash of face masks cannot defend me from the disease.
The same rule can be applied to industries. There hasn’t been good news from the economy and industries since the Lunar New Year holidays from January 24 to 27. Tourism, airline and offline retail has been directly hit by Covid-19, and the slump could spread to industries that are enjoying a boom at anytime.
Of course, there are industries that seem to be thriving now. In the early days of the Covid-19 crisis, offline stores, big box stores and hotels seemed to suffer the most. In contrast, major online shopping malls have seen a surge of demands and could not handle the orders.
As dining out is discouraged and more people work from home, delivery apps have become busy. Major delivery apps have seen a 20 percent increase in transactions in February and March. As the remarkable growth of Coupang — an e-commerce frontrunner — during the Middle East respiratory syndrome (MERS) outbreak in 2015 shows, some Covid-19 related retailers have high expectations.
Unfortunately, the ordeal has just begun and the situation is changing rapidly. Companies at a crossroads of survival are scaling down their workforce and temporary workers. The reduced work hours led to paid leaves — and sometimes unpaid furlough. Workers say this year’s goal is survival.
Options for individuals with reduced income or no income are limited. Orders for fried chicken, a popular delivery menu item, surged beyond capacity at the beginning of the Covid-19 crisis. However, a red signal is on as the crisis extends. A source from a chicken franchise company said that their sales are decreasing as their core consumers — those in their 20s and one-person households — make less money. The change only took a month.
The increase in transactions at online shopping malls is risky. Items that show increases are mostly grocery and necessities, which should be delivered at a loss. Inventory of large appliances and apparel that have a relatively bigger profit margin are piling up.
In the end, overcoming the Covid-19 crisis is a team game for industries. That’s why there is no Covid-19 boom for industries. By the way, Coupang’s remarkable growth in 2015 owed more to the direct buying boom, rocket delivery and $1 billion investment than to the MERS outbreak. There was no benefit from MERS.