The Impact of COVID-19 to Businesses
The COVID-19 outbreak disrupted many industries in the process and caused a sudden shift in the business world.
Amidst the health crisis, notable trends have emerged over the past few months, especially among consumers and businesses. We’ve listed these driving forces to give you a better picture of the Philippine market nowadays and help your business thrive in the new norm.
1. Consumers – Filipino households are known for their spending habits that have always driven the economy. Although it is expected that many will tighten their belts this year, we can see some demand propping up from households who start putting up their businesses at home in order to survive. More people are also into online buying of items that can make staying at home worthwhile, such as kitchen tools and equipment, ingredients used for cooking and baking, and garden supplies.
2. Online Presence – With more hours at home, time spent on the internet will increase. In determining the legitimacy of a business, customers often check the business’ page ratings and reviews, follower engagement, and the quantity and quality of information provided on social media or website. It is important to keep your followers updated with your products and services by being active online. Online transactions surged during the lockdown and are now becoming the preferred mode for transactions through the use of online banking and digital wallet apps.
3. Logistics – During the quarantine period, buyers and sellers have increased their reliance on courier services since this is the only mode available. Restaurants and online sellers make use of these services to deliver food and goods to their customers. Scrutinizing your logistics service partners is necessary in order to ensure quality and timely delivery of goods for your customers.
4. Health and Safety – Establishments are expected to implement stricter health and safety protocols that include contact tracing, use of thermal scanners, wearing face masks, social distancing, and disinfection of premises. Most businesses will incur additional costs in complying with these new requirements even as they operate on a limited capacity, hence a decrease in productivity.
5. ‘Cautious’ economy – The Philippine economy is expected to contract this year as a result of the quarantine which prevented businesses from operating for several months. Because of the uncertainty in the country’s health and economic outlook, consumers and businesses will remain cautious in their spending until the COVID-19 vaccine becomes available. Restaurants, malls, hotels, and tourism-related activities are not as lucrative as before due to the risk of spreading the virus.
6. Banks – The banking industry is highly impacted by the pandemic as businesses have been paralyzed by the lockdown. Defaults in corporate loans as well as housing, car, personal loans, and credit card payments are forecast to increase. Consequently, banks are expected to restructure their loan portfolio, tighten lending standards, and refrain from giving out new loans to new clients.
7. Financial Availability – With draining cash flow, many businesses will find it more difficult to obtain funding from banks and investors. Most of the traditional business models may no longer be viable and should be tweaked to the new norm in order to optimize revenue generation, sustain cash flow, and secure fresh funding from banks and investors.
8. Employment Opportunities – Millions of workers were retrenched, laid off, or became temporarily unemployed as businesses struggle with limited or no cash flow. This results in a larger supply of jobseekers, many of which are returning OFWs and highly-skilled workers competing for job positions available locally. For business owners, this will be an opportunity to tap into the vast availability of skilled workers in the market with limited costs.
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