Over the last few weeks, there have been many discussions, ideas and content on the impact of COVID-19 on businesses and the economy in particular. It is evident that COVID-19 has created many challenges for individuals, companies and governments. This pandemic has created volatility, uncertainty and chaos at an unprecedented level. Whilst there is insufficient data at this point of time to predict the overall impact of COVID-19 to the global economy, it is reasonable to forecast that the recovery may take around 24 months for certain countries.
Interestingly, most countries seem to be allocating between 5-10 percent of their GDP in order to fight off the pandemic and provide a much-needed stimulus to their economies. Of course, not every country can afford to do the same because they may not have the necessary fiscal space to do so, making them more vulnerable than the others.
The world that all of us are going to embrace post COVID-19, will be a totally different one without a shadow of doubt. As individuals, our lives will also be definitely changing (if not already), once this pandemic is over. It is going to be an era where it will be the ‘survival of the most adaptable’.
In Sri Lanka, industries such as tourism, apparel, construction, tea, exports and the manufacturing sector will be severely impacted as a result of this pandemic. Similarly, the importers are also ‘feeling the heat’ due to the temporary restrictions on imports and the currency depreciation (the rupee has depreciated by approximately 11 percent over the last 30 days).
The daily wage earners and self-employed, who are a significant proportion of the total working population in Sri Lanka, are currently in ‘dire straits’ and struggling to say the least. Unfortunately, the recent economic stimulus package introduced by the government does not address these segments sufficiently.
On the other hand, industries such as healthcare, telecom, agriculture, ICT, e-commerce and food processing for example, will have new opportunities that derive due to this current pandemic situation.
The purpose of this article is to outline ‘10 new realities’ that we, as Sri Lankans, need to be prepared as a result of COVID-19. These realities provide a number of new opportunities for individuals, entrepreneurs, companies and the government. There will be new actors and players who will be entering these industries and market segments in order to capitalise on the opportunities and the gaps that exist.
It should be noted that these ‘10 realities’ may not be the only aspects that need focus because the situation is evolving with each passing day. However, for the purpose of this article, let’s focus the scope only on
1. Going local
It is evident that there will be a strong push in Sri Lanka towards buying locally produced goods and services. With import restrictions, currency depreciation and changes in consumer demand with focus more towards ‘essential items’, there would be a renewed emphasis on import substitution.
Currently, Sri Lanka imports more than what we export. If we analyse this with an open mind, it is evident that some of these products that we import (not all) can easily be produced within the country.
With the push towards ‘think local’, ‘produce local’ and ‘buy local’, it will provide the Sri Lankan entrepreneurs and companies new opportunities to address, thereby having a positive impact to the economy in the long run. Self-sustainability will be a priority focus area post COVID-19.
2. Changes in consumer buying behaviour and lifestyles
The needs and wants of consumers, the buyer behaviour, demand patterns and lifestyles are no doubt going to change post COVID-19 (if it has not happened already). The lockdown has made people realise what the ‘most important things in life’ are, at the end of the day.
Today, ‘cash is king’, as they say. It is also the scarcest aspect, especially during a recession or economic downturn. One can forecast that consumers will want to cut down on luxuries and unnecessary spending whilst focusing only on what can be classified
Hence, for companies, it will not be business as usual moving forward. They would need to invest more time and money on market research and consumer insights in order to understand the gaps in the market and the emerging opportunities.
The competition on the ‘share of wallet’ would be more on actual value as opposed to perceived value at least in the short to medium term. There would also be industry-level consolidation, resulting in new opportunities as well. There is no choice actually i.e. change or perish.
3. Banking and financial services
During the last few weeks, as a result of the lockdown, there has been a strong emphasis on mobile, tele-banking, online banking and digital financial solutions. This has resulted mainly due to the lack of choice or options available for completing daily or routine banking requirements as a result of the immobility associated with the lockdown.
These digital banking solutions would no doubt be the new norm moving forward. The focus on the traditional cheque payment system will be reduced and online payments will soon become popular in the near future. We would see more opportunities for fintech solutions and blockchain technology. The regulator will have to be more open-minded and support these types of solutions
Post COVID-19 will also provide new opportunities for insurance companies, both in the ‘general’ and ‘life’ insurance categories. The middle class population in particular will be allocating some portion of their income for these services in the future.
At a national level, the ‘life’ insurance penetration in Sri Lanka is almost negligible. It is reasonable to assume that moving forward, there would be more demand for such services and the insurance companies will have the potential to come up with innovative products and services to serve such requirements.
There will also be new opportunities in the ‘financial inclusiveness’ space and banking solutions for the poor using mobile phones and other technologies. Once the ‘E-KYC’ processors are in place by the regulator (sooner rather than later), banks and other financial institutions will have a greater ability to serve the customers who are at the bottom of the pyramid (in terms of income levels) with innovative products and
4. E-commerce and online delivery
As we have seen, there has been a huge surge in e-commerce as a result of the lockdown associated with COVID-19. It has always been evident that the e-commerce opportunity in Sri Lanka is both lucrative and scalable considering our Internet and mobile penetration rates.
However, until the recent pandemic, the e-commerce adaptation (or the need for it) was not seen as important from an average citizen’s perspective. Due to the unprecedented demand over the last few weeks, we have seen most e-commerce platforms and online delivery models either failing or falling short of expectations. There are a number of reasons for this but that’s a debate for a different date.
From the pharmacy to the almost extinct ‘neighbourhood grocery store’, we have e-commerce taking place since the lockdown was implemented. This will continue to be the new norm moving forward as well with people getting comfortable with the process and the use of technology.
We have seen many technology companies helping retailers, shops, restaurants, etc. by developing apps and platforms either free or at a very low cost to support businesses during this pandemic. Similarly, we have seen these small businesses changing their business model almost overnight to serve
By now, all of us have our own directory in place on whom to contact for essential services and others items when the need arises. Some have even joined or subscribed to various information sharing groups on social media platforms so that they are up to date with ‘who is selling or delivering what items’ based on their location. Will we use these contacts post COVID-19 as well to meet our requirements? The answer would be an overwhelming ‘yes’.
However, our continuity to work with a particular company, vendor or delivery partner would be based on their consistency of service, value and meeting standard expectations. Basically, we will be more ‘picky and choosy’ in the future, once the current level of desperation subsides.
5. Medical and healthcare
The importance of healthcare has been tremendous during COVID-19. The role played by doctors, nurses and other frontline staff has been nothing but exceptional in every country. Post COVID-19 would see governments, companies, entrepreneurs and individuals continuously focusing on healthcare. There will be large investments in this sector alongside significant emphasis on research and innovation. Areas like telemedicine will gain popularity.
Technology will play an important part both on the preventive and curative sectors of the health industry. Technology platforms that provide high-quality remote healthcare at a press of a button would be the norm as opposed to the exception in the future.
There would be more tech start-ups emerging in this sector without a doubt to address the gaps in the market that are visible due to the pandemic. The demand for products and services that help (increase) immunisation, overall health and nutrition, etc. will provide new opportunities for entrepreneurs and companies.
Organic products and ‘healthy food’ will play an integral part in our lives moving forward. Pharmaceutical companies will be one of the biggest gainers in the post-COVID-19 world. Similarly medical equipment suppliers will have enhanced opportunities as well.
It should also be noted that the psychological aspect of people will need to be addressed post COVID-19. This area, whilst posing challenges, will also open up new opportunities for people and experts who are engaged in the field.
6. Government services and engagement with citizens
Whether it is routine services like obtaining a passport, birth certificate or a more complex activity like disaster or pandemic management, how the government will engage with its citizens will have to be different in the post-COVID-19 scenario. The push for e-services will be greater more than ever before.
Better coordination between various government ministries and departments will be a necessity and this seamless integration is only possible via the implementation of SMART technology. For this to happen, there has to be a shift in the attitudes of the public sector with a renewed emphasis on productivity and quality service delivery.
The citizens will also have to embrace technology and change the way they engage with the government and the various departments. In other words, lesser physical contact and an increased technology-based engagement (and interaction). If COVID-19 does not push us to a more digitally-driven ‘governance model’, it is hard to assume what would.
7. Flexible work arrangements
Due to the lockdown scenario, most countries have implemented a work-from-home procedure or system. In Sri Lanka, over the last few weeks, many companies and individuals have slowly but surely adapted to this change. Whether it is a Zoom meeting, project collaboration on Microsoft Teams or sharing work files via Google Docs, the productivity has not diminished for companies or individuals who are disciplined and stick to a routine with a clear set of KPIs and expectations.
In a post-COVID-19 era, companies may provide greater flexibility towards working from home (at least for a few days monthly). Such arrangements will provide both cost savings as well as enable companies to attract and retain a more diverse workforce for e.g. recent mothers. The demand for flexible workspaces and co-working spaces will surge in the medium to long term, once the social distancing requirements are relaxed.
Flexible workspace arrangements provide companies and entrepreneurs greater flexibility to get office spaces on demand, with little or no capital ‘locked in’ (compared to conventional spaces) and the ‘plug-and-play’ type of setting allows people to start work without worrying about furniture, complicated agreements, security, technology, cleaning services and tea or coffee facilities.
8. Education sector
We have seen the education segment impacted (and facing disruption), as a result of COVID-19. The secondary and tertiary education sectors have been forced to adapt technology and deliver their programmes, curriculum and homework via online platforms. Most state institutions are still focussed on the traditional ‘brick and mortar’ model of education delivery.
Online learning and blended learning is a common model across most developed economies. Sri Lanka will also have to embrace these models if they are to survive and compete in the world. The policymakers and regulators will have to put in serious thought on this aspect by first recognising online and blended learning as an important element in ‘education service delivery’.
Secondly, they need to implement changes to the educational structure and bring in reforms for such technology-driven models to be part of the wider system and qualifications framework. The private sector as usual will be better ready for this reality but the question is how quickly can the state sector adapt to the same?
9. Telecom and entertainment
One can argue that most people would have been lost without their phones and digital devices during the lockdown. Some may go one step further and even trade a meal literally in exchange for a data connection with enhanced bandwidth. That is the level of our dependence on voice and
Sri Lanka has one of the highest per capita mobile phone subscribers and Internet penetration levels in the region. Almost 45-50 percent of the total mobile phones used in Sri Lanka are ‘smartphones’.
One can predict that content and digital entertainment solutions will see greater demand by people in the future. Whether it is watching movies or a live sports game via a streaming service, the entertainment options that telecom companies can provide their customers is almost limitless.
Emerging entertainment solutions such as e-gaming will also gain more popularity in the future. So, if you are an app developer, content provider or an entertainment solution provider, there are some good opportunities to explore in the future.
10. Role of marketing
COVID-19 has pushed companies to re-examine their marketing mix. What worked prior to the pandemic will no longer be relevant in the new world order. The author is of the view that digital marketing will be a ‘game changer’ for companies in the post-pandemic era. Whether it is brand storytelling, market positioning or order fulfilment (last mile), the role of marketing will be much different in the future.
For small companies, whether it is creating a website, a social media strategy, search engine optimisation (SEO) or influencer marketing, the tools that can be used now are extensive. Digital marketing allows companies to acquire customers at lower costs in comparison to other traditional marketing mediums.
If you look at distribution for example, collaboration is the way forward as opposed to trying and ‘reinventing the wheel’. A classic example of this is how a local ‘ride-hailing service’ effectively collaborated with the largest state sector ‘wholesaler’ in the country to deliver essential goods to people during the lockdown. Here both companies focused on their core competencies and collaborated to meet customer requirements by changing their business model.
From a product perspective, there would have to be a rationalisation based on the changes in consumer demand. Marketing professionals will have to be more rational in their decision-making moving forward.
The focus of this article was to highlight ‘10 realities’ that we will all have to face as a result of COVID-19. Whilst there is going to be a significant impact for every country as result of this pandemic, it will also open up new opportunities for individuals, entrepreneurs, companies and the government. The case for Sri Lanka will also be no different.
As exemplified earlier, the new world that we are all going to embrace will be a totally different one. We need to prepare for these changes and be flexible both in our mindset and actions. The key is to respond and adapt to these changes quickly and ideally in a pro-active manner.
The above ‘10 realities’ have happened already or will happen sooner rather than later for sure. The million dollar questions therefore, would be: ‘Are you ready?’ And if so, what are you going to do about it?
(Dr. Nirmal De Silva is an Associate Professor in Business, a Board Director and an entrepreneur)