Our world is experiencing a health crisis.
Part of that health crisis is the economy. I say that because an economy is not a static, stale object. An economy is a living, breathing, always-moving organism. The moment an economy “stops,” the economy dies. It requires movement in order to stay alive.
Part of what keeps our economy moving, then, are the industries stable enough to continue moving. Some industries accelerate to meet sudden demand, and others slow down due to demand vanishing. In this sense, there end up being companies and industries that do very well during downturns, while other companies and industries grind to a halt—or go out of business altogether.
As both an investor and an entrepreneur, here are my predictions on 12 major industries being affected by the coronavirus.
1. Home Utilities
It goes without saying that if the world is mandated to stay at home, anything based around home utility is going to do very well (whereas you can imagine if the opposite problem occurred, and it was unsafe to be at home for some reason, home utility companies would suffer).
Companies like Peloton right now are soaring because, well, their whole “sell” is the benefit of working out from home. In addition, if you were hesitant about buying a Peloton before quarantine (because you already had a gym membership or a gym at work), all of a sudden you have a reason to jump on the bandwagon.
2. Food Delivery Services
Uber’s stock has gotten pummeled, but I think people are undervaluing the role UberEats will play in the near-term.
With so much fear around going out to eat, restaurants shutting down, etc., companies like UberEats, DoorDash, Postmates, etc., are going to become a staple in our quarantined society. Even after people are encouraged to “go back to work,” it’s going to take some time for restaurants to come back to life.
3. Reusable/Sustainable Products
This is an interesting one because on the one hand, things like reusable cloth masks couldn’t be more in-demand.
On the other hand, grocery stores in California are actually reversing their stance on eliminating plastic bags because they fear people bringing cloth bags into their stores because of germs. With that in mind, there is going to be a lot of fear over the short and medium-term of reusing things that end up being brought out into the world.
Reusable at home is a different story.
4. Shelf-stable Foods
If you’re a company that sells frozen foods, you’re going to do very well.
For example, one of our biggest investments in our family office is a company called Saffron Road. They were one of the first to do organic grass-fed sustainable frozen food almost a decade ago. And since the coronavirus has hit, their sales are up tremendously. More and more people are stocking up on food to keep in the pantry and freezer.
5. Prepper Gear
Unfortunately, guns are at the top of this list.
For some reason, people are reacting to this pandemic by buying firearms. But other goods are being bought up like crazy, such as toilet paper, paper towels, cleaning supplies, etc. Sales on anything that would be a “need” in dire circumstances are going to increase dramatically in the short term. They already are.
As a universal hedge against the government, cryptocurrencies are going to gain a lot of popularity over the next year.
A lot of people feel like the U.S. government really mishandled the spread of the coronavirus. Now, trillions of dollars are being injected into the market, billions of dollars are being used to bail out companies that spent all their cash on stock buybacks over the past decade, interest rates are at zero, small businesses everywhere are shuddering, and all the while, the everyday American is struggling to actually claim their tiny stimulus check to keep the lights on.
Cryptocurrencies are more than just a financial instrument. They are a political statement, saying, “I trust this mathematical ledger more than I do the U.S. dollar.” And more and more people are moving in that direction.
Unless you are a big-box store or an essential business, retail is dead right now.
E-commerce is the only game in town.
Amazon, Walmart, Target, and a few others are going to do well in the real world, but corner stores and boutiques are going to have a very hard time. As a result, many will rely solely on their digital businesses to stay alive—and in order to do that, they will need to double-down on advertising channels that are also doing well during this downturn (Facebook and Instagram, for example).
FedEx is going to do extremely well. Anyone who can optimize logistics in shipping right now is going to be crucial to keeping the economy afloat. Again, this is why Uber is compelling because they fall within this category.
On the flip-side, the U.S. Postal Service is in some trouble right now, and the government is sort of looking the other way.
Hospitals are completely overwhelmed right now, so any medical solutions that can assist patients from afar are going to be highly effective.
One company I’ve been thinking about this with is Smile Direct Club. Here is a business that is able to deliver orthodontic work remotely without having to physically leave your house to see a dentist. They are a teledentistry company, and ship customers clear aligners.
10. Restaurants & Restaurant Groups
This industry is going to have a very hard time.
Restaurant groups will most likely be alright, but the unfortunate reality is that if you were a worker at one of these restaurants living paycheck to paycheck, you most likely have already been let go. You might get some modest assistance from the government (which will take a few months to arrive), but for the most part, restaurant workers are being affected terribly.
Travel is not going to just “bounce back.”
People are going to be hesitant to travel for the next year, minimum. It’s not going to be a luxury. People aren’t going to be taking vacations. Travel is going to be seen as something you only do if you have to.
As a result, airlines are being severely affected. Hotels are down—and this viral video by the CEO of Marriott sums things up perfectly. Even businesses like Airbnb are having a hard time finding a clear path forward (and Airbnb was set to IPO in the next couple months, which has since been postponed indefinitely).
12. Corporate Events
Of all the marketing tactics a company could spend money on over the next year, events is going to be at the bottom of the list.
Reason being, there is already a lot of risk in throwing an event. There are a lot of upfront costs, a lot to manage, and it’s all dependant upon people showing up. In today’s climate, attendance is going to be at an all-time low for quite a while, making this marketing method feel disconnected from people’s current behaviors.
There are many, many more industries being affected by this global pandemic, but these are the ones at the top of the list.