Far from regaining any momentum, non-essential businesses in cities around the world are facing the prospect of shutting down yet again due to second waves of the coronavirus outbreak.
The global economy was already in the doldrums when governments imposed lockdowns in March-April 2020. Markets were waiting to discern the extent of the dent caused by the lockdowns when disturbing news about second waves started coming in from major cities across the world. This led to re-closures of non-essential businesses. In late August, when the results for the first quarter of the 2020-21 financial year were declared, USA’s GDP had shrunk by 4.8 percent. Moreover, projections foresee the economy further contracting by 11 percent in the second quarter of FY2020-21.
Second wave in major cities across the world have led to re-closures of non-essential businesses.
The sinking economy affected people and businesses from all walks of life. However, the worst hit sectors were manufacturing and services. The situation is grimmer taking into account the fact that the number of employed people in the US is expected to be 26 million lower than a year ago.
Watch: Fears of a Second Wave hit US
At a time when job cuts and salary cuts have become the order of the day and businesses are facing the heat of a poor economy, consumers focusing solely on essential buys is certainly not helping. Non-essential shopping has become a dormant phenomenon while the surge in essential commodities’ purchase has only partially helped economic recovery.
In the forthcoming quarter, the number of people employed in the US is projected to be 26 million less than what it was a year ago.
The Way Forward for Non-Essential Businesses in 2021
Non-essential businesses have found it tough to restart operations. Far from regaining any momentum, they are facing the prospect of shutting down again due to second waves of coronavirus outbreak. Shopping malls have reopened, but they are not attracting many customers. Surveys unanimously suggest that people are wary of catching coronavirus and want to avoid going to public places. Similarly, another important factor is that buyers are short of cash and don’t want to spend money on non-essential things.
In such a scenario when non-essential items are not in focus, what should be the priority for businesses in the domain? Can they recover on their own? Do they need more stimulus packages from the government? Is innovation the answer?
Here are 8 ways for non-essential businesses to reshape themselves for the Covid-19 induced economic downturn and recession in 2021:
1. With liquidity crunch making it nearly impossible for many non-essential businesses to make a recovery themselves, governments around the globe are stepping in to provide stimulus. Businesses should study the stimulus packages and schemes to realize how they can make the most of institutional support from states to get back on their feet.
Businesses should study the stimulus packages and schemes to realize how they can make the most of institutional support
2. With recovery reaching pre-Covid levels only a distant possibility right now, non-essential businesses need to enhance focus on exports for some time. Most major countries have come up with ways to enable partial functioning of their economies.
3. While medium and small scale non-essential businesses have taken a hit during coronavirus, big companies associated with them — Amazon and Walmart — have profited more than ever. These giant firms are the go-to channels for non-essential businesses to sell their products as brick and mortar shops remain closed.
4. Since there is still a lot of uncertainty about economic recovery, non-essential companies should develop a plan based on the current situation. Businesses should analyze what areas need funding. Expenditure can be reduced or eliminated completely.
Non-essential companies should develop a plan for based on the current uncertainty.
5. Non-essential businesses should be conservative in their projections of growth rate for next six months. They should come up with modest business plans where they can survive in tough economic conditions.
6. Covid-19 has changed the parameters of the global economy. In the new normal, companies should identify new business opportunities. They must give up their old ways of working and devise new strategies to handle the unprecedented challenges.
7. Non-essential businesses are one of the worst-hit sectors, so leadership needs to be agile enough to gauge problems soon and solve them asap. Flexible goals and processes can help stabilize operations in a time of crisis.
Flexible goals and processes can help stabilize operations in a time of crisis.
8. Since non-essential businesses are low on their finances, they should be smart enough to identify their core requirements and retain or hire new employees accordingly.
9. Non-essential businesses should also focus on consumer safety. In the Covid-19-affected world, people are precarious of having physical contact. Ensuring consumer safety will help them form brand loyalty and re-establish their businesses.