Industry Horizon (July 2020)

Industry Horizon (July 2020)

09 July 2020

REOPEN WITH CARE

 

 

Steps towards full-fledged reopening


 

Relaxing lockdown measures in phases

 

 

Reopening will require changes to work, commercial, and social life

 


A change in behaviour after lockdown


 

Consumers are cautious, but they are ready to spend

EY conducted a survey to track emerging consumer behavior and sentiment across key five markets [1]. There are five very different consumer segments as the crisis abates. “Cautiously extravagant” consumers (25% share) are financially conservative but expect to increase spending in non-essentials once the crisis is over. “Get to normal” consumers (31%) are determined to resume normal life as soon as possible. “Back with bang” consumers (9%) are younger and working. Although their daily lives had been disrupted the most, they are the most optimistic and spending much more in all categories. Only a third of consumers – “Stay frugal” (22%) and “Keep cutting” (13%) – expect to spend less.
 

Hardest Hit, Slow Start and Quick Start sectors


 

Businesses or events that involve large gatherings in enclosed spaces will be hardest hit

The health risks associated with reopening will differ across industries, depending on the extent workers can engage in distancing with minimal loss of output. The least risky industries include software, manufacturing, telecommunication, professional services, banking, insurance, and agriculture. Food manufacturing is riskiest among the manufacturing sub-sectors. The riskiest industries are air transportation, healthcare, education, arts and entertainment, accommodation, and food services.
 

 

Strategic response to reduce reopening risks

 
 

Solutions for Hardest Hit industries – effective vaccine, digital tools, and substitute products/services

For any industry to recover, individuals need to feel safe and confident that they are protected from the virus. A scalable vaccine is the most effective solution while reopening, but that will not be available so soon. Technology can help make society more resilient during a pandemic and other threats, while helping businesses to stay open or resume operations. There are 10 emerging technology trends, including digital payment, telehealth and robotics. In the absence of a scalable vaccine and digital tools, businesses need to find ways to substitute their offering with products or services that allow greater ability to work remotely and reduce health risks.
 


 

In the absence of a vaccine or scalable treatment, reopening will have to remain gradual and prudent



 

Risky industries can reopen safely with digital tools

 

 

Essential to seek substitute products and services

Service reform

  • The Hardest Hit sector needs to find substitute products and services that allows the ability to work remotely and reduce health risks and collaborate with “tech” platforms which have strong traffic. For example, movies and concerts can be substituted with content delivered via Netflix or Facebook Live. They also need to collaborate with e-marketplaces while scaling down off-line stores to reduce rental expenses.
  • A direct substitute (moving to an identical competitor) is not a good option because those businesses would also be affected. Therefore, the focus would be on indirect substitutes (something different to achieve the same goal) that can respond to new normal consumer behavior.
 


 

Top 10 trends: Biggest influence on businesses in Thailand

 

 

Healthcare: Towards a digital health ecosystem

 


 

Meeting challenges by developing new service offerings

 


Developing new services while reducing investment in new hospitals

 

 

Air transportation: Raising public health standards and seamless travel trends

 

 


Hotels: Swift upgrade to ‘smart hotels’ to meet rising demand from Gen Y and Gen Z travelers



 

Restaurants: Increasing digital business services

 

 

Modern trade: Developing omni-channel platforms and building partnerships with other businesses



 

Retailers will improve health and safety standards and develop strategies to offer value-for-money products

 


  
 

Real estate for sale: Moving towards online sales and the use of VR



 

Real estate for rent: Moving towards scalable floor space and flexible rental contracts



Transportation and Logistics: Greater adoption of data analytics and digital technology



 

Automobiles: Build resilient supply chains and offer rental services to sustain long-term business



 

Construction: Accelerate adoption of digitalization and scale up off-site construction



 

Agriculture: Taking the opportunity to strengthen food security



Transitioning to smart farming using advanced technology and shifting towards value-added products



 

Changes in the agriculture sector



 

How is the pandemic reshaping the agriculture sector?

The pandemic has affected the agriculture sector in 3 ways: (i) Labor shortage issue has worsened; (ii) logistic problems; and (iii) rising public health concerns. This will prompt players in the sector to change process to be less labor-intensive, broaden their distribution channels, and try to  build consumer trust in their products.


 
 
 

Recovery trajectories for major industries after reopening

Our analysis suggests only Hospital and Food Manufacturing sectors would return to pre-pandemic level by end-2021. Air Transportation, Hotel, Restaurant, Auto dealers, and Amusement & Recreation sectors would continue to suffer until end-2022. Construction, Retail, Wholesale, and Beverage sectors have been severely affected but they would rebound faster than other sectors.



 

 Automobile: Temporary plant shutdowns triggered by falling demand will lead to 37% drop in 2020 output


 

Automakers accelerating adoption of digital technologies to strengthen supply chains, expand marketing channels



Hotels: Following the ban on inbound flights, there were zero tourist arrivals in Thailand in 2Q20



 

Hotel bookings continue to rise after hitting bottom in March and April when COVID-19 cases accelerated



 

Hospitals: Thailand might have the opportunity to become a medical hub sooner than planned


 

Housing in BMR: Demand has tumbled, prompting developers to hold back new projects to ease oversupply



 

Retail space: Retailers severely hit by weak consumption, especially among the middle- and low-income groups



 

Rice: Pandemic has increased global demand for rice, but higher price for Thai rice could dampen exports this year

In the first 5 months of 2020, Thailand exported 2.6 million tonnes of rice (-31.9% YoY), generating USD1.7bn receipts (down 12.3% YoY). Exports slipped against rising sales in India, Vietnam, Pakistan, Myanmar and China because the 2019-2020 drought had reduced the output of off-season rice and lifted the price of Thai goods relative to their competitors, by an average of USD140/tonne, the widest price differential in 6 years. Although the pandemic has increased demand for rice overseas, higher prices for Thai rice would depress exports in 2020. We project rice exports would drop by 12-16% to 6.1-6.5 million tonnes this year, from 7.58 million tonnes in 2019.


 

Despite near normal rainfall, there is still drought risk due to low reservoir water levels and a delayed rainy season



 

Note: [1] EY surveyed 4,859 consumers across the US, Canada, UK, France and Germany during the week of 6 April 2020. The survey questionnaire covered current behaviors, sentiment and intent.

 
ประกาศวันที่ :09 July 2020
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