Prof. MJ Xavier
Founding Director of IIM Ranchi
Professor of Marketing and Business Analytics with LIBA, Chennai
We belong to a generation that has the dubious distinction of having seen tsunami, demonetization and now the corona virus in our life-time. But the corona virus turned out to be the worst to hit India and the whole world. The lockdown has given time for people to rediscover their talents and introspect about healthcare, the planet and life in general. All of us have had to cut down our copious consumption instincts and stick to the essentials. In some sense it has taken us back to life during the pre-industrial days. The only saving grace is that we have electricity and the internet. Otherwise, our visits to restaurants and malls are gone. Many have not had their hair trimmed or facials done as the beauty parlour remains closed. We have realised that we can live without many things that we took for granted, such as, cars, aeroplanes, bars, jewellery shops, gyms, swimming pools and and even parks.
Thanks to the efforts by the Government, we should get over the Corona acute phase soon with limited damage to lives. Of course the damage to the economy is going to be colossal. Many have lost their livelihood and their jobs. A number of other people are going to be subjected to pay-cuts. Many companies and brands will fall by the wayside. Our supply chain is crippled and money supply has shrunk. Under these circumstances, how should the individuals and corporates prepare themselves to face the post-Corona world. This article looks at the factors enabling recovery, industries aided and hit by Corona, and strategies for individuals and corporates.
Factors Impacting Recovery
There are many factors that determine to what extent a community will bounce back after a disastrous epidemic like Corona. That includes no. of people who faced the disease, demographic profiles of the population, the Government and the Industry.
To understand the size of the population that has witnessed the death trail of corona, we should not look at aggregate numbers but the number of people affected per million population. The data about the number of cases, deaths, cases per million population, deaths per million population, no of tests done and tests per million as of April 15th is reported in the Table below.
Source: https://www.worldometers.info/coronavirus/?#countries, accessed on 15.04.2020
With only 8 cases per million population and 0.3 deaths per million, the Indian public would have hardly understood the enormity of the problem. Of course, adequate testing has not been done yet in India. Other developed countries, such as the USA, Spain and Italy have done a lot more testing. Italy has done 100 times more tests per million population than India. One other factor is that the death rate per million has doubled in 5 days in India as of 14th April as compared to 7 days in the US. (https://ourworldindata.org/coronavirus). Given the steps we have taken so far, we should be able to contain it within reasonable limits.
The second major factor that determines the speed of recovery is the nature of the population. India is a country of young people with more than 85% of the people (as of 2017) below the age of 55. This group is raring to get back to work. A substantial 17.9 % of the population belongs to the 15-24 age group. This group is the one with an entrepreneurial mindset and is already finding business opportunities in these difficult times. For example, Paytm was born during the demonetization. A number of youngsters are working on start-ups that provide online education, wellness tips, AI enabled service companies.
The most adverse factor is the income distribution. 70% of wealth is concentrated in the hands of top 10% of the population. Bottom 50% of the population owns only 2.5% of the wealth. About 22% of the India’s population lives below the poverty-line. Further, poverty levels are acute in rural areas of Chhattisgarh and Jharkhand where it is as high as 45%. These people are worst hit due to the lockdown. They will need a lot of subsidies and support from the government before they can join the main-stream.
The other two factors are the Government and the Industry. When the Government will lift the lockdown and what relief and revival packages will they announce will determine the speed of recovery. The speed of response of the Industry in terms of reinventing their businesses will also play a critical role in the recovery of the country. For example, Swiggy has enabled its ‘Grocery’ deliveries section in over 125 cities in India. The company says that it has tied-up with national brands and retailers including HUL, P&G, Godrej, Dabur, Marico, Cipla, Vishal Mega Mart, and Adani Wilmers to deliver essentials to its customers. They also supply vegetables and meat products. Since work-from-home is catching up, companies including Myntra, Lifestyle and Peter England have introduced attires for home-wear.
Impact on Consumption
Lockdown has taught consumers to be frugal and keep away from non-essential things. Except for groceries, fruits & vegetables, electricity, internet and medicines, all other items have taken a beating. To some extent there is a surge in online training and skill upgradation. During the time of distress, people also seek counselling services, yoga, meditation and spirituality. This in turn has the impact of stalling the entire economy.
Consumers will re-examine what they consume, and how much they consume. Having experienced shortage and thus the value of even small little items like masks, milk, and other necessities, consumers are expected to minimize waste. Many would have experimented with cooking different food items. Home cooking, gardening to grow vegetables and herbs are likely to stay on for a long time. Many who lost jobs and experienced pay-cuts are sure to spend less and save more. People would have become aware of our weak health-system and would have prepared to stay healthy by eating healthy food and through physical exercises. Some would have discovered the joy of yoga, meditation and spirituality. Many would have become conscious of the planet and its fragility and would become more eco-friendly.
According to Philip Kotler, there is an anti-consumerism movement and he has identified 5 types of anti-consumerists.
- Life simplifiers, who want to eat less and buy less.
- Degrowth activists, who feel that too much time and effort are going in to consuming
- Climate activists, who worry about the planet
- Sane food choosers, who have turned in to vegetarians
- Conservation activists, who plead to repair, reuse and give to needy people.
In India, anti-consumerismmay not have such a great impact. People are not going to be against marketing, advertising and brand promotion in India. However, consumers will become more value-seeking. Nirma type of brands for the bottom of the pyramid will spring up to satisfy the value-seeking consumers. There will always be a section of people with deep pockets, and will easily go back to their old ways of consumption the moment lock down is lifted. The summary of corona aided and affected industries is presented in the following Table.
|Corona Aided Industries
|Corona Hit Industries
|AI and Data Sciences
|Air Travel and Tourism
|Healthcare, Hygiene products and pharmaceuticals
|Automobiles, Minerals and metals
|Supply Chain and Logistics
|Real estate and Housing
|Psychological Counselling and Spirituality
|Online education and Skill Upgradation
|Higher Education (especially Engineering and Management)
|Social sector and Eco friendly products and Services
|High Tech Agriculture
Due to lockdown, items such as alcoholic beverages, gold and jewellery, leather items, textiles and apparel and beauty parlours have got hit temporarily. Same is the case with eating out. Consumer durables, such as mobile phones, refrigerators, furniture etc. are also hit and may take a couple of years for the demand to get back to its normal levels. Air travel, automobiles, real-estate and housing have taken a big hit and could take a long time to recover. This is because of the overall downturn in the economy is likely to leave lesser disposable income in the handsof consumers. Pay-cuts and job losses will add to the woes of the consumers and the industry. Domestic travel and tourism have also been adversely affected. Insurance and healthcare are temporarily down; but would surge in a big way in the years to come. Higher education could get adversely affected due to its high cost. With dwindling global opportunities and reduced corporate pay, people would not see much value out of higher education. Of course, AI and data sciences have been in great demand due to their application potential in virtually every industry and every function.
Skills and Courses for the Post-Corona World
Indian middle class dream is certainly shattered. Typically, “study engineering, get an IT job and migrate to the US”, kind of model is gone for the foreseeable future. There are definitely opportunities for engineers to become techno-preneurs. Engineering education itself has to become more hands-on so that a graduate should come out with several new product ideas to set up a new venture. There will be a demand for good engineering colleges and the weaker or the less efficient ones will see a difficult time. Demand for core disciplines such as mechanical, civil, electrical and electronics will remain subdued for the next 5 years or so. Courses on AI, data sciences and Block chain would assume prominence. Chemical Engineering may pick up once again as India will become a major supplier of bulk drugs to the world. Bio-tech also will see a marginal growth.
There will be a major shake-up in MBA education too. Top institutions will survive but the weaker ones will wither away. Obscene fees collected by colleges will see a downturn. Value for money should be the mantra of all businesses. With the health sector becoming important, Health Management programs will assume importance. Supply chain and Logistics will gain prominence. Media management and Business analytics programs will also be in demand. Name of the game is specialization.
Now that people have experimented with online classes, more and more online programs have come to the market. Be it business analytics, digital marketing, dieting and exercises, yoga and meditation, psychological counselling, design thinking, drawing, music, or fashion design, everything is available online. People are not shy of learning online. Corporates have also started valuing such skills acquired through online portals. Though these courses, by themselves, may not fetch a job, these are good value-additions for professionals like engineers, doctors, MBAs or even other graduates.
The Universities will have to reinvent themselves by making every program a blended learning program. Residential programs should re-think their idea of wasting 4 years for an engineering or two years for an MBA program. They could send them to industry during alternate semesters so that they can double their in-take with the same residential facilities. During the semesters in industry, courses can be offered online to stay in touch with their students.
Psychology and counselling will assume greater importance to deal with mental trauma caused by death of loved ones or loss of job and financial issues. Suicides are on the rise as people are unable to maintain the living standards that they were accustomed to. Many won’t be able to pay EMIs for their car or house bought by them. Opportunities are there for yoga, meditation and spirituality. Either specialized courses can be introduced in these areas or can be bundled with every course taught by colleges and Universities.
Healthcare is at the cusp of a major revolution. We see a convergence of engineering, medicine, technology and management to solve health problems. IIT professors are working on medical equipment. Corona has brought healthcare in to sharp focus. Research is happening on precision medicine and data scientists play a key role in developing new therapeutic methods. Just as everyone migrated to IT in the 80’s, people are getting in to healthcare in a big way.
|Health care, pharmaceutical and allied industries are the ones that would take India to newer heights. Needless to say that AI and data sciences will continue to be high growth areas. Complement your skills by doing several add-on online courses in these areas. Be prepared to do more work for the same or less pay.
Strategies for Companies
Companies operating in Corona-hit industries will experience decline in their business. They will have to come up with innovative ways to create value for their customers. Real estate and housing have touched obscene heights. They have to come to realistic levels to sustain and stimulate demand. Air travel will definitely dip in the coming days as people have started using teleconferencing to conduct meetings across geographic boundaries. Hence they should focus their attention away from ‘travel for business’ to ‘travel for pleasure’. Offer tour packages by tying up with tour operators. Innovate in every way to offer better value to customers. Auto companies should do a lot of thinking to reduce cost of owning a vehicle. Instead of selling they may resort to leasing. They need to reinvent their business. Same is the case with consumer durables.
Since IT companies have now got metrics and measures to manage the people who undertake work from home, they have to think of permanently shifting at least one third of their work to this mode of working. The more they cut the need for brick and mortar, the more is their gain in terms of productivity and profitability.
With the millennials joining the work-force, many corporates have to re-think their job design. Unless they offer challenging and engaging assignments, the young kids are not likely to stick to their jobs. Work-from-home and flexi-working are options that could entice them.
Individuals must, therefore, prepare to move to industries that are expected to do well in the post-Corona world. Healthcare, pharmaceuticals and allied industries are the ones that are likely to take India to newer heights. Needless to say, AI and data sciences will continue to be the high-growth areas. Complement your skills by doing several add-on online courses in these areas. Be prepared to do more work for the same or less pay.
Corporates will do well to develop products for the bottom of the pyramid. Every company will have to re-think their business and reengineer their processes to offer better value to their customers. Innovation will be the key to corporate success. Have a better value discovery, design and delivery process to attract and retain customers.
The author is a Professor of Marketing and Business Analytics with LIBA, Chennai.