Rytis Krušinskas, a professor at KTU School of Economics and Business and KTU Chairman of the Senate
The coronavirus or COVID-19 is a vast and urgent topic recently. Information on this subject is intimidating, instructive, motivating, encouraging. Undoubtedly, one could find many more definitions for the times we are living now.
If we were to compare this situation with the SARS epidemic in China 17 years ago, which is somewhat similar to what is happening today, the beginning of SARS in Guandong Province is considered to be December 2002. The first case was registered and reported in another province Beijing in March 2003.
The highest incidence rate of SARS infection was recorded in April and May 2003. Looking at the economy and finance, in June 2003, the market returned to trends similar to those expected at the beginning of the year.
Increase in food and sanitary items sales
The significant increase in food and sanitary items purchasing during COVID-19 is similar to that of the 12 weeks in spring of 2003 in China. According to KANTAR, in 2003 during the most intense 12-week period of the SARS epidemic in China, supermarkets’ turnover grew by 12%, yielding 9% growth to the annual turnover. The average demand for personal care products (over the 12 weeks) was twice as high as the annual average increase.
Meanwhile, other businesses have suffered and are currently suffering heavy losses. It will only be possible to evaluate them from a historical perspective. However, the SARS experience shows that it took 3-4 months to stabilise the economy after the virus outbreak.
E-sales will increase
One more tendency is that COVID-19 will increase the growth of e-commerce for some commodities, and at the same time, it will change people’s future shopping habits.
According to Forbes forecast, electronics sales in the US e-commerce market share will increase to 42.7% compared to total retail market sales. Forbes also predicts that the e-commerce apparel market will account for almost one-third (28.9%), food and beverages’ – for 3.2% of all sales.
This is the ‘magic’ of numbers. Some parallels are becoming more apparent today, but we can only guess what will happen in the future when the COVID-19 situation in 2020 will be history.
There are no universal solutions
However, everyone can find the most appropriate, personally acceptable way to describe this information. Businesses will have to re-plan their budget. The situation will affect those companies which will increase their turnover and those that are looking for the most efficient solution during a difficult period. Quarantine and the freeze of activities for, let’s say 1 month, may force a write-off revenue for the analogous period of time. However, it will not be possible to do so with all the operating expenses suffered during that period, which will make it necessary to assess the losses and to look for sources of financing/compensation.
It is hard to find universal solutions for every business or every sector. The whole world understands that if the economic engine stalls, it will affect many areas of life.
Active listening and dialogues between national governments and business, governments and science are important here. In Lithuania, this is already happening. It is always easy to criticise from the outside or after some period of time, but in the COVID-19 situation, we must mobilise and together look for the best solutions.