Earth Is Closed Today: And Business Down

There is a flair PM Modi attaches to his 8 PM addresses to the nation and the following midnights.

Last time he did that in Nov 2016, the country shook. Its people shook, its economy shook. Chaos ensued with serpentine lines at banks, hospitals and grocers. Distress followed in daily life. The prime minister had announced the demonetization of Rs 500 and Rs 1000 notes in circulation at that time.

This time, on Mar 24, 2020, he went live, the country was shaken. Its people shaken, its economy shaken. Chaos ensues, but with fear of serpentine lines at banks, hospitals and grocers. Distress follows in daily life.

PM Modi announced the lockdown with this slogan drawn from social media

The prime minister had announced a 21-day lockdown for the whole country of more than 1.3 billion people. No, the country is not in a state of emergency, the country is not at war. This is the biggest lockdown attempted in the history of mankind. And this is sadly, necessary.

…

Pre 2020: What Do We Know About The Disease?

On December 31, 2019, the World Health Organisation’s (WHO) China office heard the first reports of a previously-unknown coronavirus, COVID-19, behind a number of pneumonia cases in Wuhan, a city in Eastern China with a population of over 11 million.

What started as an epidemic mainly limited to China has now become a truly global pandemic. There have now been over 9,00,000 confirmed cases and over 48,000 deaths all over the world. While India has not faced a very large number of cases as China, Italy or the US yet, but with over 2,000 confirmed cases and 50 deaths (at the time of writing), India might face an explosion in the number of cases as time passes and symptoms emerge.

The disease appears to have originated from a Wuhan seafood market where wild animals, including marmots, birds, rabbits, bats and snakes, are traded illegally. Coronaviruses are known to jump from animals to humans, so it’s thought that the first people infected with the disease – a group primarily made up of stallholders from the seafood market – contracted it from contact with animals. According to researchers, pangolins and bats are the prime suspect animals from whom humans seem to have contracted this virus.

The epicenter of the worldwide epidemic: Wuhan Seafood Market

The highly contagious virus has no vaccine or proven treatment yet, and has caused a lot of strain on even the best healthcare systems in the world with over a thousand new cases being reported in countries like the US, Italy and China on a daily basis. Medical staff is faced with the unfortunate choice of deciding who to provide care to owing to lack of medical infrastructure and devices. Not even world leaders are safe, with even the likes of British crown-prince, Prince Charles, British prime minister Boris Johnson and Canadian Prime Minister Justin Trudeau’s wife having contracted the virus.

While the number of cases and deaths has shot up significantly since Mar 27, this infographic provides a basic timeline

Let us take a look at what this means for businesses and how they join hands with authorities to keep the average consumer comfortable at home.

…

Government Jumps in Action

Authorities have shown commendable agility in trying to contain the possible epidemic in India. Government machinery swung into action way before the first confirmed case of coronavirus came up in India, with both the Center and the States issuing advisories and quarantining and testing people suspected of being infected.

Airports looked like railways stations with people waiting for their test results before being allowed to leave premises so that infected people can be directed to isolation wards in hospitals for treatment and possibly infected people can be directed to quarantines.

While the DGCA mandated airlines to deep clean airplanes every day and sanitize them before every flight scheduled, there are quite a few loopholes and points of failure that could later prove to be catastrophic in hindsight.

The test was only for those with a history of travel to the affected countries or may have come in contact with a Covid-19 positive carrier and were showing mild symptoms of the disease. If a patient walks into a health center with common cough, cold, or flu, but claims not to have come in contact with a Covid-19 patient, there will be no tests on that person.

That criteria needs to be broadened immediately. Those terms in the inclusion criteria could be glaring red lights. That’s where a large set of Covid-19-infected patients could go undetected. In a closed community, people who had had contact with a traveller from a Covid-19-infected country may not be identified. Also, there have been reports of a large number of patients going missing, who can never be identified for the tests.

While the government is testing extensively at the airports, the critera needs to be explanded to be comprehensive

Such a situation could potentially lead to a larger community getting infected. Given that the virus has started spreading in smaller towns away from metro cities, where healthcare facilities may not be adequate, things can spin out of control.

Unless India aggressively detects infected people by focusing on high-risk populations, Covid-19 can become the AES (acute encephalitis syndrome) for the aged and infirm. It can potentially kill hundreds, if not thousands, just like AES killed many Indian children last year.

This might just be a ticking time bomb for India with the densest population in the world, but a very inadequate public health infrastructure. As a result, India has a low number of government labs authorized to test for coronavirus, and only the National Institute of Virology in Pune can pronounce the final verdict on a true positive after another round of testing at their facilities. The time lag in transporting the sample from the test centres to Pune may prove too costly for a patient in the ICU. That delay led to the death of a 76-year-old patient, the first victim in India.

…

Getting Back to the Basics of Personal Hygiene

Despite all of humanity’s proclamations of being the smartest species on Planet Earth, armed with all the technological advancements, it was just a small new virus that forced it to fallback within the supposedly safe confines of its homes with only one basic means of defense – washing hands.

This is pretty evident by the trending search term 'Hand Washing' on Google Search service over the last few months, gathering alot of steam over January-February and finally peaking over in March.

With a vaccine nowhere near in sight and the virus spreading faster than wildfire, there’s no dearth of panic buying, hoarding and black-marketing of cleanliness products like hand sanitizers, hand wash, and soaps. Sales have shot up drastically, with items across brands and price ranges frequently going out of stock. Handwash sales in the UK surged by upto 255% as early as February.

Rumors and fear-mongering led to mini riot-like situations across American and Australian suburbs which ran out of toilet papers in market, as people exponentially increased focus on personal hygiene. The situation got so bad that an Australian daily printed 8 blank pages in its newspaper that people could use as toilet paper.

Not only this, there has been unprecedented sales of all types of facemasks as well, ever since the news of the virus going international spread in December. Though Walgreens, America’s second largest pharmacy retail chain, says that masks are not capable of preventing coronavirus infection, both surgical and N95 masks are being bought in unprecedented quantities at much higher-than-normal prices. While this is good news that the public is taking steps to stop the virus from spreading any further, it is deplorable that such panic buying leaves people who actually need masks – patients, care-givers and medical professionals on the front lines – without adequate number of masks hence exposing a potentially high risk point of failure.

Such sheer numbers the initial panic buying of toilet paper, sanitizers, handwash and masks raked in that retailers, both online and brick-and-mortar, imposed limits on the number of items customers could buy facing frequent stock-outs.

It is interesting to note, however, that every available hygiene related shortage was not caused by panic buying from the average retail customer. A huge role was played by bulk buying from corporate offices and other public places like banks and malls etc. The shortages were such that factories started producing fake/substandard sanitizers and masks and even those were being bought up quickly off the market.

Sanitisers, Handwash and other PPEs like facemasks have gone AWOL from the fight against Corona

A common sensical guess based on the number of bottles of sanitizers used up at a particular point in the office/building, the number of times the bottle is replaced and the number of stocks the managers would have bought given these were in use way before the public lockdown was announced in India would lead us to believe that such panic bulk buying might have led to shortages at local distributors which can easily lead up to the average citizen following the herd mentality and sanitizers actually requiring ramping up of production.

However, this shortage-inducing bulk buying across the nation could have possibly failed in fulfilling its purpose given the lackadaisical attitude of people who did not adhere to the guidelines recommending hand sanitizers and other basic personal hygiene as a means of prevention for coronavirus.

…

Food in the Times of Corona

Agriculture is often and rightly called the backbone of the Indian economy. With the current situation, even this is supposed to take a huge hit and be a major contributing factor to slowdown in the Indian economy. Given that the previous harvest season of the Kharif crops was spoilt due to unseasonal rains but gave hopes of a bumper harvest for the Rabi season due to higher soil fertility and water reservoir levels.

However, there has been no directive from the central government regarding social distancing to be exercised during farming activities and hence different state governments are coming up with their own directives for the same. For example, the farmers are allowed to harvest and cut crops in groups of 2-4 based on the level of machinery used, after keeping the gram panchayat in loop. Apart from this, the current lockdown situation has adversely affected the supply-chain and distribution channels at various levels in the agriculture value chain which is another huge blow to the sector.

With harvest likely badly hit, a shock to the agri sector is an understatement

This will adversely affect the quantity of production and farmers are going to face losses. Not only that, the economy was projected to be on a path to recovery boosted by bumper harvests and earnings from the agricultural sector, and these likely won’t stand true any longer.

Talking about food, it is imperative to mention how the country has been scrambling to stock up rations at homes given the lockdown. Though the government has assured that there will be no disruption to essential services, issues do crop up nonetheless. Citizens continue to grapple with problems like stock running out due to panic buying and hoarding, limited hours of sales being allowed and supply-chain issues due to restrictions and lack of clarity on both inter and intra-state transportation.

In the wake of local grocers running out of stocks, people have turned to online, runner-based delivery apps like BigBasket, Grofers, Dunzo Zomato and Swiggy. While they too had to face issues like restrictions on movement of delivery agents and disruptions in supply-chain, they have surprisingly been agile enough to quickly coordinate with the government to obtain requisite permits for their supply vehicles and delivery agents. Big Bazaar, on the other hand, has ramped up deliveries in a few tier 1 and tier 2 cities, by leveraging its network of not only Big Bazaar and FoodHall stores, but also its retail chains like EasyDay and Heritage Fresh.

The delivery agents are no less than heroes in times of unprecedented crises like these

The state governments are therefore looking at introducing passes for a select few delivery partners, so that they can do their jobs without having to worry about facing the music. Digital IDs have also been suggested as these are thought to help speed up the process of obtaining the passes. In some cases, the warehouses where the raw materials are stored are not being allowed to open, and this is something the government must look into. In the next fortnight, these logistical challenges should be dealt with, so that at least the delivery of essential items can be continued. The aggregators, on their part, should also ensure the safety of the delivery personnel, as they are the ones who are at greater risk of contracting the disease.

While there was a dip in business of groceries and food delivery apps in the initial days due to lack of clarity on government directives, it has now surged way past normal levels. While the average order quantity has increased a lot, there has been no huge increase in the number of orders. While errand-running apps like Dunzo have seen a surge in popularity and number of orders, it will be interesting to see how their business pans out post the lockdown period.

The impact on the gig economy in India, which was once projected to achieve a market share of around USD 455 billion by 2023, has also been huge. In the short term, we have seen it get derailed due to supply chain disruptions, less manpower and weak demand. Online delivery, which is a huge part of the gig economy, was supposed to grow by 9.5% from 2020 to 2024, has been affected too. Ever since Covid-19 has gripped the nation, consumers have rightly become very cautious, because there are ample opportunities of the disease spreading in the entire online delivery chain. To counter this, the aggregators introduced zero-contact delivery, in which a delivery personnel would not directly come in contact with the consumer, ensured that the partners wore proper protective masks, gloves, etc. and maintained proper hygiene. Just as these steps were leading to a spurt in demand, came the lockdown which coupled with the already low demand, spelled doom for the online delivery sector (food and essentials included).

This whole scenario has been nothing short of catastrophic for the ride hailing services, a sector that was supposed to grow 13.5% from 2020 to 2023. Not only in India, but around the world, the operations of the cab aggregators like Uber and Ola have come to a grinding halt. However, their recovery shouldn't be that hard and for a few days after all this boils down, we might even see an uptick as many people might prefer cabs over other modes of public transport.

...

The State of Travel and Tourism

Another interesting trend to note here is how the hospitality and travel industries have been affected by the whole episode. While there was a surge in number of people travelling home due to the fear and uncertainty surrounding the situation, there was a sudden drop after Janta Curfew, the one-day voluntary curfew requested by PM Modi. Flights were being cancelled due to low traffic and customers were offered free of cost rescheduling and cancellation. However, road, rail and air travel came to a complete halt once the 21-day lockdown was imposed.

A sight as rare the an empty flight has been reduced to something very necessary

The travel-ban and the mass hysteria following the lockdown has meant doom for the travel and hospitality industries. While airlines look to layoff jobs and pay reduced salaries to employees, looking at losses to the tunes of USD 1.5-1.75 billion, the more unorganized hospitality industry stares at a possible loss of one million jobs, looking at a possible loss in excess of USD 1 billion.

The resulting cancellations proved to be a nightmare, and in most of the hotels, because of the receding demand, prices even one week before the lockdown were half of what they were a month prior to that. This was also exacerbated by the travel restrictions on foreigners, who on an average make up about 24% of the occupants in the hotels. What's more damaging is that this is the peak tourism season. A few chains including OYO, Lemon Tree, Fern Hotels, have agreed to convert their properties into quarantine zones, till the situation stabilises.

Federation of Associations in Indian Tourism & Hospitality has written a letter to the Prime Minister Narendra Modi, seeking his help on several issues possible bankruptcies and mass unemployment, and asked for relaxation of certain norms pertaining to the sector’s business. This is, keeping in mind that many hotel owners are already in debt and this crisis would crush them financially, and also the fact that as much as 70% of the 55 million work-force, directly and indirectly related to this industry, would be affected. There would be pay cuts, starting from the top, which would at some point also impact those at the bottom, if the situation persists.

Airbnb is set to get affected as well, with its recovery being equally tough, and probably much more difficult than that of the traditional hotel chains. This is mainly because of the trust deficit in such type of properties; Airbnb has very less control over its occupants, while the regulations followed in the traditional hotel chains would not generally permit that.

Even when all settles down, there is no hope of a quick uptick or improvement in business since most customers would suspect hygiene in externally maintained rooms and kitchens and would understandably want to remain within the safe and known confines of their home cities.

…

The Positives and The Heroes

Amidst all the uncertainty and despair that has gripped the country, it's encouraging to see the prominent industrialists and big businesses take up the mantle to fight this deadly virus.

While Tata Trusts has pledged Rs. 500 crore for fighting Coronavirus, Hindustan Unilever and Vedanta have pledged Rs. 100 crore each to the cause, Reliance has declared an initial monetary support of Rs. 100 crore and Anand Mahindra has contributed 100% of his salary.

India's most fortunate lead the fight against Corona with all their wealth and industry capabilities

Reliance and Mahindra are also helping set the required infrastructure up. While Reliance is setting up a 100-bed hospital in Mumbai and an isolation facility in Lodhivali, Mahindra Holidays has also offered its resorts as temporary care facilities and Hindustan Unilever will contribute Rs. 10 crore for better medical facilities, while also susbtantially reducing the prices of its soaps and sanitisers.

Reliance is also trying to increase the production of protective masks to 1 lakh per day, while Mahindra has committed to manufacturing ventilators. Reliance will also be providing free fuel for all Emergency Service vehicles used in transport of Corona and quarantined patients. Mahindra Group has created a fund to help the hardest hit businesses in its supply chain that primarily includes small businesses and the self-employed.

Another tiny positive thing has been Parle-G's resurgence. This was a company that, even a few months ago, were considering laying off a significant amount of its workforce. Due to the ongoing lockdown, however, people have started stocking up Parle-G, the ultimate comfort food, so much so that its sales have increased by 25% wrt the average of March, that too in the last couple of weeks. Stocks are getting sold out, despite the company increasing its production by 10-15% - the issue with the lag is not a supply one, but is a distribution one, that can be attributed to the supply chain disruption and restriction of movement.

…

While we understand there is a lot of fear and rumor floating around regarding COVID-19 and the impending onset of Stage 3 in India, it is important that we maintain a societal calm and are able to help masses to stay home and stay safe.

Celebs are using their influence to urge people stay home, companies like YouTube have launched their own campaigns like #StayHome. Jio came up with its own tagline of #CoronaHarega, and has been offering plans at reduced rates and extra data limits to help people work from home easily.

Spending so much time at home might be an issue for the elderly, especially with supply of the newspaper disrupted. While some can be solved digitally, as with HDFC starting an email campaign with The Indian Express, delivering the daily e-paper to your inbox directly, some cannot. The government on its part, through Doordarshan, has brought back telecasts of extremely popular TV shows of yesteryear like Ramayan, Mahabharat, Byomkesh Bakshi and Shaktimaan.

...

We, at BizzNeeti, urge our readers to stay home and stay safe. That being said, it is important to stay aware of all that is happening currently, and we try to cover a wide range of issues over the past couple of weeks in a manner as concise and informative as possible.

Next week we’ll be back with more on the disruption in businesses due to coronavirus, and how we as a nation aim to tackle them.