RSS feed Get our RSS feed

News by Topic

BizReport : Research : April 07, 2020

Reports: COVID-19 impacting SMBs, travel brands, restaurants

As more consumers tighten their belts because they have been or fear they will be laid off from their work, businesses are also tightening their belts. Some are making plans to cut employee costs, some are looking at small business loans and many are simply in survival mode.

by Kristina Knight

Most small businesses (87%) surveyed in a recent WalletHub report say they are struggling because of the impact of the Coronavirus across the US and the globe; about one-third (35%) say they can only survive three months if the current conditions continue. Most (68%) say the US government isn't doing enough to help them survive the current crisis.

And while small businesses struggle to survive advertising is one of the expenditures being cut first; according to MediaRadar verticals across the board stand to lose out on ad dollars in the coming months. Restaurant and Bar advertising is expected to drop by at least $1 billion (YoY) while travel brands, including lodging, cruise and airline ad spends are expected to drop by about $850 million.

"In terms of pulling ad spend, airlines, in particular, may be a place to look," said Todd Krizelman, Co-Founder and CEO of MediaRadar. "During Q2 of 2019, 72 percent of their budgets were spent on digital ads, a format that is bought - and likely canceled - on the shortest of notice." 

Much of that lost revenue would have been spent in the sports arenas - as advertisers now have no baseball, hockey, or basketball games in which to buy advertising time. Some of those advertisers - tech brands, retailers and even car brands - will find other avenues in which to buy advertising time. But traditional Primetime TV can only handle so many of those ad dollars.

The Coronavirus outbreak is also pushing some retailers to put more infrastructure and advertising dollars toward their ecommerce offerings. That's the word from Narvar; their new report indicates that while retailers are bearish right now, many are bullish about the future with more than half (58%) believing that retail will be 'back to normal' within the next year.

Still, about one-quarter of the retailers Narvar polled say they've lowered their forecasts for the current time period and only about half believe their ecommerce hubs 'will fare better' now that their physical stores have closed. That is because most aren't set-up to provide a localized shopping experience - 68% say their local stores aren't set up to deliver on online orders. Fewer than 10% are offering either same day delivery or curbside pick up options for local orders placed online.

Data out from Yotatta finds that while 90% of shoppers are 'hesitant' to go into physical stores, many are already turning to online avenues to get the goods that they need. Most shoppers they polled (94%) said online shopping would be 'important' for them over the next months while 45% said ecommerce would become a 'necessity'.

"The results of our consumer survey clearly indicate that even at a time when the vast majority of US inhabitants are not infected with coronavirus, their sense of responsibility to stop the unwitting spread of the disease is keeping them at home - causing their shopping behaviors to be drastically affected," said Steve Rowen, Managing Partner, Retail Systems Research (RSR), who collaborated with Yotatta on the research. "With most experts predicting the effects of this outbreak to continue for several months, it can clearly be expected that the online shopping trends exposed in this research will only increase in the days and weeks to come. As a result, store-based retailers are in for a long and difficult journey."

At least one expert believes the global economy could recover within 6 months of the virus being contained, however, which would be good news for brands and retailers across the globe. Nigel Green says if mass testing begins and if governments begin supporting the demand for tests, the recession that is pending because of COVID-19 could be lessened.

"I believe that the global economy is likely to be headed for recovery from a coronavirus-triggered downturn within six months - but only if mass testing is rolled out now and governments guarantee to support demand," said Nigel Green, CEO and founder of deVere Group. "Most of the world is currently in phase one: lockdown. The unprecedented lockdown measures are, of course, dramatically slowing economies as both supply and demand are hit. The next phase, phase two, needs to be mass testing.  An aggressive mass testing agenda, the likes of which could soon happen in Germany according to reports, would allow potentially millions of people to leave lockdown early, get back to work, and help kick start economies."

There are more than 1.1 million cases of Coronavirus globally and just over 300,000 in the US.

Tags: advertising, COVID19, deVere Group, ecommerce, MediaRadar, Narvar, SMB trends, WalletHub, Yotatta

Subscribe to BizReport



Copyright © 1999- BizReport. All rights reserved.
Republication or redistribution of BizReport content is expressly prohibited without the prior written consent.
BizReport shall not be liable for any errors in the content, or for any actions taken in reliance thereon.