Consumer Goods, Sports & Leisure, Electronics & Computing, Clothing & Apparel

Part
01
of four
Part
01

COVID-19 Impact on Consumer Goods

The impact of the Covid-19 pandemic in the US is noticeable in consumer demand trends and disruptions in supply chains. There is an increase in consumer demand for typical stock-up supplies, lower-priced brands, art and craft goods, products that prevent the spread of COVID-19, and health and wellness products. The supply chains for food are relatively robust, while the supply chains for pharmaceutical drugs and medical gear are less resilient as it is dependent on exports from China and India.

COVID-19: Consumer demand and behavior in the US:

  • There has been an increase in stock-up supplies in the US. These typical stock-up supplies include baking and canned goods, ground meat (to freeze), soups, rice, and pasta. The demand for some of these categories have increased with 30% to 250%.
  • It is predicted that the demand for stock-up supplies will continue to be higher than normal as more people are eating breakfast, lunch, and dinner at home.
  • Due to the devastating effects of COVID-19 on the economy, consumers will increasingly look for lower-priced brands and value propositions.
  • More consumers are inclined to purchase consumer goods online. It is predicted that this trend will continue after the pandemic has subsided.
  • The demand for art and craft goods have also increased. The demand for some art and craft brands has roughly increased by 30%.
  • Consumers are purchasing products that prevent the spread of COVID-19. These products include detergents, cleaning agents, and hand sanitizers.
  • Consumers are purchasing more health and wellness products.

COVID-19 and its effects on supply chains:

  • The supply chain for typical stock-up supplies, such as canned goods and pasta, are gradually catching up to consumer demands in the US. It will, however, take a week or two before inventory levels return to normal.
  • The US food supply chain is exceptionally robust as most of the food supplies are obtained within the United States.
  • COVID-19 is threatening the global drug supply chain and experts predict the increasing possibility of a shortage of pharmaceutical drugs in the US. Pharmaceutical companies in the US rely on India and China for drug supplies. COVID-19 caused numerous drug manufacturers to shut down in China and India is presently undergoing lockdown.
  • A disruption in the supply of medical devices and protective gear, such as ventilators and masks, is expected.
  • US businesses are experiencing longer lead times. The lead time for most US businesses are doubling due to the effects of COVID-19 virus on global supply chains.
  • In the US there is presently a shortage in the supply of toilet paper, thermometers, board games, Vitamin C, onions, and garlic.






Part
02
of four
Part
02

COVID-19 Impact on the Electronics and Computing Industry

The impact that COVID-19 is having on the U.S. electronics and computing industry includes a disruption in supply chain and electronics and technology events. In addition, a decline in company revenues and reduced demand for high-ticket items such as TVs, appliances and smartphones was also seen. However, the shift towards remote work and education has also driven the demand for personal electronic devices (e.g., tablets, laptops and desktop computers) in the short-term.

Disruption of Supply Chain

Disruption of Electronics & Technology Events

Increased Demand for Personal Devices & Durables

Decline in Company Revenues

  • Electronics and computing companies are facing a decline in their revenue due to supply chain disruptions and a reduction in consumer demand. Hewlett Packard Enterprise Co. announced a 9% decline in total revenue.
  • Short-time spike was seen in purchase of personal devices, however, in the upcoming months consumer demand for smartphones and other durables is expected to decline. Microsoft and Apple Inc. have lowered their sales and production forecast due to the COVID-19.

Addressing the Challenges and Opportunities of COVID-19

  • Due to the disruption in supply chain many U.S. electronics and computing companies are looking for alternative manufacturing facilities in Vietnam and Thailand. Establishing a diversified material sourcing and manufacturing facility will help organizations ensure a sustainable supply chain in the future.
  • By establishing a business continuity and contingency plan these companies have curtailed further loss of their revenue. For instance, providing remote working facilities for employees have enabled these companies to not only ensure the safety of their workforce but also offer uninterrupted services to their clients.
  • Due to COVID-19 it can be expected that there will be an increase in the usage of virtual tools for work, events and education. This will help electronic and computing companies as there will be a demand for computing products and peripherals. Moreover, we can expect this trend to be visible in other sectors like delivery services, healthcare, automated manufacturing, etc., which will help boost the growth of electronics and computing industry.

Research Strategy

To determine the impact of COVID-19 on the U.S. electronics and computing industry, we searched through various relevant articles published on reputable websites like Marketwatch, Axios, Zdnet, Bloomberg and Wall Street Journal. We also visited various reputed research and consulting agencies websites and reports like Deloitte, McKinsey, IDC, IBIS and Freedonia. Some reports were behind paywalls so we were unable to access all the details. They have been mentioned in the source list for reference.

Part
03
of four
Part
03

COVID-19 Impact on the Sports and Leisure Industry

COVID-19 outbreak has disrupted sporting and events calendar, caused loss of revenue, job losses, and affected betting business in the US. A detailed analysis of the effects of COVID-19 outbreak on the sports and leisure industry in the U.S is presented below.
  • The continued spread and increased risk of COVID-19 in the U.S. has affected the sporting calendar in the US. Already, many major sporting events and activities have been postponed, canceled, or suspended because of the pandemic. Most major sporting leagues such as the Major League Soccer (MLS), National Basketball Association (NBA), Major League Baseball (MLB), U.S. Soccer, and National Hockey League (NHL) have been postponed or suspended.
  • The sports and leisure industry is also likely to lose significant amounts of revenue due to the postponements, suspensions, and cancellations of events. Statistics show that the NBA will potentially lose $450 million in gate revenue while the potential loss from TV and Marketing rights for the March Madness sporting event could reach $867.5 million.
  • Cancellation and postponement in the U.S. soccer league will result in potential losses of about $90 million in revenues from media rights deal. The top teams in the USL Championship could suffer up to $200,000 per home game in revenue losses.
  • The suspension of sporting events and games for the 2019/2020 season's remaining games by the NBA was projected to result in $350-450 million gate revenue losses while non-ticket revenues could reach $200 million.
  • With regard to the World Wrestling Entertainment (WWE) professional league, the exclusion of a live audience during the WrestleMania 36 scheduled for April 5, 2020, is expected to deny the WWE at least $125.6 million. Revenue losses of $743.1 million and $91.7 million from media and consumer products will also be incurred.
  • Overall, the effects of the COVID-19 pandemic on the sports and leisure industry could see the industry lose millions of dollars this calendar year. The potential revenue losses could increase significantly if the pandemic persists.
  • The COVID-19 pandemic is also causing job losses in the sports and leisure industry as sports arenas close. As fears of infection continue, especially in crowded places like in sporting events and other leisure places, attending or participating in these activities remains banned.
  • Ultimately, there is reduced demand prompting many employers in the industry to reduce their workforce as a cost-cutting measure. Research shows that leisure and hospitality industry is among the top industries with the highest risk of job losses and labor disruptions because of COVID-19 outbreak.
  • Moreover, COVID-19 has directly affected the jobs of many sporting personalities and athletes. The cancellations and suspensions of sporting events and calendars means that they cannot play or participate normally, thus affecting their career. Salaries of employees working in sporting leagues in the US such the NBA have also been cut as a result of the outbreak.
  • For others, being infected with the disease means that they cannot participate in the games and events as expected. Some of the top NBA stars affected by COVID-19 include Rudy Gobert and teammate Donavan Mitchell who play for Utah Jazz.
  • The suspension and cancellation of major sporting events and games due to COVID-19 is also affecting sports betting in the U.S. With the cancellations and suspensions, many sports betting companies are now reviewing their costs downwards since there are no games and other sporting events for fans to bet on.

Part
04
of four
Part
04

COVID-19 Impact on the Clothing and Apparel Industry

Due to the COVID-19 pandemic, fashion and luxury sales in North America are expected to decline by 25% to 30% in 2020. Adidas, Puma, and Under Armour will face downstream challenges to supply chains in the US due to disruptions caused by COVID-19. Gap, Guess, Converse, and other clothing and apparel companies have closed their physical stores in the US to prevent further spreading of the virus.

Sales

  • According to a research report published by Boston Consulting Group, fashion and luxury sales in North America (defined as the US and Canada) will decline by 25% to 30% in 2020 due to the COVID-19 pandemic.
  • Analysts at Bain & Company have estimated that fashion and luxury sales in the Americas are expected to drop by 25% to 30% in the first quarter of 2020.
  • Target, which operates physical stores in the US only, has revealed that sales of its apparel and accessories have declined by over 20%.
  • Macy's has reported that online sales of apparel and footwear have dropped in March as consumers in the US focused on buying essential goods.
  • An analyst at The Motley Fool has predicted that the suspension of the NBA season will lead to a decline in sales of Nike's basketball shoes in the US as the company is the NBA's exclusive apparel provider.

Supply Chain

  • Apparel companies such as Adidas, Puma, and Under Armour have revealed that the COVID-19 pandemic will result in downstream challenges to supply chains in the US.
  • As around 40% of the clothes that Americans wear come from China, affected retailers in the US have begun to look elsewhere to fill the supply chain gap.
  • According to Sarah Willersdorf, managing director and partner at the Boston Consulting Group, the COVID-19 pandemic will encourage companies in the US clothing and apparel industry to "diversify their supply chain and reduce environmental impact in the process."
  • Clothing companies in the US that have already shifted manufacturing activities to Bangladesh, Vietnam, and Cambodia due to rising labor costs and other factors are expected to experience limited impact.
  • As apparel brand American Giant sources materials and manufactures in the US, the company has not felt the impacts that other brands have experienced.

Physical and Online Stores

  • Clothing and apparel companies that have closed their physical stores in the US include Gap, Guess, Converse, New Balance, Nike, Lululemon, Tommy Hilfiger, Ralph Lauren, Calvin Klein, and Under Armour.
  • Forever 21 is one of the notable clothing brands that planned to keep its stores in the US open, but for shorter hours.
  • Fashion ecommerce site Net-a-Porter shut down its US online store as it has closed its warehouse to meet the health and safety guidelines provided by the local government.

Fashion Shows and Events

  • Fashion shows in the US that have been canceled or postponed due to the COVID-19 pandemic include the Los Angeles Fashion Week, Gucci's Cruise 2021 (San Francisco), Ralph Lauren's fashion show (New York City), and Versace's US fashion show.
  • However, the organizer of the Vegan Fashion Week, set for April 3-4 in Los Angeles, refused to cancel the event as she wants to "draw connections between sustainability and ethics," and also noted that "animal exploitation is directly linked to the virus outbreak."
  • Instead of hosting an in-person event in New York City, the organizer of the 2020 Bridal Market asked designers to use digital sharing platforms such as Zoom and Join.me to present their collections.
Sources
Sources

From Part 02
Quotes
  • "In the electronics manufacturing sector, manufacturers anticipate product shipments to be delayed by more than at least five weeks, according to a survey by IPC."
Quotes
  • "Industry operators have experienced increased risk in their global supply chain due to COVID-19. Many businesses have shut down, or delayed operation, impacting the delivery and procurement of goods."
Quotes
  • "Customers are looking for laptops, webcams, keyboards, and mice, he said. Demand has been 3 to 4 times the normal run rate."
Quotes
  • ""The demand has been insane," said Ben Niernberg, executive vice president at Chicago-area value added reseller and managed service provider MNJ Technologies. Customers are looking for laptops, webcams, keyboards, and mice, he said. Demand has been 3 to 4 times the normal run rate."
Quotes
  • "Last month, Microsoft gave a wider-than-usual sales target -- $10.75 billion to $11.15 billion -- for that division, citing uncertainty related to the spread of the deadly respiratory virus."
Quotes
  • "With over 200 of Fortune 500 companies investing in the city, Wuhan is a key hub for global electronics manufacturing."
Quotes
  • ""It hasn't been like Black Friday but more than an average day," Best Buy salesman Matt Canon told the Journal, who said monitors and small TVs were sold out and laptops, keyboards and video cables almost were."
Quotes
  • "In addition, we are seeing a recent increase in demand for notebooks used in the commercial and educational segments to support work-from-home and virtual learning initiatives occurring in many parts of the world."
Quotes
  • " MSFT, -3.811% warned that it will not meet guidance for its fiscal third quarter due to COVID-19."
Quotes
  • "The global tech economy's just-in-time supply chain has never faced a disruption quite like this one."
Quotes
  • "In the past few weeks, though, that supply chain, which includes everything from raw parts to finished products, has been fundamentally disrupted."
Quotes
  • "Oculus Developers bowed out of the show last week, citing public health risks related to COVID-19."
Quotes
  • "https://www.freedoniagroup.com/Content/COVID-19-Economic-Impact-Tracker"
Quotes
  • "One change that we have already seen is closer working relationships and greater visibility through the supply chain to minimize the manufacturing impact from materials and manufacturing disruptions."