Amid the coronavirus pandemic, recessionary pressures have constricted consumer and business spending, limiting demand for a whole host of markets—from manufacturing and retail to oil and gas. However, some markets are not only resilient, but positively thriving during the Great Lockdown.
- Cybersecurity: As working, learning and banking have shifted online, they have created an immediate need for security software. In addition to encouraging digitization, the coronavirus has also spurred the need for cybersecurity by prompting an onslaught of targeted cyberattacks. For instance, the World Health Organization (WHO) released a warning about threat actors posing as the WHO in order to secure funds or to obtain private information from individuals. According to Check Point Software Technologies Ltd., a cybersecurity company, in the first two weeks of April 2020 there was an average of 14,000 cyberattacks per day, which is six times the average number of attacks seen in the previous two weeks. When examining the week from April 7 to April 14, this average increases to 20,000 attacks per day.
- Personal protective equipment (PPE): Personal protective equipment (PPE) was one of the first products to face a shortage at the start of the coronavirus pandemic. Personal protective equipment, such as respiratory protection equipment, is worn primarily by frontline medical personnel in hospitals and clinics. However, some regional laws have come into effect mandating the use of facial protective equipment by individuals in public situations, thereby boosting demand significantly. For example, Los Angeles and New York City are urging residents to wear face masks, including homemade masks, when in public.
- Plastics: The use of acrylic sheet is becoming increasingly popular for the fabrication of physical shields. These shields are being used in grocery stores, hospitals, pharmacies and clinical settings to prevent the spread of fluid droplets between employees and customers/patients. Additionally, the use of plastics to construct face shields is also on the rise. These face shields are reusable and do not need to adhere to strict medical guidelines because they are designed to be used in tandem with N95 or surgical masks. Apple is now making 1 million face shields each week, contributing significantly to demand for plastics in the United States.
- Sanitation products: The case for sanitation products, such as disinfectants, is clear. Consumers and businesses have been increasing their purchases of sanitation products (e.g. disinfecting wipes, hand sanitizer, etc.) to mitigate the spread of the coronavirus in their homes and facilities. The greater demand for sanitation products, coupled with supply chain disruption stemming from the coronavirus, has resulted in a shortage of disinfectants. Some hospitals in the United States are going so far as to produce their own hand sanitizer to guarantee the safety of their operating environments.
- Snacks: In recent years, consumers have been gravitating toward healthier food and beverage options. This trend seems to have reversed in the wake of the coronavirus as demand for snack foods, sweets and cereals has skyrocketed. The sale of fluid milk is closely linked to cereal demand. While milk's popularity had been falling in recent years, in the week ending March 22, dairy sales rose 60.0% versus the same week in the prior year. At the same time, packaged and fresh bakery goods sales have soared 37.0% as compared to the previous year.
- Stay-at-home services: Stay-at-home services include food delivery (e.g. Amazon), as well as entertainment offerings, such as videogame services (e.g. Activision Blizzard) and content-streaming services (e.g. Netflix). When it comes to food delivery, Amazon is beginning to waitlist new buyers of their grocery delivery service. This is after expanding order capacity by greater than 60.0% due to rising demand from the coronavirus pandemic. On March 12, after sitting on the market for three days, Activision Blizzard's Call of Duty: Warzone game was downloaded 15 million times, beating out the prior download record set by Electronic Arts and establishing a novel record for most rapid video game download growth on console and PC platforms. Similarly, on March 20 and 21, Netflix's data traffic throughout its US networks climbed to record heights. Because demand for stay-at-home services is skyrocketing, thousands of others must get to work. Amazon, for example, added 100,000 workers in the past few weeks and plans to open up its hiring to an additional 75,000 part-time and full-time jobs.
- Toilet Paper: Toilet paper has become the symbol of coronavirus panic buying. While the use of personal paper products likely has not increased, demand for toilet tissue has skyrocketed in the United States since March. Toilet paper is generally considered a necessary product. Additionally, the shelf-stable nature of toilet tissue means that buyers can purchase in bulk without worrying about waste. According to Georgia Pacific, the maker of Quilted Northern and Angel Soft toilet tissue, toilet paper orders from some retailers almost doubled in mid-March. Ultimately, Georgia Pacific was able to ship out 20.0% more toilet paper than its usual capacity.
- Videoconferencing providers: Widespread work-from-home provisions and company-wide travel bans have prompted organizations to turn to videoconferencing software to keep up communications. Cisco's WebEx, which is many times more popular than rising videoconferencing star Zoom, is seeing call volumes 24 times higher than what they would normally be outside of the pandemic. What's more, according to Sri Srinivasan, the head of Cisco's collaboration unit, the surge in demand for videoconferencing is part of a lasting change in work practices, not a temporary blip before levels drop back to normal. "We will never go back," says Srinivasan. "The way we work is going to change forever."
Some of these demand spikes are likely confined to a few months at most. As hospitals and grocery stores stock up on acrylic sheet and front-line workers gain access to face shields, demand for plastic will relax. Additionally, as panic surrounding the coronavirus subsides, individuals will start buying reasonable quantities of toilet paper. While demand will normalize in some cases, some of these increases are here to stay. For example, the transition toward online transactions is unlikely to reverse enough to limit demand for cybersecurity services.
Whether temporary or long-lived, suppliers are adapting to the changes. Cisco, for example, is encouraging users to join meetings five minutes early or stop scheduling meetings at the top of the hour to spread out surging demand. Meanwhile, retailers like CVS Health are limiting toilet paper and sanitation product purchases to one item per household. Whatever the post-lockdown future may hold, suppliers are making changes to address differences in demand.
By: Remi Nathanson