People are stocking up but staying at home more, and the coronavirus is gearing up to be bad for business.
Reports about the consumerist boom brought on by the novel coronavirus are everywhere. Yes, people are stocking up on things like hand sanitizers, face masks, and household disinfectants, in addition to washing their hands more often (which could lead them to buy more soap), but Covid-19 — which has infected more than 100,000 people worldwide and poses a threat to human lives, especially in cities where outbreaks are rampant — could, despite appearances, be really bad for business.
Empty store shelves and TikToks of frantic stockpiling aside, most businesses and brands are primed to lose revenue. On top of that, this will undoubtedly affect workers, especially those in the service industry who are less likely to have paid time off if they’re sick.
As Vox’s Matthew Yglesias wrote of the stock market’s recent meltdown, “Markets [were] down because events abroad imply bad business conditions are coming in the near future.” Covid-19 doesn’t have to get significantly worse in the US to impede the economy (although health officials say it’s likely that more cases will emerge). If people start going out less or if the government encourages “social distancing” to reduce the likelihood of an outbreak, that’s going to hurt companies across many sectors — from mom-and-pop restaurants and film distributors to major airlines and the alcohol industry. (Corona beer might have a marketing dilemma on its hands, but the spirits business is more worried about how coronavirus will stall imports and alcohol production.)
Then there’s the issue of the global supply chain. Financial analysts have predicted a “ripple effect” from supply chain disruption, which would slow down the production of familiar American goods, from Diet Coke to iPhones to Baby Yoda toys. The scope of a supply chain disruption has yet to be determined because, as Elisabeth Braw pointed out in Foreign Policy, “no CEO actually knows his or her companies’ complete supply chain,” adding that “the suppliers have suppliers of their own, who may, in turn, even have a third layer of suppliers.” To put it simply, if a business relies on a coronavirus-impacted country for production or has a significant overseas customer base, the outbreak could have a substantial negative impact on its sales and manufacturing.
