Business (un)usual in the new (ab)Normal

Businesses will never be the same after the COVID-19 quarantines and lockdowns are relaxed or lifted. Or better said, perhaps — they will not be the same businesses after the isolations and mobility restrictions of COVID-19 are relaxed or lifted.

The coronavirus disease 2019 (COVID-19) that started in early December 2019 in Wuhan, China has since spread to more than 29 other countries and regions, blown in by the Chinese New Year and pushed by international travel, according to an analysis by the World Economic Forum (WEF) in February 2020. “The outbreak of the pandemic highlights cracks in global trust, the pitfalls of global interdependency and the challenge for global governance.”

The top economies of the world succumbed most terribly to the “Pandemic Recession,” as vulnerabilities and economic frailties were amplified in the eerie sudden shutdown of economic activities — but health first, no question about that. And with more than a third of the world’s population being locked down, and hundreds of millions of jobs lost, plus governments fighting and controlling the virus — the GDPs of the world collapsed to negative growth to as much as -7% for the biggest economies in Europe, also the hardest-hit by the coronavirus. Note that the largest economy in the world, the United States of America, is also number one in world COVID-19 contamination and deaths.

With shops and factories closed nationwide due to the coronavirus pandemic, nearly all of the jobs created in the consumer-driven US economy in the last decade were wiped out in a single month, with an unprecedented 20.5 million jobs lost, AFP News reported on May 8. “I’ll bring it back,” President Donald Trump said. “I think it’s going to come back blazing,” he told reporters. But the COVID-19 vaccine is expected to be found, tried, and tested in not less than a year, maybe in one and a half years, according to epidemiologists.

It was pitiful to watch on CNN News, Las Vegas Mayor Carolyn Goodman calling for her city and the entire state of Nevada to reopen in mid-April, saying that shutting down the economy over the coronavirus pandemic made “no sense.” In an interview by Anderson Cooper on April 16, she offered her city as a “control center” to test the demand for returning casino players — until Cooper very cleverly made her fumble with the apparent senselessness of her proposal (but not to admit it still). Will the gamblers come rushing back to the Las Vegas casinos? How will it be possible to sanitize all the machines and tables, the cards and chips before each gambler?

The question must be asked: are we the same persons after the COVID-19 experience? Will our wants and needs be the same as what they were before? Forced by the circumstances of the lockdowns, isolation, and social distancing, of being contaminated or not, our tastes and habits have changed in varying degrees according to economic and social status and personal traits, values and principles. Psychologists generally estimate that it takes 66 days to form a habit or a change in predilection. Habits formed in trauma or extreme emotional cost (like fear of contamination and death) hold fast. Much of the world has been under a quarantine and lockdown for some two months since March, and these may be to be extended to June or July.

But owners of businesses big and small and their employees, entrepreneurs, and the self-employed professionals want to reopen economic activities — of course — to resume earning money. This quarantine has been a forced shut down and lay-off, an unplanned early retirement or extended leave for millions of people who have to support their families and themselves. Even governments cannot give out taxpayers’ money to the affected and underprivileged in subsidies, dole-outs, and amelioration ad infinitum. First of all, where’s the tax money coming from if there is hardly any employment and economic activity is insignificant?

As an example, Tessie-Sy Coson of one of the top conglomerates in the Philippines, SM Holdings, asked government in April to gradually restart the economy and allow half of all businesses to reopen after the lockdown, which at that time was nearing the end of the first 15-day extension from the initial quarantine imposed on March 17. “If all the industries can start operating [at] 50% [of capacity] including the transport, with all the medical precaution like making test kits more available and disinfecting measures and sanitation safeguards, then we can gradually increase the employment including the returning OFWs who are adding to our number of unemployment,” Ms. Sy-Coson said as quoted in Esquire Philippines on April 13.

SM Supermalls has 70 malls around the country. Other major mall chains are Robinsons Malls with 50 shopping malls; Ayala Malls, which has 14 shopping malls nationwide; and others such as Megaworld Lifestyle Malls, Vista Malls, Walter Mart, Gaisano Malls, Ever Gotesco Malls, Isetann, and many more. The retail industry in the Philippines accounts for approximately 15% of the Philippines’ total Gross National Product (GNP) and 33% of the entire services sector, employing some 5.25 million people, representing 18% of the Philippines’ workforce, according to the Philippine Retailers Association. And all the malls, except for their grocery sections, have been closed for some two months now, to comply with restrictions on mass gatherings.

Malls have replaced the town plaza as the number one place for community gathering, especially on weekends. Developers have converted most of the parks and open spaces into malls anyway, so there’s no place to go but malls. These are one-stop places to shop, transact business in off-site government and private offices, banks, clinics, gyms, entertainment venues like theaters and game rooms, and even to attend Holy Masses and novenas. Shoppers and non-shoppers alike go to malls also for the priceless pleasure of free air conditioning in this hot, humid country.

But will shopping malls with their thousands of retail locators in each site enjoy the same demand after the COVID-19 pandemic has been sated and burped out its last few victims? Will hordes of people congregate and mass in such enclosed spaces with shared ventilation, after the mind-conditioning of isolation and social distancing in the deathly fear of virus contagion? Will not the habit of budgeting and prioritizing expenditures, forced by the unpredictability of cash flows in the past two months and still proceeding confinement, be the modus vivendi in the New Normal after COVID-19? And perhaps the fear for health will overrule the joys of mass socialization.

Of course, businesses want to return to normalcy, for their own sakes and for the altruistic sense of responsibility for the people they employ, for their clients/customers, for the common good and for the country’s GDP. But it seems clear that the same businesses that thrived before COVID-19 will not quite have their original business models, and competition will have changed by the new standards in price, product, distribution, and public awareness, as taught by marketing textbooks. There are drastic changes in the New (Ab)Normal.

Businesses that will have to change — re-tool, reorient, downsize, centralize, and consolidate — or totally give up (perhaps to cut their losses) will be those in services and the retail industry. Hotels, tourism, travel and entertainment might not see the demands of the mostly pleasure seekers who could buy wants on credit. Malls will probably find it difficult to herd in locators and concessionaires. Even direct-contact personal services like massage, “hospitality” services, saunas, etc., and club memberships might not be as in demand as before. Some restaurants, maybe many, will not be able to live with diners’ new habits formed in quarantine: it is better, cleaner, safer to dine and be with family in Home Sweet Home.

Businesses that will thrive are those that can offer online transactions and payments. No-contact transactions have been established and entrenched in quarantine. Even traditional schools and colleges now have online teaching and learning — the problem of physical space (and attendant issues of transportation and traffic) has somehow been addressed, but as in online transactions, online managing and controlling, there are the problems of security and the difficult authority and leadership decimation in the organization.

In any case, the businesses that will thrive, and the new businesses seeking emerging opportunities must keep in mind and action that resiliency and the humility to accept changes are absolutely needed in the New (Ab)Normal.

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com