Craig Woolford

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Dana M Peterson

While the shutdown hit all non-essential industries at the same time, the recovery is likely to result in a diversity of recovery times depending on the sector. To help identify when different industries might rebound from the coronavirus globally, we looked at eight sectors which we segmented into “play” and “work” based on attributes including whether they are structured/mandatory or unstructured/discretionary and the ease of social distancing. Play sectors include hotels & restaurants, air transport, arts/entertainment/personal services, and retail & wholesale trade while work sectors include manufacturing, financial services, business services and high-tech manufacturing. Given the large amount of uncertainty, not just surrounding the virus itself but also around the depth of the downturn and the speed of the recovery, we felt it wasn’t enough to just estimate the time to recovery based on our base case economic forecasts. Instead, we widened the analysis to look at recovery scenarios for industries under a rapid recovery, a U-shaped recovery and a worst-case scenario. For all sectors and recovery scenarios, we estimated the number of quarters it would take to get back to pre-COVID-19 levels of global GDP from trough levels. We also estimate how long each sector would take to get back to pre-Great Financial Crisis levels of growth. What we found was that sectors associated with discretionary activities — "play" — may experience deeper contractions and lengthier returns to pre-COVID-19 levels than "work" sectors. For these sectors, we think the time it takes to recover may extend between six and eight quarters. Shallower contractions in growth and likely shorter recovery periods are predicted for ‘work’ sectors —between four and seven quarters — which is consistent with the duration of recovery for those sectors during the Great Financial Crisis. The industry which proved to be an exception is manufacturing. Although it is classified as a "work" industry, we believe it may suffer deeper contractions and lengthy recovery periods as some of its large sub-sectors (i.e., autos and aerospace) may struggle longer in recovery due to the nature of the crisis and the fact that certain geographies with heavy manufacturing presence (i.e. Western Europe and China) were affected the most by the crisis.Authors: Dana M Peterson,

While the shutdown hit all non-essential industries at the same time, the recovery is &nbsp;likely to result in a diversity of recovery times depending on the sector.&nbsp; To help identify when different industries might rebound from the coronavirus globally, we looked at eight sectors which we segmented into &ldquo;play&rdquo; and &ldquo;work&rdquo; based on attributes including whether they are structured/mandatory or unstructured/discretionary and the ease of social distancing. &nbsp;Play sectors include hotels &amp; restaurants, air transport, arts/entertainment/personal services, and retail &amp; wholesale trade while work sectors include manufacturing, financial services, business services and high-tech manufacturing. Given the large amount of uncertainty, not just surrounding the virus itself but also around the depth of the downturn and the speed of the recovery, we felt it wasn&rsquo;t enough to just estimate the time to recovery based on our base case economic forecasts. Instead, we widened the analysis to look at recovery scenarios for industries under a rapid recovery, a U-shaped recovery and a worst-case scenario.&nbsp; For all sectors and recovery scenarios, we estimated the number of quarters it would take to get back to pre-COVID-19 &nbsp;levels of global GDP from trough levels. We also estimate how long each sector would take to get back to pre-Great Financial Crisis levels of growth.
<img class="alignnone wp-image-9134" src="https://www.citivelocity.com/citigps/wp-content/uploads/2020/05/Industry-Recovery-Scenarios.png" alt="" width="1290" height="422" />
 What we found was that sectors associated with discretionary activities &mdash; "play" &mdash; may experience deeper contractions and lengthier returns to pre-COVID-19 levels than "work" sectors. For these sectors, we think the time it takes to recover may extend between six and eight quarters. Shallower contractions in growth and likely shorter recovery periods are predicted for &lsquo;work&rsquo; sectors &mdash;between four and seven quarters &mdash; which is consistent with the duration of recovery for those sectors during the Great Financial Crisis.
<img class="alignnone size-full wp-image-9133" src="https://www.citivelocity.com/citigps/wp-content/uploads/2020/05/Industry-GVA.png" alt="" width="865" height="481" />
 The industry which proved to be an exception is manufacturing. Although it is classified as a "work" industry, we believe it may suffer deeper contractions and lengthy recovery periods as some of its large sub-sectors (i.e., autos and aerospace) may struggle longer in recovery due to the nature of the crisis and the fact that certain geographies with heavy manufacturing presence (i.e. Western Europe and China) were affected the most by the crisis.Authors: Dana M Peterson,

COVID-19 Global Impact

May 7, 2020 - To combat the COVID-19 pandemic, countries across the globe  started issuing ’stay-at-home’  and ‘lockdown’ orders to help flatten the curve of infection and protect their citizens. This essentially shut down all businesses and services that weren’t deemed ‘essential’. With a number of countries starting to lift restrictions and more planning to do so soon, people will be returning to work and consumers will  hopefully be getting out of the house and spending their money. As businesses reopen, the hope is that the economy recovers quickly and gets back to pre-COVID-19 levels.

When Will Industries Rebound?

Once restrictions are eased, we expect a bounceback in spending as people venture back outside and try to shift back to normal. But the speed of any recover is still a big unknown as questions linger about safety which could potentially dampen demand. Will people get comfortable again being among large groups of people, or sitting on a crowded airplane? Until they are, the thought of traveling abroad to a busy tourist destination may not be appealing. In addition to consumer fears, border restrictions in certain countries around the world could also limit the resumption of international travel. In the attached report, we look at Australia, where border restrictions mean international travel is suspended for the foreseeable future. This is a concern as Australians like to travel — they made 11 million offshore trips last year. The silver lining is that a portion of the money Australians would have spent overseas — some A$50 billion — could remain in Australia and benefit the domestic economy. Overall, we expect domestic tourism in Australia to rise 7% and retail growth to be boosted by 1 percentage point as a result of this shift in spending.Authors: Craig Woolford,

Once restrictions are eased, we expect a bounceback in spending as people venture back outside and try to shift back to normal. But the speed of any recover is still a big unknown as questions linger about safety which could potentially dampen demand. Will people get comfortable again being among large groups of people, or sitting on a crowded airplane? Until they are, the thought of traveling abroad to a busy tourist destination may not be appealing. In addition to consumer fears, border restrictions in certain countries around the world could also limit the resumption of international travel. In the attached report, we look at Australia, where border restrictions mean international travel is suspended for the foreseeable future. This is a concern as Australians like to travel &mdash;&nbsp; they made 11 million offshore trips last year. The silver lining is that a portion of the money Australians would have spent overseas &mdash; some A$50 billion &mdash; could remain in Australia and benefit the domestic economy. Overall, we expect domestic tourism in Australia to rise 7% and retail growth to be boosted by 1 percentage point as a result of this shift in spending.Authors: Craig Woolford,

A Source of Increased Domestic Spending

May 19, 2020 - The economic fallout from the COVID-19  virus is expected to be huge. Millions of people are out of work and economic activity is at a standstill while we wait for the virus curve to flatten. Although many industries are affected, one of the hardest hit sectors has been tourism, with the lockdown grounding both business and leisure travel. Restaurants are also struggling as social-distancing restrictions mean they can't open up to sit-down diners, forcing consumers to shift their spending towards at home options.

Locking Down Australian Tourists

Mark A Manduca

With the current global lockdown, business travel has for all extents and purposes been grounded. Businesses that were able to shift to remote working also shifted their in-person meetings and conferences to phone calls, video calls, and virtual meetings. Over the next few months, countries around the world will start to ease restrictions and get their economies back open for business, but to what extent will things change on the corporate travel front?. Will corporate travel return to the pre-COVID-19 levels? We think corporate travel will likely come under pressure both in the long and short term. First, varying border and quarantining rules in place globally will make travel itself difficult and possibly create significant litigation risks for corporates. Second, the accelerating use of digital meetings throughout the crisis could create a secular shift which replaces costly and time-consuming corporate travel. In the short term, a 1% impact on corporate travel volumes has a 10% impact on airlines profits, keeping other variables static including lower fuel costs and the industries high level of fixed costs. In the attached note, we also look at the volume of business vs. leisure travelers and domestic vs. international travel for major cities. In the longer term, the secular shift could hit the portion of the industry that travels more than five times a year as well as the corporate traveler that visits other offices versus visiting clients. A decline in the first could come from the increased difficulty of travel while a decline in the second could come from corporates seeing a cost saving as virtual meetings and video conference calls have been effective substitutes for in-person meetings. If the number of trips is cut in half for both the high-volume traveler and the "own office" traveler, corporate travel overall could be secularly impaired by 25% from 2019 levels.Authors: Mark A Manduca,

With the current global lockdown, business travel has for all extents and purposes been grounded. Businesses that were able to shift to remote working also shifted their&nbsp; in-person meetings and conferences to phone calls, video calls, and virtual meetings. Over the next few months, countries around the world will start to ease restrictions and get their economies back open for business, but to what extent will things change on the corporate travel front?. Will corporate travel return to the pre-COVID-19 levels? We think corporate travel will likely come under pressure both in the long and short term. First, varying border and quarantining rules in place globally will make travel itself difficult and possibly create significant litigation risks for corporates. Second, the accelerating use of digital meetings throughout the crisis&nbsp; could create a secular shift which replaces costly and time-consuming corporate travel. In the short term, a 1% impact on corporate travel volumes has a 10% impact on airlines profits, keeping other variables static including lower fuel costs and the industries high level of fixed costs. In the attached note, we also look at the volume of business vs. leisure travelers and domestic vs.&nbsp; international&nbsp; travel for major cities. In the longer term, the secular shift could hit the portion of the industry that travels more than five times a year as well as the corporate traveler that visits other offices versus visiting clients. A decline in the first could come from the increased difficulty of travel while a decline in the second could come from corporates seeing a cost saving as virtual meetings and video conference calls have been effective substitutes for in-person meetings. If the number of trips is cut in half for both the high-volume traveler and the "own office" traveler, corporate travel overall could be secularly impaired by 25% from 2019 levels.Authors: Mark A Manduca,

A 1% Impact on Corporate Volumes Impacts Airline Profits by 10%

May 18, 2020 - Corporate travel has been a cornerstone of business for decades. Whether it's a traveling salesman, sitting in the middle seat of a regional flight between small cities in his sales coverage or the global businessman who travels around the world meeting meet clients and colleagues, business travel for many involves being on an airplane. For airlines, although almost 85% of their passengers fly to visit family and go on vacation, the smaller corporate category generates 40% of airline revenues. 

Corporate Travel

Monique Pollard

Catherine T O’Neill

In the article “Is COVID-19 Lead to Accelerating Trends” we noted a Kantar survey conducted on February 15th of Chinese shoppers measuring the impact of COVID-19 found that 42% of respondents said they would use online more in the future for their grocery purchases while only 8% said they would reduce their use after the crisis. For those not cooking at home, online delivery service from restaurants is one way to limit the amount of trips outside the home. Below we look at what drives the online food delivery platform and how the COVID-19 pandemic has affected the demand and future prospects. What is the Revenue Growth Opportunity for Online Food Delivery Platforms? Revenue growth drivers for online food delivery platforms include (1) number of customers; (2) orders per customer; (3) take rate; and (4) gross merchandise value. Crucially, attention should be focused on how operators can maximize order growth (order value growth can largely be assumed to increase in-line with inflation) and take rates. Clearly order growth is, in turn, driven by customer numbers and how many orders each customer makes. For take rates, we focus on whether commission rate increases to restaurants are possible, or whether more can be done to drive placement revenues (where restaurants pay the platform to have a high placement in search results). Market maturity is a key differentiator in both the rate of revenue growth possible for online food delivery platforms, and in the types of levers companies should pull in order to maximize this growth. As a result, we consider separately the market growth potential for mature and nascent markets, as well as the factors that can deliver best in class growth in both. REVENUE DRIVERS FOR ONLINE FOOD DELIVERY PLATFORMS Inequality, minimum wage levels, and the negotiating position of restaurants vs. online platforms are more significant factors driving attractive delivery service economics than population density and traffic congestion. There are also idiosyncratic factors that influence the delivery economics of a country that we are unable to capture in this analysis. Some examples include: tipping culture (increases attractiveness of delivery economics in U.S. and Canada), customer price sensitivity to delivery fees (Western European customers highly price sensitive to delivery fees, worsening delivery economics), and weather (poor weather in Canada increasing customer willingness to pay for delivery). Globally, we believe the markets that will likely provide the most attractive delivery economics are certain Latin American countries (such as Brazil, Mexico, Paraguay, Panama) and some in the Middle East (such as Kuwait and Qatar). This is based on our assumptions that markets with attractive delivery economics have: Customers willing to pay a high delivery fee Delivery riders willing to accept a low wage Restaurants willing to be charged a high fee to use online platforms These three factors are in turn driven by: The level of income inequality in a country: More unequal countries providing better delivery economics given the significant gap between what a customer is prepared to pay for delivery and the pay a courier rider would expect to receive. We measure both the Gini coefficient in each country and the ratio of the share of income in a country going to the 20% of income earners vs. the bottom 20%. The minimum wage and labor legislation (or lack thereof) in a country: Countries with poor labor protection and a lack of minimum wage legislation providing better delivery economics given the lower rider pay required. We measure the ratio of typical delivery fees charged in a country to the national minimum wage. A higher ratio suggests more attractive delivery economics. Where countries have no minimum wage we assume a default ratio of 3x (at the high end of our data). The proportion of branded restaurants in a country: Branded restaurants typically having better negotiating power with online food delivery platforms, which worsens delivery economics by lowering commission rates and delivery charges possible by platforms. How has COVID-19 Affected Online Food Delivery Platforms? Between April 8 and April 20, we conducted an online food delivery survey among 3,606 consumers (both users of online delivery services and non-users) in the U.K., Italy, Brazil, and South Korea. The average age of users in the survey is 45 with heavier users of the platform younger than light users. Based on data from the results, we analyzed online food delivery platform usage, how it has changed given the COVID-10 pandemic and whether current changes could be long-lasting. Overall, COVID-19 has had a net positive impact on frequency and spending on online food delivery and the majority of new users (57%) are likely to use it again. Click on the Key Findings below for more details from the Survey.

In the article&nbsp;&ldquo;<a style="box-sizing: inherit; line-height: inherit; cursor: pointer; transition: color 0.5s ease 0s; text-decoration-line: none;" href="https://www.citivelocity.com/citigps/will-covid-19-lead-to-accelerating-trends/" target="_blank" rel="noopener">Is COVID-19 Lead to Accelerating Trends&rdquo;</a>&nbsp;we noted a Kantar survey conducted on February 15th of Chinese shoppers measuring the impact of COVID-19 found that 42% of respondents said they would use online more in the future for their grocery purchases while only 8% said they would reduce their use after the crisis. For those not cooking at home, online delivery service from restaurants is one way to limit the amount of trips outside the home. Below we look at what drives the online food delivery platform and how the COVID-19 pandemic has affected the demand and future prospects.
<h3 style="box-sizing: inherit; margin: 0px 0px 0.5rem; padding: 0px; line-height: 1.4; text-rendering: optimizelegibility; font-size: 1.25rem; background-color: #ffffff;">What is the Revenue Growth Opportunity for Online Food Delivery Platforms?</h3>
Revenue growth drivers for online food delivery platforms include (1) number of customers; (2) orders per customer; (3) take rate; and (4) gross merchandise value. Crucially, attention should be focused on how operators can maximize order growth (order value growth can largely be assumed to increase in-line with inflation) and take rates. Clearly order growth is, in turn, driven by customer numbers and how many orders each customer makes. For take rates, we focus on whether commission rate increases to restaurants are possible, or whether more can be done to drive placement revenues (where restaurants pay the platform to have a high placement in search results). Market maturity is a key differentiator in both the rate of revenue growth possible for online food delivery platforms, and in the types of levers companies should pull in order to maximize this growth. As a result, we consider separately the market growth potential for mature and nascent markets, as well as the factors that can deliver best in class growth in both.
<h4 style="box-sizing: inherit; margin: 0px 0px 0.5rem; padding: 0px; line-height: 1.4; text-rendering: optimizelegibility; text-transform: uppercase; font-size: 1.125rem; background-color: #ffffff; text-align: center;">REVENUE DRIVERS FOR ONLINE FOOD DELIVERY PLATFORMS</h4>
<img class="size-full wp-image-9032 aligncenter" style="box-sizing: inherit; border-width: 0px; vertical-align: middle; display: block; max-width: 100%; height: auto; clear: both; margin-right: auto; margin-left: auto; margin-bottom: 30px;" src="https://www.citivelocity.com/citigps/wp-content/uploads/2020/04/OFD.png" alt="" width="705" height="434" />Inequality, minimum wage levels, and the negotiating position of restaurants vs. online platforms are more significant factors driving attractive delivery service economics than population density and traffic congestion. There are also idiosyncratic factors that influence the delivery economics of a country that we are unable to capture in this analysis. Some examples include: tipping culture (increases attractiveness of delivery economics in U.S. and Canada), customer price sensitivity to delivery fees (Western European customers highly price sensitive to delivery fees, worsening delivery economics), and weather (poor weather in Canada increasing customer willingness to pay for delivery).
Globally, we believe the markets that will likely provide the most attractive delivery economics are certain Latin American countries (such as Brazil, Mexico, Paraguay, Panama) and some in the Middle East (such as Kuwait and Qatar). This is based on our assumptions that markets with attractive delivery economics have:
<ol>
<li>Customers willing to pay a high delivery fee</li>
<li>Delivery riders willing to accept a low wage</li>
<li>Restaurants willing to be charged a high fee to use online platforms</li>
</ol>
These three factors are in turn driven by:
<ol>
<li>The level of income inequality in a country: More unequal countries providing better delivery economics given the significant gap between what a customer is prepared to pay for delivery and the pay a courier rider would expect to receive. We measure both the Gini coefficient in each country and the ratio of the share of income in a country going to the 20% of income earners vs. the bottom 20%.</li>
<li>The minimum wage and labor legislation (or lack thereof) in a country: Countries with poor labor protection and a lack of minimum wage legislation providing better delivery economics given the lower rider pay required. We measure the ratio of typical delivery fees charged in a country to the national minimum wage. A higher ratio suggests more attractive delivery economics. Where countries have no minimum wage we assume a default ratio of 3x (at the high end of our data).</li>
<li>The proportion of branded restaurants in a country: Branded restaurants typically having better negotiating power with online food delivery platforms, which worsens delivery economics by lowering commission rates and delivery charges possible by platforms.</li>
</ol>
<h3 style="box-sizing: inherit; margin: 0px 0px 0.5rem; padding: 0px; line-height: 1.4; text-rendering: optimizelegibility; font-size: 1.25rem; background-color: #ffffff;">How has COVID-19 Affected Online Food Delivery Platforms?</h3>
Between April 8 and April 20, we conducted an online food delivery survey among 3,606 consumers (both users of online delivery services and non-users) in the U.K., Italy, Brazil, and South Korea. The average age of users in the survey is 45 with heavier users of the platform younger than light users. Based on data from the results, we analyzed online food delivery platform usage, how it has changed given the COVID-10 pandemic and whether current changes could be long-lasting. Overall, COVID-19 has had a net positive impact on frequency and spending on online food delivery and the majority of new users (57%) are likely to use it again.
&nbsp;
<h3 style="box-sizing: inherit; margin: 0px 0px 0.5rem; padding: 0px; line-height: 1.4; text-rendering: optimizelegibility; font-size: 1.25rem; background-color: #ffffff;">Click on the Key Findings below for more details from the Survey.</h3>

Key Finding #1: Positive Impact on Frequency & Spending Level in All Markets Except the U.K. COVID-19 has had a net positive impact on the frequency and spending levels of online food delivery consumers in Brazil and South Korea in particular (and to a lesser extent in Italy), but a net negative impact in the U.K.

COVID-19 has had a net positive impact on the frequency and spending levels of online food delivery consumers in Brazil and South Korea in particular (and to a lesser extent in Italy), but a net negative impact in the U.K.

Key Finding #1: Positive Impact on Frequency & Spending Level in All Markets Except the U.K.

Key Finding #2: Restaurant Choice & Promotions During COVID-19 Outbreak The majority of U.K. users have seen a decline in restaurant choice since the COVID-19 outbreak and no change in promotions. In Brazil, 52% of users have observed an increase in restaurant choice and the majority saw an increase in promotions. South Korea appears the most rational market (76% see no change or a decrease in promotions). South Korea rationalization follows a very competitive 2019 when online delivery companies spend money on vouchering in the country.

The majority of U.K. users have seen a decline in restaurant choice since the COVID-19 outbreak and no change in promotions. In Brazil, 52% of users have observed an increase in restaurant choice and the majority saw an increase in promotions. South Korea appears the most rational market (76% see no change or a decrease in promotions). South Korea rationalization follows a very competitive 2019 when online delivery companies spend money on vouchering in the country.

Key Finding #2: Restaurant Choice & Promotions During COVID-19 Outbreak

Key Finding #3: Price & Choice Are the Main Selection Criteria for Platforms Pricing, availability of restaurants, and hygiene are the main drivers in selection of a platform. Delivery speed, customer service, and app functionality are less important.

Pricing, availability of restaurants, and hygiene are the main drivers in selection of a platform. Delivery speed, customer service, and app functionality are less important.

Key Finding #3: Price & Choice Are the Main Selection Criteria for Platforms

Key Finding #4: Brazilians Most Likely to Continue Using Service 82% of new users in Brazil (past 2 months) will likely continue to use the service vs. 57% overall.

82% of new users in Brazil (past 2 months) will likely continue to use the service vs. 57% overall.

Key Finding #4: Brazilians Most Likely to Continue Using Service

Key Finding #5: Non-Users Not Fully Convinced The majority of non-users (64%) are unlikely to use online food delivery, excl. Brazil where 65% would consider using it, mainly as they prefer to cook themselves and consider the services to be expensive.

The majority of non-users (64%) are unlikely to use online food delivery, excl. Brazil where 65% would consider using it, mainly as they prefer to cook themselves and consider the services to be expensive.

Key Finding #5: Non-Users Not Fully Convinced

In the article “Is COVID-19 Lead to Accelerating Trends” we noted a Kantar survey conducted on February 15th of Chinese shoppers measuring the impact of COVID-19 found that 42% of respondents said they would use online more in the future for their grocery purchases while only 8% said they would reduce their use after the crisis. For those not cooking at home, online delivery service from restaurants is one way to limit the amount of trips outside the home. Below we look at what drives the online food delivery platform and how the COVID-19 pandemic has affected the demand and future prospects. What is the Revenue Growth Opportunity for Online Food Delivery Platforms? Revenue growth drivers for online food delivery platforms include (1) number of customers; (2) orders per customer; (3) take rate; and (4) gross merchandise value. Crucially, attention should be focused on how operators can maximize order growth (order value growth can largely be assumed to increase in-line with inflation) and take rates. Clearly order growth is, in turn, driven by customer numbers and how many orders each customer makes. For take rates, we focus on whether commission rate increases to restaurants are possible, or whether more can be done to drive placement revenues (where restaurants pay the platform to have a high placement in search results). Market maturity is a key differentiator in both the rate of revenue growth possible for online food delivery platforms, and in the types of levers companies should pull in order to maximize this growth. As a result, we consider separately the market growth potential for mature and nascent markets, as well as the factors that can deliver best in class growth in both. REVENUE DRIVERS FOR ONLINE FOOD DELIVERY PLATFORMS Inequality, minimum wage levels, and the negotiating position of restaurants vs. online platforms are more significant factors driving attractive delivery service economics than population density and traffic congestion. There are also idiosyncratic factors that influence the delivery economics of a country that we are unable to capture in this analysis. Some examples include: tipping culture (increases attractiveness of delivery economics in U.S. and Canada), customer price sensitivity to delivery fees (Western European customers highly price sensitive to delivery fees, worsening delivery economics), and weather (poor weather in Canada increasing customer willingness to pay for delivery). Globally, we believe the markets that will likely provide the most attractive delivery economics are certain Latin American countries (such as Brazil, Mexico, Paraguay, Panama) and some in the Middle East (such as Kuwait and Qatar). This is based on our assumptions that markets with attractive delivery economics have: Customers willing to pay a high delivery fee Delivery riders willing to accept a low wage Restaurants willing to be charged a high fee to use online platforms These three factors are in turn driven by: The level of income inequality in a country: More unequal countries providing better delivery economics given the significant gap between what a customer is prepared to pay for delivery and the pay a courier rider would expect to receive. We measure both the Gini coefficient in each country and the ratio of the share of income in a country going to the 20% of income earners vs. the bottom 20%. The minimum wage and labor legislation (or lack thereof) in a country: Countries with poor labor protection and a lack of minimum wage legislation providing better delivery economics given the lower rider pay required. We measure the ratio of typical delivery fees charged in a country to the national minimum wage. A higher ratio suggests more attractive delivery economics. Where countries have no minimum wage we assume a default ratio of 3x (at the high end of our data). The proportion of branded restaurants in a country: Branded restaurants typically having better negotiating power with online food delivery platforms, which worsens delivery economics by lowering commission rates and delivery charges possible by platforms. How has COVID-19 Affected Online Food Delivery Platforms? Between April 8 and April 20, we conducted an online food delivery survey among 3,606 consumers (both users of online delivery services and non-users) in the U.K., Italy, Brazil, and South Korea. The average age of users in the survey is 45 with heavier users of the platform younger than light users. Based on data from the results, we analyzed online food delivery platform usage, how it has changed given the COVID-10 pandemic and whether current changes could be long-lasting. Overall, COVID-19 has had a net positive impact on frequency and spending on online food delivery and the majority of new users (57%) are likely to use it again. Click on the Key Findings below for more details from the Survey. Key Finding #1: Positive Impact on Frequency & Spending Level in All Markets Except the U.K. COVID-19 has had a net positive impact on the frequency and spending levels of online food delivery consumers in Brazil and South Korea in particular (and to a lesser extent in Italy), but a net negative impact in the U.K. Key Finding #2: Restaurant Choice & Promotions During COVID-19 Outbreak The majority of U.K. users have seen a decline in restaurant choice since the COVID-19 outbreak and no change in promotions. In Brazil, 52% of users have observed an increase in restaurant choice and the majority saw an increase in promotions. South Korea appears the most rational market (76% see no change or a decrease in promotions). South Korea rationalization follows a very competitive 2019 when online delivery companies spend money on vouchering in the country. Key Finding #3: Price & Choice Are the Main Selection Criteria for Platforms Pricing, availability of restaurants, and hygiene are the main drivers in selection of a platform. Delivery speed, customer service, and app functionality are less important. Key Finding #4: Brazilians Most Likely to Continue Using Service 82% of new users in Brazil (past 2 months) will likely continue to use the service vs. 57% overall. Key Finding #5: Non-Users Not Fully Convinced The majority of non-users (64%) are unlikely to use online food delivery, excl. Brazil where 65% would consider using it, mainly as they prefer to cook themselves and consider the services to be expensive.

April 30, 2020 – The COVID-19 lockdown has limited the movement of people across nations. It has also led to behavioral changes among consumers as they limit the number of trips outside the home and increasingly strive to maintain control on the hygiene of their households through limiting what comes into their home.

How COVID-19 Is Impacting Online Food Delivery Platforms

More data here...

Pernille Henneberg

Catherine L Mann

In order for policies to be effective in building confidence in financial markets, businesses, and individuals, a combination of health measures and fiscal easing are needed. Supporting the healthcare system is required now because of the demand for infrastructure, testing, and a vaccine and support can reduce the fear factor. Fiscal measures need to be deployed to avoid even deeper economic losses by keeping businesses afloat and workers away from unemployment. But how much fiscal easing is going to be needed to offset the upcoming losses to global GDP? To answer this question, we developed a scenario framework to evaluate the current and upcoming fiscal announcements. The first scenario assumes the only shock to the economy is to consumer activity due to the forced and self-imposed distancing measures. Using data from China as a guide, a 30% reduction in travel and tourism is not too big an assumption. The second scenario assumes not only a reduction in consumer activity but also a shock to uncertainty, financial markets, and the price of oil. With just a hit to consumer activity, fiscal easing equivalent to 1% of GDP isn’t enough to avoid a negative impact on growth across the worlds’ largest economies and regions. Instead, our simulation says a substantial fiscal easing of 2% of GDP would leave the impact to global GDP growth in positive territory in 2020. But when we add to that the shock of uncertainty, financial markets, and oil prices, fiscal easing of 2% is insufficient and would leave a drag on global GDP growth of 1.2 percentage points. To avoid a negative impact on already weak global growth in 2020, fiscal easing approaching ~5% of GDP is more likely to be needed. And timing matters because once an economy falls into recession policy actions need to be even bigger to get out of recession. Therefore, the best strategy is to move quickly to implement fiscal actions to limit the negative financial and uncertainty feedback loops. As COVID-19 continues to worsen, bigger fiscal easing will be needed. Without aggressive fiscal easing, the consequence for the economy is depressing, but not unrealistic. Starting with a pre-COVID-19 GDP growth baseline of ~2.5% in 2020, the result of the huge economic shock, which is more aggressive than the second one considered above, would be that global GDP growth falls by around 7% in 2020. However, if the global fiscal easing is very large and amounts to 5% of GDP, as is being suggested in the U.S., the support to GDP growth lifts global growth back to around 0% in 2020. The best advice? Go big, because it is going to be worse than you think and go now, because later may be too late. In theory, and as illustrated above, if immediate fiscal action stems the deteriorating conditions now, then a large fiscal effort should not be needed. ‘Go big and go now’ also reduces the threat of a deep and prolonged recession and sends the signal that policymakers are committed to doing whatever it takes. Authors: Pernille Henneberg,Catherine L Mann,

<div class="preview">
In order for policies to be effective in building confidence in financial markets, businesses, and individuals, a combination of health measures and fiscal easing are needed. Supporting the healthcare system is required now because of the demand for infrastructure, testing, and a vaccine and support can reduce the fear factor. Fiscal measures need to be deployed to avoid even deeper economic losses by keeping businesses afloat and workers away from unemployment.
But how much fiscal easing is going to be needed to offset the upcoming losses to global GDP? To answer this question, we developed a scenario framework to evaluate the current and upcoming fiscal announcements. The first scenario assumes the only shock to the economy is to consumer activity due to the forced and self-imposed distancing measures. Using data from China as a guide, a 30% reduction in travel and tourism is not too big an assumption. The second scenario assumes not only a reduction in consumer activity but also a shock to uncertainty, financial markets, and the price of oil.
With just a hit to consumer activity, fiscal easing equivalent to 1% of GDP isn&rsquo;t enough to avoid a negative impact on growth across the worlds&rsquo; largest economies and regions. Instead, our simulation says a substantial fiscal easing of 2% of GDP would leave the impact to global GDP growth in positive territory in 2020.
But when we add to that the shock of uncertainty, financial markets, and oil prices,&nbsp; fiscal easing of 2% is insufficient and would leave a drag on global GDP growth of 1.2 percentage points. To avoid a negative impact on already weak global growth in 2020, fiscal easing approaching ~5% of GDP is more likely to be needed. And timing matters because once an economy falls into recession policy actions need to be even bigger to get out of recession. Therefore, the best strategy is to move quickly to implement fiscal actions to limit the negative financial and uncertainty feedback loops.
As COVID-19 continues to worsen, bigger fiscal easing will be needed. Without aggressive fiscal easing, the consequence for the economy is depressing, but not unrealistic. Starting with a pre-COVID-19 GDP growth baseline of ~2.5% in 2020, the result of the huge economic shock, which is more aggressive than the second one considered above,&nbsp; would be that global GDP growth falls by around 7% in 2020. However, if the global fiscal easing is very large and amounts to 5% of GDP, as is being suggested in the U.S., the support to GDP growth lifts global growth back to around 0% in 2020.
The best advice? Go big, because it is going to be worse than you think and go now, because later may be too late. In theory, and as illustrated above, if immediate fiscal action stems the deteriorating conditions now, then a large fiscal effort should not be needed. &lsquo;Go big and go now&rsquo; also reduces the threat of a deep and prolonged recession and sends the signal that policymakers are committed to doing whatever it takes.
Authors: Pernille Henneberg,Catherine L Mann,
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April 3, 2020 – In trying to stay ahead of the damaging economic effects of COVID-19 virus, the U.S. Federal Reserve went ‘all in’ on monetary policy and lowered the federal funds rate to an all-time low of 0-0.25 percent. Both the Fed and the European Central Bank also delivered a “whatever it takes” sentiment with ‘bazooka’ policy easing actions. Unfortunately, easing monetary policy doesn’t reduce the rate of infection and has not been enough to reduce the level of uncertainty and rising economic damage.

COVID-19’s Global Impact: Fiscal Action – Go Big Go Now

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