While de-globalisation will force companies to discard low-cost imports and shift to local vendors, diversification of supply chains will become important as an insurance policy.
The effect of the coronavirus pandemic on businesses may last longer even as some of the companies may reach pre-Covid levels in the near-term. The ‘4D’ forces of de-globalisation, diversification, digitalization, and Darwinism may affect the companies in the times to come, according to a report by Kotak Institutional Equities Research. While de-globalisation will force companies to discard low-cost imports and shift to local vendors; diversification of supply chains will become important as an insurance policy, the report added.
On the other hand, digitalisation has picked up pace in recent months and is likely to accelerate. Darwinism in business is the evolution of businesses in the market over a long period by sustaining various conflicting situations. The report underlined that Darwinism is further expected to stay across industries in the near-to-medium term.
3 factors affecting consumer behaviour
In the wake of changed consumer behaviour due to the pandemic, several structural changes are expected in the post-Covid businesses. Consumer behavior and preferences are being affected by near-term worries on employment and income, forcing changes in consumption baskets; digital adoption led by necessity and convenience, and lifestyle changes altering consumption habits.
The report highlighted that it would be a mistake to over-emphasize near-term factors and trends at the expense of a medium-term perspective. The Covid-19 pandemic will not fundamentally affect what people consume in the medium term but will likely affect how and where they consume. Similarly, the pandemic may not affect what companies produce but may affect where and how they produce.
Meanwhile, the Covid-19 pandemic will likely hasten the process of business transformation across industries. Changing customer preferences will force companies to redefine their offerings, channels, and modes of engagement with consumers while demand- and supply-side forces will drive faster innovation. On the demand side, consumer needs and preferences have changed dramatically and the companies will have to adjust their business processes to meet the changed needs of consumers, the report said. On the supply side, companies will continue to look at de-risking their supply chains and upgrading their digital offerings.