Winnowing is the process of separating grains from the wheat and chaff by means of the wind. The COVID-19 crisis may be the wind that separates weaker companies/industries from their more future-fit competitors.
The Kauffman Foundation sponsored a 2009 study that found more than half of the companies on the 2009 Fortune 500 list were launched during a recession or bear market. (Source: Top Companies Started During A Recession | HuffPost UK)
Business in high and negatively impacted sectors, such as travel, are most likely to struggle. More traditional players with high fixed costs and low margins, like airlines, railways, hotels, are more likely to struggle than those with more variable costs and better digital reach, like Airbnb and Uber. The stronger players stand to benefit when the market starts to return after some of their competition has been eliminated.
Other sectors, such as those catering to remote work and telemedicine are receiving a short-term boost. At least some of this will be retained in the longer term.
Across all sectors, the winners are likely to be those that:
- most embrace flexible working,
- provide flexibility in channels, and
- have greater control over their supply chains.
Note that all of these factors were already present in the market. COVID-19 will not create this change. It will merely accelerate it.
There will be a flurry of creativity as increased unemployment leaves people with time on their hands and disruption opens up new opportunities to exploit. Intellectual property lawyers have reported is a rush of new applications since the lockdown period began. (Source: Eureka moment? Law firms report rush to patent ideas amid UK lockdown | World news | The Guardian published 24/05/2020)