COVID-19 has challenged all businesses, but not equally so. Some faced falling footfall as streets and airports emptied. Whereas others experienced surging demand, notably technology and e-commerce companies.
This report provides fresh analysis following July’s Navigator Resilience survey, covering a period of increasing business activity post-lockdowns, when government support to many businesses and employees continued. Comparisons with July’s survey, which covered a narrower range of markets, will track businesses’ response to the pandemic. And year-on-year comparisons with the larger annual Navigator survey from November 2019 will show the impact of COVID-19.
This survey was conducted between 11 September and 7 October 2020. Signs of a second spike were emerging across Europe, there was no agreement on a UK-EU post-Brexit deal, and businesses were contacted before the US election.
This reflects the nature of COVID-19 spreading through face-to-face contact, meaning that demand and supply shocks have varied widely between different sectors, with economic impacts depending on the make-up of national economies. Almost all businesses surveyed have been adversely affected, with only 8% currently seeing current profitability ahead of pre-pandemic levels. And while the revenue outlook is significantly more pessimistic than last year, most businesses project revenue growth this year.
There are emerging signs of a two-speed recovery. Businesses growing over 5% this year are making a majority of sales online. And a narrower group comprising 15% of companies enjoy revenue growth of over 15%. These leading companies are followed by a large pack of slower-growth firms. Then, the proportion of companies expecting declining sales has doubled since 2019. A few sectors face particular challenges, such as automotive and tourism. And all businesses are conscious of downside risks, with further waves of COVID-19 posing the greatest threat to the business outlook.
These differences may persist because of the strategies companies are able to adopt. For most, the pandemic has caused an evolution rather than revolution in operations. Around half of companies have made short-term changes, with others evenly split between longer-term and no change.
Companies facing growth challenges are undergoing the greatest scale of change. Through choice or necessity, these challenged companies favour a defensive cost-cutting approach. And in common with higher-growth firms, they’re seeking to resuscitate consumer demand through marketing. Higher-growth firms follow a broader approach however – investing for future growth through innovation, product development and new markets.
Business leaders define corporate success as extending far beyond shareholder returns. Innovation, responsible business practices and corporate culture are more significant factors. Nine in ten firms (86%) anticipate revenue growth from improved sustainability outcomes. And most firms have adopted targets, generally focused on environmental and social factors, rather than corporate governance.
Level of change experienced in the last 12 months
|Have undergone long-term changes or transformed for ever||Have undergone short-term changes||Have continued as before|
|Agriculture / Fishing / Forestry||18%||42%||40%|
|Mining / Oil / Power / Metal||20%||43%||37%|
|Wholesale / Retail Trading||28%||49%||23%|
Sectors expecting sales growth to exceed 5% over the next year
|Advertising & public relations||58%|
|Oil & gas||54%|
|Metals and mining||54%|
|Media & publishing||51%|
|Computer & electronic manufacturing||39%|
|Power & utilities||38%|
|Healthcare & social services||38%|
|Wood, paper, rubber, plastic manufacturing||32%|
The pandemic has had an unequal impact on different sectors; demand and supply shocks have varied widely
Most businesses expect to return to pre-COVID profitability this year or next
COVID-19 spurred short-term change for most businesses
High-growth firms now make a majority of sales online
Nine in ten companies expect sustainability performance to boost sales
Mainland China surpassed the USA as the main foreign market for firms in Asia Pacific, a shift since 2019
Year in which businesses expect to return to pre-COVID levels of profitability*
|By the end of 2020||2021||2022|