Going virtual is becoming the order of the day with the pandemic revolutionizing business, and sparking a drastic change in consumer habits. Zeng Xinlan reports from Hong Kong.
Bilal Anjum saw his dream of taking to the skies in tatters, at least for the time being, as COVID-19 struck.
The 27-year-old was about to join Hong Kong flag carrier Cathay Pacific Airways as a trainee pilot early last year when the pandemic hit the world with full force, grinding businesses, particularly, the aviation, travel and retail sectors, to an almost complete halt.
Companies have been forced to revolutionize to keep their heads above water by going “smart” or online amid the unrelenting outbreak.
Anjum has joined the information technology crowd, helping an online food market to launch its first brick-and-mortar store in Tseung Kwan O.
“The pandemic has dealt a heavy blow to businesses. I had already been jobless for almost a year, living on my savings and was about to join Cathay Pacific’s pilot training program when everything was stopped on its tracks,” he said.
Airlines around the world were running skeleton services due to suppressed demand as countries imposed severe travel curbs to keep the coronavirus out of their shores. Cathay Pacific was hard hit, having to scrap more than half of its flights in February last year and lay off some 6,000 employees in October. The carrier posted a record loss of HK$21.65 billion (US$2.79 billion) in 2020, according to its annual report.
The financial storm also battered the tourism, hospitality, and food-and-beverage industries as consumption slumped. Enterprises are keeping their fingers crossed that normalcy will soon return.
“Whether or not things will turn the corner is anybody’s guess,” said Pascal Martin, partner at global management consulting firm OC&C Strategy Consultants. “Holiday travel may soon recover but, for business travel, I think it’s going to take much longer to return to the pre-pandemic levels because the way of doing business has changed dramatically.”
Consumer habits have also changed, prompting a reshuffle in various industries, such as the wide adoption of e-commerce.
“The pandemic marks a watershed (for e-commerce). I think going virtual will be the order of the day,” said Ross Settles, an adjunct professor in the Journalism and Media Studies Centre at the University of Hong Kong.
“A lot of people who haven’t really thought of going online as part of their business operations have been forced to do so. So over time, they’ll get ‘smart’ to bring in new customers.”
Go ‘smart’
The pandemic took a heavy toll on Hong Kong cosmetics chain SaSa, which said its turnover plunged by more than 60 percent in the first half in 2020, compared to the same period in the previous year. The group, which used to run about 230 retail stores in Hong Kong and Macao, took to e-commerce, which paid off with an almost 70 percent year-on-year surge in sales in the third quarter of last year.
According to the group’s financial report, its increased focus on online business by leveraging campaigns on WeChat and Taobao led to its online-to-offline business taking up more than 20 percent of total e-commerce turnover during the period.
Martin said COVID-19 has undoubtedly accelerated the integration of online and offline business activities. “Consumers rarely shop just online or offline. Most of them do both and don’t care whether they’re by online or offline as long as it’s convenient to them.”
‘Fewer outlets’
Settles said many physical retailers probably won’t see their post-pandemic heyday return. “There’ll be fewer outlets. People will be more likely to purchase online. Shoppers may only patronize physical stores for product demonstrations on things like clothing and furniture. But once you’ve ordered your purchases, they’ll all be sent to you,” he said.
There’s no sophisticated digital life without logistics, a field in which Hong Kong is lagging behind compared to the Chinese mainland and the United States. “The way retailers are organized makes home delivery relatively limited”, said Settles. “We (people in Hong Kong) don’t really have a distribution of technology. What we have is real estate, so if anybody wants to sell something, space is indispensable.” However, he said the pandemic has begun changing this. “Home deliveries involving online retail will start building up,” he added.
SF Express — the mainland’s largest express courier services group — has proved not only resilient amid the pandemic. It has benefited hugely from the virus-induced acceleration of e-commerce. The group recorded a nearly 50 percent surge in net profit year-on-year in the first half of 2020, compared with an 11.5 percent increase for the same period in 2019. In Hong Kong, SF Express teamed up with five new partners last month to join its delivery network.
The demand for food deliveries is also growing as more people order food from home or offices amid tighter social distancing measures imposed on restaurants and prolonged work-from-home arrangements. Delivery platforms such as Deliveroo, Foodpanda and Uber Eats have seen increases in orders and more eateries are turning to them, including top-end restaurants and hotels. By June last year, Deliveroo had teamed up with about 6,500 restaurants in Hong Kong, accounting for nearly 40 percent of all licensed eateries in the city.
“Hopefully, the pandemic will create so much demand for virtual purchasing, e-commerce and delivery services that it will dramatically alter consumption behavior,” said Settles.
Looking ahead to a post-pandemic world, Anjum said he is pretty confident of taking to the skies again. “It’ll take time, but things will get back to normal eventually.”
He is also taking a course in cloud computing. “I don’t want to stop pursuing flying, but I would like to supplement it with other things after I realized that being a pilot now won’t be as secure as it was because another pandemic could come, and the first to get hit will be the aviation business.”
Contact the writer at xinlanzeng@chinadailyhk.com
