Six Key Industries Shaping The Future
Due to COVID-19 pandemic, B2B and D2C industries were slowed or halted across the world, and they created a new normal. As per our analysis, initiatives such as wearables, food tech, AgriTech, automotive technology, smart utilities, and infrastructure industry are aggressively capturing the market gap post-pandemic.
Direct-To-Consumer (D2C)
Agritech
The farming community has always lagged due to non-modernisation of farming techniques and equipment. This story was the same for all farmers till a few years back. With the increasing penetration of the internet and better supply chain solutions, the AgriTech industry started helping many farmers increase their income and productivity.
Few AgriTech firms have provided different equipment, fertilisers, pesticides, guidance and knowledge about farming directly to the farmers in a single phone call. Firms have also tied up with farmers to provide the knowledge and advice about planting the best crop, yielding a better income. Some firms are buying directly from farmers and supply them to small and large retail stores, eliminating possible intermediaries to condense the chain. During COVID-19, the farming sector has performed better compared to other sectors.
During COVID-19, AgriTech firms, especially those that provide agriculture equipment, faced a significant challenge that small and mid-sized farmers could not afford that equipment due to discontinued supply chain and lower-income. So, they had to be back to their traditional farming methods. Firms, which are in hydroponics farming, faced supply-demand issues as most retail stores were closed. Many subscription-based consumers went back to their home states, resulting in a cancellation of their subscriptions. Firms, advising farmers that which crop is best to grow according to the soil and environment were facing hard times to convince farmers as most of them wanted to cash crops. Due to all this, some AgriTech firms encourage organic farming and provide the required knowledge to farmers.
Such firms must invest more in data analytics to gain better predictive insights about farming conditions. They must hire local people who can teach farmers about the benefits in their local language. Firms that have done the contract farming for fresh produce must improve their supply chain, adopt a monthly subscription, or have tie-ups with other firms to provide healthy food. Firms who focus on procurement and delivery can expand their territory for which they will require the proper cold chain to keep the food fresh for a longer duration. Hydroponics farming firms can collaborate with restaurants and small retailers for a stable income. Firms must teach farmers how to use a smartphone as it will also help other players to reach their customer easily.
Overall there are more areas to explore and grow in AgriTech sector like providing storage space, vertical farming, a platform for Agri-product buyers and sellers, organic fertilisers, pesticides, etc.
Foodtech
FoodTech industry was booming before the COVID-19. However, after the lockdown, all came to a standstill. Restaurants, food courts all were closed. Also, people started avoiding outside foods due to hygiene issues. Some food tech companies’ dependent on institutions’ cafeteria, which were all, closed during the lockdown, facing heavy losses. Before COVID-19, people like to eat outside food at least once a week, but this habit has changed after COVID-19. People prefer home-cooked food that is safe and healthy.
FoodTech firms, which operate through cloud kitchens and have its delivery system, were affected the most. People going back to their villages during lockdown have also affected the industry due to lesser workforce post-COVID-19. Food aggregators focused on food delivery, such as Zomato and Swiggy, also faced losses during the period. FoodTech firms must take some bold steps to regain the lost ground during COVID-19. They must implement the highest safety standards for food packing so that the customers feel safe while having outside food. The firm which sells organic food items, such as honey and other staples, must ensure the minimum or no contact during food processing and delivery.
FoodTech companies can publish food preparation/processing videos, which showcase what type of measures they have taken to ensure minimum contact while preparing the food. Companies running cloud kitchens can invite regular customers for inspection at their food preparation areas. It would help in garnering some positive perspective in the eyes of customers. Additionally, they should create more engaging content for social media so that customer cannot ignore that. They can also collaborate with food bloggers to set-up a positive image across digital channels. In short, they should look out for the feasibility for better and innovative media.
Wearables
The wearable industry is in the incline mode since the beginning of COVID-19. The forced lockdown and increase in the number of people working from home have spurred the demand for wearables. People are buying wireless earphones for office work. Many of them had to buy an extra set of pairs for their kids for online education during COVID-19.
Indian companies like NOISE and BOAT have benefitted tremendously due to this. They introduced the right products at the right price and the right time, which had pushed their sales upward. Also, the smartwatches or wristband had made their way into people’s lives as due to COVID-19, many people have become health conscious and do not want to take any health-related risks. They have understood the value of being healthy. As there is no sign of normalcy for at least six months or before the vaccine arrives, the work from home and online education will continue. Few new companies faced challenges as consumers usually don’t trust more unique brands when it comes to electronics.
Companies must take advantage of the COVID-19 situation, develop more affordable devices with the best quality, and target smaller cities and towns because many people have come home during this pandemic situation. They have to increase their reach to those places or do tie-ups with logistics firms with a vast network. They would come up with safe and comfortable products for children aged up to 15 years, as most of them will attend online classes. Firms, which make earphones, can also approach to different schools for tie-ups. Also, tie-ups with EdTech firms may help in expanding their reach. It will increase its reach and improve its brand recall. Some well-established firms may invest in smart wearable glasses for research to make them cheaper to gain the first-mover advantage. The smart wearable glass is a new concept not much popular among masses. Smartwatches or wristbands have minimum functions, for children, which can act as a GPS device which can resolve the security issues for worrying parents.
Business-To-Business
Automobile Industry
The auto industry is not doing well from the past year as sales declined compared to previous years. Several factors such as GST implementation, structural changes, liquidity crunch, and a transition from BS-4 to BS-6, which forces companies to sell BS4 vehicles at heavy discounts, resulted in considerable losses to auto companies. There was a slowdown in the industry due to expensive loans and cab aggregators such as OLA and Uber. Then during the COVID-19 pandemic, the wheel of the automobile industry stopped utterly. For most companies, not a single car was manufactured or sold for more than two months. This hit the hardest to SMEs who supply parts to big companies as most of the firms have only 1–2 customers. Their inventory increased as well as their dues. Due to no hope of industry revival, workers also left for their hometown and villages during the same period. Some firms had taken advanced loans to fulfil future orders, but they could not sell anything with factories shutting down. Also, the industry faced supply chain issues as most of their demands were at ports.
To improve this situation, post-COVID-19, auto parts suppliers must adapt to a just-in-time delivery model. Also, they should avoid being dependant on a single customer. SMEs must research and explore different products or machines, not necessarily related to the auto industry, manufactured with similar materials. For example, many global auto companies, including General Motors and Ford, produced ventilators from the same material used to manufacture cars and various parts. They can also approach local auto garages for material supply.
Firms must look forward to new upcoming EV Start-ups and start supplying to them. Also, under the Make in India initiative, they can manufacture parts for global auto players. They can also focus on manufacturing parts required after-sales and can turn to job work for OEMs.
Energy and Power
The energy sector has seen growing trends for the past few years due to increased consumption and local demand. The standard of living of the middle class is rising, contributing to the need for more energy. The sector is mainly in loss because of theft of materials, non-payment of dues, etc. During COVID-19, when most industries were not functional, it helped reduce the energy demand vastly. Also, energy and power distributors faced issues like non-payment of dues by consumers.
Small firms, manufacturing grids and other components have seen their orders got cancelled due to economic slowdown. As the effect of COVID-19 is slowing down and the shutters of factories are opening up, the energy sector has again picked up the pace. Small firms cannot make the same mistakes also as they already have incurred huge losses during this pandemic. Situations are getting regular, but non-payment issue is still there as small households cannot pay their bills as those companies could not make payments to their supplier.
To cope with the situation and not be in the same position again, firms must find other income alternatives. The shift from conventional energy sources to renewable sources has a huge opportunity for SMEs. They should not be dependent on one segment and should explore options in solar and wind energy. They must manufacture complex parts for the solar industry like panels and micro-inverters, rather than importing from other countries. It will reduce their dependency on other firms. Firms should start providing services directly to end consumers to have a better margin.
Infrastructure & Construction
The construction and infrastructure industry has picked up pace from the last 3–4 years as major roads, highway, and rail projects have been announced, and many more are on their way. Road construction activities have been increased exponentially from the past 2–3 years, which is a good sign for the industry. Such things help small or medium companies as most of such jobs are outsourced from prominent firms to smaller ones. It is also one of the most manageable sectors to enter because of low entry barriers. The primary reason is that it is still a labour-intensive industry, and it employs a large number of people. COVID-19 has slowed down the pace, and many projects are overdue now. Also, labourers’ return to their villages has created a massive gap for skilled workers in on-going and pending projects.
Currently, the biggest challenge that construction and infrastructure firms are facing is the unavailability of skilled workers and significantly less cash in hand. Firms are not working at full capacity, further pushing the deadline of completion, which results in increased interest rates. Now, these firms have to re-strategise their model so that the most important projects get completed as fast as possible to get their dues shorter.
Technologies like 3-D printing are gaining popularity, reducing the price of construction and labour work exponentially. It is also much faster than conventional methods. If possible, smaller firms can go for smaller units or make individual homes after successful completion to add work to the company’s portfolio. Manufacture can produce bricks made from plastic or ash, making research and design equipment made from plastic or carbon. The firms must ask the payments in advance, which will resolve the issue of liquidity as many workers paid daily, which required a tremendous amount of cash in hand. The firms may try the robotics, as it is expensive but can do the work lot faster.
