BY KEN LERONA
WHILE Iloilo sets the bar high in terms of addressing the impact of COVID-19 in terms of medical and social response due to the effective partnership between the private and the government sectors, our businesses need to start planning for a post-crisis bounce back now. We know that we Ilonggos are resilient but we also need to acknowledge that the impact of this current crisis may be immense that if we do not start planning for recovery now, we may suffer a little bit harder, a little bit longer.
Weâve seen really good days these past years before the pandemic happened. Our economy has significantly grown as shown by the expansion in business in the past four to five years. In 2015 alone, Western Visayas grew by 9.4%, among the highest in the country. In 2018, the regional GDP has grown by about 6.1% which was almost at par with the national economic growth.
We can tell that our economy was doing well with the proliferation of malls and retail outlets within the city and province of Iloilo. Customers who went around these establishments pushed bigger shopping carts, bought more clothes and other non-grocery items, hauled more appliances and furniture, dined in the restaurants in bigger groups, and a lot more. Hotels and resorts enjoyed healthy occupancy rate coming from both local, regional, and international guests. Money from OFW dollar earners, supported by local earners and industries, has buoyed our economy very well. Condominium units and subdivision lots sold out like hotcakes and office spaces were easily filled by the burgeoning BPO industry. Until everything was put to stop because of the COVID-19 pandemic.
We were caught surprised, much like the rest of the world.
With the community quarantine going on, malls are shuttered, most offices are closed and only those who run the essential goods business are allowed to operate. Most micro, small, and medium enterprises are forced to stop running their operations. What will happen now to our local businesses?
The new normal
Most analysts predict that the impact to businesses by COVID-19 crisis may extend even after the community quarantine has been lifted. Businesses may even reel from its punching effects three to six months into the new normal.
So what will be the new normal? The new normal will no longer be business as usual. In the new normal, we may lose those what we have been comfortable with and we will be forced to quickly adapt the changes we often dismissed or procrastinated about in the pre-COVID-19 world.
According to the projection of the National Economic Development Authority (NEDA) in a report called Addressing the Social and Economic Impact of the COVID-19 Pandemic, released last March 19, 2020, there may be a 5-10% decline in household consumption of non-essential commodities. These non-essential commodities include alcoholic beverages and tobacco, clothing and footwear, furnishings, household equipment and routine household maintenance, recreation, culture, restaurants and hotels, and miscellaneous goods and services.
In the same report, NEDA projects significant hit to the tourism sector due to travel restrictions. On a national level, the sector is projected to lose an equivalent of about 0.4 to 0.8 percent of the 2020 GDP. Due to the slowdown of economic activities, the industry may reduce employment by about 33,800 to 56,600. We can infer that this national concern may also be felt in a way in Iloilo given our position as a tourism destination player.
Once the quarantine is lifted, it will take time for Ilonggos to come out and do their leisurely shopping in the malls. If they do, they will only shop for essential goods and their spending will be limited to those that they need to bring back a semblance of normalcy. In fact, they may even spend lesser time outside to avoid crowded places.
Because of the global nature of this crisis, money inflow from OFW earners will be limited. These earners will remind their dependents and families to scrimp and reserve cash on more important spending such as food, health, and school. They may once again go back to the risk-averse and spending-averse attitude which will definitely impact our local businessesâ earnings. Potential winners in this scenario would be the health sector and the insurance industry.
Preparing for the new normal
So what can Iloilo businesses do to prepare for the new normal? We need to start this conversation soon so we can cushion the potential impact to our local industries. As I said, the new normal will no longer be business as usual so we have to gear-up and adapt as fast as possible.
Local businesses need to quickly learn and adapt digitization. This goes beyond just having a Facebook page and posting on the platform every now and then. This means transitioning to take advantage of digital technology â from internal processes, marketing and selling, and even order-taking and delivery. Notice that during the lockdown, those that continue to earn are those who are ahead in the digital platform. We will see that this will be the mode of running the business post-COVID-19.
Expand value proposition from just having a basic product or having the cheapest offer â a very Ilonggo way of doing business. âGinadumog kami sang customers kay barato kami iya,â may no longer be necessarily true in the new normal. Customers will demand for more value from what they buy because they want more bang for their buck. Money will not be as easy to get so they will stretch value from every centavo that they will spend. They will require better customer service and more value-added services. Will you be capable of doing house-to-house delivery? Will you have a hotline to address their concerns?
Of course, local businesses need to manage cost but extra care must be taken so as not to sacrifice quality. Customers will always sense this and the danger is that they can shift their loyalty to another brand as easily as they can. National players with deeper pockets may start to come in (if they havenât yet!) and they may eat up significant market share.
In the end, local businesses, the local government, as well as the Ilonggo community need to work together now if we want to reduce the painful impact of the COVID-19 crisis in our economy. Talking about it and calibrating our bounce-back plans soon will be a good start./PN
