As part of BSRIA’s quarterly Business COVID-19 Impact survey, in September we focused on an update of business expectations for 2020-21, technological changes and the pandemic’s impact on Business Models, as well as on specific vertical applications.
Although some regions and individual businesses have been impacted by COVID-19 in different ways, the September survey confirmed the COVID-19 negative impact on companies’ bottom line with 90% of respondents expecting a fall in sales by the end of 2020 compared to their original target. Nearly half of the respondents expected a fall in sales of between 5-10% with a third expecting sales dropping in excess of 10%.
There is more optimism for a recovery of sales in 2021, but clearly growth expectations continue to be modest. Only a third of respondents expect to see actual growth in 2021, while another 30% expected less than 5% or no change. Thus, a third of businesses still expect to see a sales decrease of more than 5%. However, this is likely to reflect the fact that most survey respondents operate in the commercial segment which is impacted more than the residential segment. The sample is also biased towards the US and Europe.
Companies were asked what technological developments they saw occurring in the next 12-18 months to facilitate occupants coming back into commercial buildings. Responses focused on the use of smart solutions and digital technology to make people feel safer; this ranges from smart heating systems to sensors and controls, expansion of building management systems and use of mobile apps and increasing wireless coverage so that occupants can open doors, operate lighting and the HVAC system remotely.
Indoor Air Quality (IAQ) came as another highlight of the survey. As the pressure on providing a safe working environment grows, businesses go well beyond the requirements of continuous use of face masks, social distancing, handwashing, and stricter cleaning regimes. Continually updated technical guidance increases pressure on provision of fresh air and appropriate ventilation by improving existing HVAC equipment. There is strong focus on the provision of clean air, whether it is by ensuring greater levels of filtration of the use of UV lighting, but the uptake of remote building management through Building Automation and Control Systems to monitor IAQ has also been noted.
Green recovery plans for the post-COVID era drive growing interest for renewable solutions.
Responses to the survey also indicated that the current second wave of COVID-19 is likely to make changes happening in the work place a more permanent feature, and companies are deploying a lot of effort to adapt their business models promptly.
With the level of travel restrictions over the past 6 months, sales and marketing activities have inevitably moved considerably towards more digital solutions, a trend which was already happening but has been accelerated significantly due to COVID-19. Companies are looking at different ways to reach customers and looking for partnerships which ultimately may narrow the distribution chain and will also involve more web-based sales and technical support. This was initially also accelerated by supply issues for many companies who consciously have been reviewing supply chain weaknesses and opportunities for more local or regional production and suppliers. Consequently, some companies have been building up safety stocks in order to minimise further disruption in the foreseeable future.
There will be a significant drop in commercial new build in the next 12 months with activities shifting towards refurbishment and conclusion of smaller projects.
Among the vertical applications offices, retail and the hotel/leisure/hospitality sectors are worst impacted by the initial lockdowns and now by further local restrictions. On the other hand, warehouses and data centres are benefiting from a greater level of remote working and online shopping and the healthcare sector is buoyant with change.
The chart below gives an overview of the business impact by key verticals, based on our survey results.