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Industry Data on COVID-19 Impacts on Business Revenue and Profitability
Industry Data on COVID-19 Impacts on Business Revenue and Profitability
The COVID-19 pandemic has had a seismic impact on businesses of all sizes and industries. As public health restrictions were enacted to control the spread of the virus, many companies saw revenues plunge while others struggled to adapt their business models. Nearly two years on from the start of the pandemic, data is emerging on just how hard COVID-19 hit company bottom lines. This article will break down some of the key industry-level data on how coronavirus impacted business revenue and profits.
Overall Economic Impact
The economic shockwaves from COVID-19 shutdowns rippled across the entire U.S. economy in early 2020. Gross domestic product (GDP) cratered at an annualized rate of 31.4% in Q2 2020 as states imposed lockdowns[1]. Unemployment spiked to nearly 15% as business activity froze.
While the economy has substantially recovered, the pandemic’s effects on business revenue and profits have been uneven across sectors. Companies in industries like travel, entertainment, and food services saw revenues evaporate almost overnight. Other sectors such as tech and healthcare proved more resilient.
According to Census Bureau data, 58.3% of companies with employees received Paycheck Protection Program (PPP) loans in 2020 to cope with the pandemic’s fallout[2]. For many firms, these emergency SBA loans and other government aid prevented even steeper revenue and job losses.
Hardest Hit Industries
Not surprisingly, the pandemic’s harshest impacts have fallen on industries that depend on large crowds and high levels of social interaction.
- The arts, entertainment and recreation sector saw revenues plunge by nearly one-third in 2020[3]. Movie theaters, museums, amusement parks, and other entertainment venues were forced to shut down for months. Sporting events were canceled or held without fans.
- The accommodation and food services industry suffered a similar fate. With travel limited and dining rooms closed, revenue fell by over 30% [4]. Many bars, restaurants, hotels, and resorts struggled to stay afloat.
- Brick-and-mortar retail also experienced massive disruptions, with clothing stores, department stores, and other retailers seeing double-digit sales declines[5]. With fewer shoppers in stores, ecommerce emerged as a lifeline for many retailers.
Within these hard-hit sectors, small businesses faced particularly devastating impacts. One study found that the number of U.S. small businesses plummeted by 22% from February to April 2020. Minority-owned small businesses were hit especially hard, with a 41% drop.
Adapting Business Models
Faced with an unprecedented crisis, many companies adapted their business models to survive.
- Restaurants rapidly transitioned to pickup and delivery options. New outdoor dining set-ups emerged across cities. Digital ordering and payment processes were accelerated.
- Retailers amped up their ecommerce capabilities through curbside pickup and improved online shopping. Companies like Walmart and Target saw massive growth in online sales.
- The healthcare industry pivoted to virtual visits and telehealth. By mid-2020, telehealth claims had skyrocketed by over 8,000% compared to 2019.
- Fitness centers and yoga studios shifted content online, offering virtual classes via Zoom and other platforms. ClassPass saw usage of its online workout library surge 5,000%.
While these adaptations didn’t fully replace lost revenue, they allowed many businesses to stay afloat during shutdowns. Companies that pivoted fastest fared relatively better.
Uneven Impacts Across Sectors
The pandemic’s economic impacts varied widely depending on the industry. Sectors like tech and healthcare generally proved more resilient.
- Information and professional services saw only a modest 6% revenue drop in 2020. With remote work surging, demand rose for videoconferencing, cloud computing, and other tech tools.
- The healthcare sector held up well overall despite delays in elective procedures. Hospitals benefited from surging demand for COVID treatments and testing.
- Essential retailers like warehouse clubs, supermarkets, and home improvement stores experienced sales increases as consumers stockpiled supplies and focused spending on homes.
- Online retailers and delivery services benefited enormously from the shift to ecommerce. Amazon increased its workforce by 50% in 2020 to meet surging delivery demand.
These sector differences reflect how the pandemic reshaped consumer spending patterns almost overnight.
The Rebound
As vaccination rates have climbed and restrictions eased in 2021-22, business revenues have largely rebounded across sectors. There are some lingering impacts, though:
- Business travel and conventions still lag pre-pandemic levels, hurting airlines, hotels, restaurants.
- Arts and entertainment venues are rebounding but face a long road to fully recover.
- Many restaurants didn’t survive the pandemic; the industry contracted by 90,000 establishments.
- Supply chain problems and labor shortages have pushed up costs and constrained sales for many companies.
- Some pandemic-driven shifts like remote work and online shopping appear permanent, forever changing how businesses operate.
The pandemic’s economic toll has been undeniably massive. But as the health crisis enters a new phase, most sectors are bouncing back. The lasting impacts on how Americans live, work and spend will continue unfolding in the years ahead.
## References
[2] https://www.census.gov/library/publications/2022/econ/2020-aces-covid-impact.html
[4] https://str.com/data-insights-blog/us-hotel-profit-decline-2020