The COVID-19 pandemic has presented Singapore with its one of its biggest challenges ever.
But amid the challenges, there is a silver lining.
As the saying goes, “necessity is the mother of invention”.
With such rapid change going on, the need to adapt is now more acute than ever.
Companies will also evolve and digitalise. Those who either have not done so or are unable to catch up will go the way of the dinosaur.
It’s the Darwinian theory of the survival of the fittest.
And the timeline for this to happen has been compressed from years to mere months.
A crisis spurs innovation
The spark of innovation normally comes from entrepreneurs or those who think out of the box.
However, the ferocity of this crisis has led to a burst of innovation.
When faced with pressure and urgency, humans are forced to think of ways to overcome obstacles.
As the pandemic has resulted in the closure of numerous brick-and-mortar businesses, some have adapted quickly to online and digital means of selling.
It’s hard to imagine how brick and mortar businesses can thrive in such times. But there are companies that are doing just that.
One example is Nike (NYSE: NKE). In its fourth-quarter ended 31 May 2020, the sports footwear and apparel giant reported a net loss of US$790 million as the bulk of its stores around the world had to shut due to the pandemic.
However, the silver lining was that digital sales soared 75% year on year during the quarter, and the company continues to connect and engage with its customers through its digital ecosystem.
Workouts on the Nike Training App more than tripled to 5 million workouts per week in April, while the Nike Commerce App has been downloaded more than 8 million times, more than triple last year’s level.
Mexican food specialist Chipotle Mexican Grill (NYSE: CMG) also suffered from store closures in its latest quarter, with comparable-store sales plunging 24.4% year on year in April.
However, the restaurant operator has grown its digital sales by 216.3% year on year and such sales accounted for nearly 61% of the total revenue for the quarter.
The examples above show how businesses have been able to leverage on technology to evolve their operating model to emerge even stronger than before.
Because of the additional engagement offered through digital means, both Nike and Chipotle are very likely to retain the new customers garnered through their respective digital channels.
Get Smart: Belief in a better tomorrow
Another common saying is that “change is the only constant”.
New industries will sprout up, new roles will emerge.
Companies that can stay relevant and gain an edge will leapfrog their competitors to emerge as top dogs in a post-pandemic world.
These businesses will form the new building blocks of tomorrow’s industries.
As investors, we need to continually stay updated on what is relevant in today’s world.
We need to keep track of the latest industry trends and the companies working hard to innovate to capture those trends.
These are the winners that we should be adding to our portfolio.
I’ll end off with an old National Day Song’s opening lyric, that of “Count on Me, Singapore”.
“We have a vision for tomorrow. Just believe, just believe”
Believe we must, if we are to embrace the vision of a much better tomorrow.
And there will always be better days in the future.
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Disclaimer: Royston Yang owns shares of Nike.
