Insight

Predicting a path to the new reality: Industry and sector dynamics

Although companies will experience similar overall trajectories, we predict the impact will differ by industry, geography and company

Kevin Bolen

Kevin Bolen

Principal, Advisory, U.S. Leader of Strategic Growth Initiatives, KPMG US

Steve Hill

Steve Hill

Principal, Global Head of Innovation, KPMG US

+1 212-909-5659

Jim Negus

Jim Negus

National Managing Principal, Clients and Markets, KPMG US

+1 213-955-8507

The COVID-19 pandemic has redefined business-as-usual for nearly all companies, regardless of industry, size, or geography. All are dealing with some level of disruption and will continue to grapple with the business implications of managing remote workforces, accelerating digital transformations, building more resilient supply chains and strengthening connections with customers in the weeks and months to come. 

Given the level of disruption, most organizations are largely still reacting or moving into ‘Resilience’, the second of what we see as a four-phased journey from Reaction to Resilience, then Recovery and eventually to a New Reality.

We see an ‘alphabet soup’ of recovery patterns emerging, influenced by many factors, including how quickly demand will recover (from slow to fast) and the degree of permanent change to the industry’s underlying economics or value chain (from low to high):

  • Hard reset: Industries/companies that struggle to recover due to “permanently” lowered demand for their offerings, insufficient capital to ride out extended recession, and/or poor digital transformation execution. This could take an ‘L shape’ – or when recovery takes a long time and results in long-term economic damage.
  • Transform to re-emerge: Industries/companies that will recover along a protracted path, requiring capital reserves to transform operating models and keep up with new consumer expectations. This could take a ‘U shape’ – or when it lasts more than a few quarters.
  • Modified Business As Usual (BAU): Industries/companies seen as daily essentials that will suffer during the consumer slowdown, but recover more quickly as consumer demand rebounds. This could take a ‘V shape’ – or when an equally sharp recovery comes after the initial plunge.
  • Surge: Industries/companies that scale rapidly because consumer behavior changed permanently during the COVID-19 era.

With so much uncertainty, it can be difficult for leaders to feel confident in their actions. Understanding the trajectory of the disease, the recovery path in an industry, and the potential vision for the New Reality can help leaders assess their current positioning and adjust their strategies to eventually thrive.

Predicting a path to the new reality: Industry and sector dynamics
Although companies will experience similar overall trajectories, we predict the impact will differ by industry, geography and company