WITH the persistent daily number of cases across the country over the past few weeks and with a steady rise in the number of ICU cases as well as cases requiring ventilators, Malaysia went into Movement Control Order (MCO) again as the government had no choice but to take drastic measures to flatten the Covid-19 curve.
Although MCO 3.0 is seen as less severe than the MCO 1.0 in March last year, the impact on certain businesses, self-employed, and daily wage earners can be devastating.
While there is so much the government can do in helping businesses or individuals, the fact that most economic activities are allowed to go on is already a blessing.
In the business sector, certain businesses are not directly dependent on the government for help during this difficult time but their survival rate during this period is dependent on support from within the businesses’ ecosystem.
This mainly involves the retail sector where these businesses are either dependent on their landlords to provide rental waivers, discount, or deferments, suppliers providing them greater flexibility in credit terms, utility service providers, who may help them to pay monthly rates on a staggered basis, or even their direct staff, who do not mind taking a little cut in salary to ensure the business survives the tough times.
Lenders too play a role in providing support to businesses by ensuring the business does not go bust as it would then place the whole loaned amount as a non-performing loan.
Having said that, these businesses’ eco-system too have bills to pay and hence businesses cannot take advantage of the situation by expecting everyone else to help them during these times.
A give and take attitude
What is more palatable for businesses in the retail segment is to have a give and take attitude as they need to realise that, while their business is been affected by the MCOs, so has the businesses of everyone else in the ecosystem.
Examples of this include businesses based in retail malls, or traditional shophouses, street food vendors, and even businesses that operate along our major highways.
Asset owners like the mall operators, landlords of shophouses, highway operators like PLUS Malaysia, have played their part along the way to provide all sorts of leeway to ensure these businesses to a large extent remain solvent and operational.
Last weekend, on top of the MCO 3.0 that was announced, some retail businesses too were abruptly hit by a sudden 3-day closure following an eleventh-hour announcement by the government for areas that were listed under Hotspot Identification for Dynamic Engagement (HIDE) system. While the government uses data and technology to identify these hotspots, a sudden closure has a significant impact on not only retail businesses in the area that is affected but also the entire supply chain of the business, especially in the food and beverage segment. This includes from suppliers of raw materials to the p-hailing service providers.
In the past, mall owners and landlords have not only played the role of a good corporate citizen by helping these businesses located in their premises to survive during the difficult period, but they have also extended assistance beyond the direct measures related to the rental of the premises.
For example, these asset owners have also taken steps and gone beyond the normal Standard Operating Procedures (SOPs) to ensure full compliance with Covid-19 procedures in their business premises as well as cleanliness.
This is significant for asset owners, especially for a mall or even a highway operator, as they have to ensure that the premises under their watch do not become the next Covid-19 cluster.
Technology is crucial
Technology today plays a significant role in the way business is conducted. Pre-pandemic, not many of us would have jumped into any of the foodservice platforms but today they have become a necessity.
Even a highway operator like PLUS has gone a step closer by allowing customers to pre-order their food or beverages via PLUS App.
With the app, travellers needing to take a break on their long journey have an option to either take-away their food and enjoy their meal in the car or to dine-in, depending on the SOP.
Having said that, just like vendors located on highways or businesses located in a shopping complex, there is so much the landlord itself could do to encourage or sustain the businesses.
At the end of the day, it is still the patronage of the customers that is the utmost deciding factor as to whether a business or vendor survives during these times.
These vendors or retailers themselves need to think outside the box too to remain in business. Nobody says running a business is easy.
During tough times, it is time to reflect and adjust to the times. If there is a need to cut overheads, businesses should do so and not get carried away. It is also time to innovate for retailers and businesses.
We have seen how businesses have transformed due to Covid-19 due to changes in consumer behaviour. The adoption of technology too has played a significant role in gaining customers, or at least, sustaining sales.
Innovative product offerings
Hence, it is a no-brainer that businesses too need to be innovative in their product offerings or deploy discounted pricing strategy, just to generate sales.
On their own, they should also explore ways to market their products outside their traditional physical stores as no one knows how long the business will be impacted due to the pandemic situation.
Thus, these vendors got to think of ways to supplement their income by venturing into either other business fields or expanding their market reach in other locations outside their current physical locations.
E-commerce platforms like Shopee, Lazada, or even Facebook marketing are ways to reach out to the potential market, and of course, when it comes to delivery, they are ample choices these days.
Asset owners, be it mall operators, landlords of shophouses, office buildings or even highway operators cannot be expected to continue to provide rental reliefs or deferments or discounts for an extended period as these landlords too have their income impacted by lockdowns.
At the same time, these corporates have not only overheads to pay, but for some, to continue to service their debt facilities.
They are also expected to continue to remain profitable and to pay decent dividends to their shareholders and hence, it is only natural that while we are concern about the livelihoods of traders, vendors, and retailers, the plight of the landlords too got to be taken into account.
In the end, it is about a balance between landlords and tenants and while there must be some form of support from the former, the latter too ought to pull up their sleeves and help themselves.
Lockdowns challenge business owners to get out of the comfort zone, or else, livelihoods will be impacted, and depending on the handouts is not exactly a solution either, especially when the economic sector is allowed to open during this MCO 3.0 period.
Pankaj C Kumar is a long-time investment analyst. The views expressed here are his own.