Page 30 - bon-dia-aruba-20200429

A30 business
Wednesday 29 april 2020
How some companies survive, even thrive, in viral crisis

By PAUL WISEMAN and find opportunity in the cha- seminar on the coronavirus' it's ignited consumers' ap- ing around curbside (pick-
ANNE DÍNNOCENZIO os. "This is a once-in-a-life- threat to companies. "Pre- petite for other offerings. up) and takeout," said Brad
AP Business Writers time — we hope — event,'' serve what you have and Netflix is capitalizing on a Plothow. Womply's market-
WASHINGTON (AP) — When said Andrew Corbett of grab more cash wherever burst of demand for stream- ing chief. With widespread
the coronavirus struck the Babson College's Butler In- you can to help you get ing entertainment. Ama- shutdowns of malls and
United States hard last stores, the pandemic is
month, 22-year-old entre- putting many clothing re-
preneur David Zamarin tailers further in peril, while
knew his company need- increasing the dominance
ed a Plan B — fast. As the of big box stores that have
economy essentially shut remained open because
down, demand for his stain- they sell essentials like food
resistant coatings was sure and household goods.
to drop. Walmart, Amazon and oth-
So Zamarin decided to re- ers are on a hiring spree
tool his company, DetraPel, and doling out bonuses or
in Framingham, Massachu- pay increases.
setts, to start making disin- But even they face pres-
fectants to help fight the sures. They're spending
virus's spread. Within weeks, more on labor and online
"we completely changed operations. Some are see-
our whole system." ing profits squeezed be-
Sales of the DetraPel eco- cause shoppers are turn-
Cleaner & Disinfectant ing to low-margin grocer-
have been strong, he said, ies and avoiding higher-
and Zamarin expects to margin items like clothing.
produce the cleaner even Amazon has struggled
after the health crisis has to handle an accelerat-
passed. ing demand for essentials,
"I don't want this to be a This Jan. 29, 2010, file photo, shows the company logo and view of Netflix headquarters in Los disappointing many of its
one-time thing,'' he said. Gatos, Calif. Prime members, who pay
"I don't want to capitalize Associated Press. $129 a year and are accus-
on this to make short-term tomed to receiving deliver-
money.'' stitute for Free Enterprise through and survive the cri- zon's stock is up on a surge ies within two days.
The COVID-19 pandemic through Entrepreneurship. sis.'' United Airlines is trying in online shopping. Clorox is The crisis risks intensifying
has been an epic catastro- "The people who are used to raise $1 billion by issuing benefiting from panic buy- what many regard as a
phe for American business. to dealing with ambiguity stock. Darden Restaurants, ing for cleaning supplies. troubling trend: Commerce
Economic life is all but fro- and trying new things — owner of Olive Garden and Zoom and other video con- increasingly concentrated
zen. Stores are idle. Sales they're going to embrace other chain restaurants, is ference services have filled among big companies as
have sunk as people isolate this and run with it.'' seeking $400 million in a a rising need of employees smaller firms fail, thereby re-
at home, slash spending on Corbett pointed to Bauer, stock offering. working from home. ducing competition.
autos and appliances and a sports equipment maker The government has in- The data firm Womply The Open Markets Institute,
halt shopping trips, restau- that has pivoted from mak- tervened to provide small found that grocery stores which campaigns against
rant meals and movie out- ing visors for hockey hel- businesses with loans they enjoyed a 40% increase in monopolies, has called for
ings. mets to producing medical don't have to repay if they revenue earlier this month a ban on acquisitions by
Many iconic retailers are visors for health care work- use most of the money to from a year ago. Also see- companies with annual
reeling. Gap warns it may ers fighting the outbreak. keep workers on the pay- ing surges: Gun shops revenue above $100 million
run out of cash. Neiman That kind of drastic rever- roll. (120%) and liquor stores or by large investment firms.
Marcus and J.C. Penney sal is beyond the reach of The Federal Reserve (60%). Lynn Barry, the institute's
could be headed for bank- most companies. poured money into finan- Still, millions of businesses executive director, notes
ruptcy protection. "It's hard to change your cial markets to ensure that have at least temporarily that many big companies
Yet by dint of circum- business model," said companies can maintain closed, Womply found: 71% swallowed up smaller rivals
stance, resourcefulness or Gregg Lemos-Stein, who access to vital short-term of shoe stores, 77% of thrift in the financial crisis and
just plain luck, some com- studies corporate analytics credit for everyday opera- shops and 68% of antique Great Recession, some-
panies have positioned at S&P Global Ratings. "It's tions. dealers. Forty-two percent times in deals brokered by
themselves to withstand, like trying to change your But government money of restaurants have shut- the government.
even thrive, in the crisis. The tires while the car is going goes only so far for a com- tered. He's worried about a re-
most fortunate work in sec- 100 miles an hour.'' pany whose business has Those that have a brisk peat:
tors mostly shielded from For most companies, the collapsed. takeout or delivery service "You've got Apple and
damage, like pharmacies. key to survival is maintain- "It doesn't put people back have been likelier to re- Google and Amazon with
Or they can capitalize on ing enough cash to stay on planes or back in the main open: Only 21% of piz- these massive piles of cash,
the quirks of the times — a afloat until the economy malls," S&P's Lemos-Stein za shops and 17% of chick- the Saudis and others with
spike in demand for grocer- begins to grind back to said. en wings purveyors have these massive piles of cash,
ies, pizza delivery, movie health. "I haven't talked to a CEO stopped doing business. and everyone else is half-
streaming, online packag- Some businesses, Lemos- yet who thinks the govern- "Businesses are reorganiz- bankrupt and paralyzed.''q
es and cleaning products. Stein said, have drained ment is going to be their
Some companies were pru- their credit lines to try to savior," said Rich Lesser,
dent enough to have built withstand a period of CEO of the Boston Consult-
financial cushions or credit plunging revenue. ing Group.
lines to access cash. And "Cash is king," Robert Ka- Even while the health crisis
then there are nimble ones plan of Harvard Business has crushed purchases for
like DetraPel that somehow School said in a video most goods and services, linda.reijnders@cspnv.com