The Delta variant is quickly establishing itself as the dominant COVID-19 strain. The highly transmissible variant of COVID-19 accounts for almost 60% of all U.S. infections, according to data from the Centers for Disease Control and Prevention. The CDC is now urging vaccinated and unvaccinated people to wear masks indoors in areas with “substantial or high transmission.” This announcement has created fresh worry about a pandemic that was believed to be on the decline.
A new survey from First Insight found that the number of consumers worried about the coronavirus in July jumped the highest since March 2020 – almost 64%.
Not only is a new strain affecting social gatherings, but it is taking its toll on retail, healthcare, and restaurants, as well as impacting travel and return-to-work timelines. With many clients being impacted by this second wave, we are gathering and analyzing data to help our clients pivot where needed and drive revenue growth. Here is what we have gathered so far:
Covid-19 Delta Variant Impact on Retail
Inflation has reached levels not seen since 2008, caused by a supply chain broken by the start of the coronavirus pandemic. While the effects of the pandemic seemed to wane, the introduction of the Delta variant has once again disrupted the supply chain, with nothing in the near term able to slow down the steady rise in prices of consumer goods. Particularly hit hard by rising prices are furniture and bedding, major appliances, jewelry, hotels and gas. Not only are prices rising, but the products people need and want are in short supply. For many of our clients, the huge challenge lies in the availability of shipping containers and shipping costs. Prior to the pandemic, the average cost to ship a container from Shanghai to Los Angeles was $1,800. Some of our clients are now paying $21,000 for that same shipment. This will result in higher prices for consumers.
Many retailers don’t expect a supply chain recovery until the summer of 2022 or even later (one of our largest clients that manufactures almost exclusively in China predicts 2023), according to the president of retail advisory service JLL. The kinks in the global supply chain will continue into the holiday season. We expect to see more aggressive fall marketing campaigns to get customers into the stores and buying online in September and October. If people wait until December to buy products, it may be too late. So expect the holiday shopping blitz to start much earlier, and if you wait to fill your Christmas gift list until December, there may not be much left to choose from.
Retailers are prioritizing dense shopping markets, so secondary and tertiary markets may not have the full array of inventory. Consumers in these secondary markets will make fewer shopping visits to brick-and-mortar retailers and will instead stay home and shop online. We also expect consumers to cut back on spending overall as a result of increased fears of the Delta variant and the increase in consumer prices.
U.S. consumer sentiment plunged 13.5% from July to its lowest level since 2011. In addition to this, 39% of small business owners said this month that they expect economic conditions to improve in the next year, compared to 50% in July, per a study from Vistage Worldwide.
Covid-19 Delta Variant Impact on Healthcare
Hospitals are once again under pressure as they are treating more COVID-19 patients than before due to the Delta variant. Surgeries and treatments for cancer, heart disease, and other common conditions are seeing increases this year, filling beds at many hospitals. At the same time, other respiratory viruses have re-emerged, adding to hospital strain. Hospitals are being hit worse where vaccination rates are lower. Hospitals in these regions are scrambling to prepare for a new wave, expected to be smaller than last year’s initial wave, but with sicker patients due to the new variant. Patient surges are leaving some hospitals without enough doctors, nurses, space, or equipment to handle patients as they normally would.
On the upside, hospital workers know a lot more about how to treat COVID-19 now and are better prepared, but no matter how well prepared they are, they are not able to create more bed space out of thin air. We are hearing the panic in the voices of many hospital administrators about the lack of available beds to treat COVID patients.
With the Delta wave also comes patient concerns about visiting the doctor’s office for routine matters. We have seen a huge uptick in telemedicine, and we believe that patients now see this method of treatment as a more convenient way to receive care and treatment. The biggest problem with telehealth is the learning curve. We are encouraging our clients to simplify the process and make it as easy for the patient as possible to set up and keep an appointment. This type of medicine will continue to grow regardless of COVID.
Covid-19 Delta Variant Impact on Hotels & Travel
Last year, the coronavirus pandemic hit hotels hard, with occupancy rates plunging to historic lows. However, we have seen a positive trend this summer. In June, the U.S. hotel industry recorded its highest monthly occupancy rates and revenue per available room since October 2019, according to hotel analytics firm STR. Many are hopeful that the current summer travel boom will help make up for lost revenue, but the Delta variant is threatening to hinder those plans. Americans who once had the “travel bug” at the beginning of summer may now want to spend the latter half of 2021 closer to home.
Hotel occupancy will be directly impacted by travel restrictions, especially those in cities with high infection rates. Many travelers may seek to steer clear of hotels and opt to stay at private vacation homes or Airbnbs until the new wave of cases is under control. Of those who have canceled hotel reservations due to the pandemic, only one in ten have rebooked to a later date.
Hotels are also losing a key source of revenue: business travel. With many companies working from home, employees are not making business trips and therefore are not staying in hotels. According to a recent Resonate report, one in four believe that business travel will never return to normal, especially with the help of online meeting services like Zoom.
Summer travel this year started out full of hope and promise, but the introduction of the Delta variant has caused an increase in worry and disruption for travelers. Demand for air travel is declining, and cancellations are rising as fears mount about the Delta variant. Domestic flights have been hit hard, with international bookings hit even harder. We are seeing more fliers purchasing cancel-for-any-reason flight insurance than ever before. This surge in cancelations is expected to continue through September.
Not only are citizens fearful of travel, but many cities and countries are beginning to tighten entry restrictions to get a handle on the most recent spread of COVID cases. The White House recently confirmed that the United States will not lift any existing travel restrictions due to concerns over the Delta variant and the rising number of U.S. coronavirus cases. As of August 3, 19 states and two U.S. territories were asking for testing or quarantine if the unvaccinated visitor comes from a state with a significant infection rate.
Luckily, many airlines assume that this is just a jump in the road rather than a detour. It’s important that you check local guidance and infection rates in your destination before booking flights and follow all necessary travel guidelines to make your travels as safe as possible.
Covid-19 Delta Variant Impact on Return-To-Office
Just as companies were preparing to bring employees back to the office, the surge in infection rates as a result of the Delta variant is driving many companies to put their return-to-office plans on hold. Many companies have announced vaccine mandates, with nearly one-third of companies allowing only vaccinated employees to return. Other companies have delayed their return-to-office plans from early September to late November or later. Nearly 47% of respondents to a Morning Brew survey said their employers are reconsidering return-to-office plans because of the spread of the Delta variant. Not only does this show how seriously employers are treating the latest wave of COVID cases, but also how comfortable companies have become with remote work. In fact, last quarter, many companies scored some of the best financial results to date, in many cases without employees seeing the inside of an office.
There is no doubt that the new Delta variant has thrown a wrench in what we thought was the tail-end of a worldwide pandemic. According to a recent Resonate report, 18% of Americans feel that life is already back to normal, 29% believe it will take over a year, and 12% say it will never be back to normal.
Through social listening, metrics, and proven strategies, The Brandon Agency is here to help our clients navigate through the pandemic. If you are interested in how we can help your business, please contact us.