Long-term changes in consumer demand
Consequences of the Covid-19 pandemic on SMEs
As a result of changing consumer behaviour, around one-third of small and medium-sized enterprises (SMEs) in Germany expect demand for their most important products and services to continue to be affected after the crisis.
According to an analysis carried out by KfW Research, 17% of SMEs (around 650,000 enterprises) are expecting a permanent decrease in demand. This is primarily made up of companies in the retail sector (20%) and in the manufacturing sector (19%). The construction industry is considerably more optimistic, with only around 9% of firms expecting demand to weaken.
The analysis shows that enterprises that are at present particularly affected by the restrictions are more likely to have a pessimistic outlook. More than half of them expect a long-term drop in demand. At companies that are affected only slightly or not at all by the restrictions, the share is only 4%.
However, SME expectations about post-coronavirus demand are not all negative. Around 14% of SMEs expect stronger demand for their products and services after the crisis. Even among those companies that see an existential threat in the coronavirus restrictions, around 8% assume that demand will increase after the coronavirus pandemic. Roughly four out of ten SMEs expect demand for their products to stabilise around pre-crisis levels; almost a third expect no change.
Dr Fritzi Köhler-Geib, KfW’s Chief Economist, comments on the results of the survey: “The coronavirus crisis could go down in history as a catalyst for change in the medium-sized enterprise sector. For some SMEs, the changes in consumer behaviour due to the pandemic will lead to a long-term fall in demand. For the companies affected, adjustments are likely to be unavoidable. The task is to support this sometimes difficult transformation process with appropriate promotional measures and training for employees. If this succeeds, SMEs as a whole could well emerge stronger from the crisis. Even more so since many of them will also benefit from the changes in consumer behaviour and in future enjoy higher levels of demand for their products and services.”