Two ways to read the story
- Quick Read
- Deep Read ( 5 Min. )
Even in a pandemic, with unemployment high and businesses closed, winners emerge. Besides the obvious ones, like grocery stores and the online video company Zoom, there are some not-so-obvious industries and firms that are flourishing. And new unemployment numbers out Friday suggest that these unexpected winners may be leading the way toward a more general recovery.
Sometimes, it’s nimble manufacturers that find new markets to replace declining ones. Other times, opportunity falls into a company’s lap: Oak Barn Beef, a tiny farm-to-consumer firm, has seen its subscription-beef service rise tenfold since the beginning of the year.
In an era of shelter-in-place rules, games are big. Sales of traditional board games have risen, and even online chess is flourishing in unexpected ways. A recent online tournament reached 10 times the viewers that an important face-to-face match received earlier this year.
The pandemic has also inspired a bicycle boom that has caused Detroit Bikes to sell seven times the volume it sold in the same period last year. “People are going back to touchstones that are comforting,” says company founder Zak Pashak. “There’s something that feels almost nurturing about being on a bicycle.”
For Hannah Esch, the surge was as sudden as it was unexpected.
At the beginning of March, her fledgling company, Oak Barn Beef, had a freezer full of meat. By the end of the month, it was empty. Even before huge meat processors began shutting down plants because of the spread of the coronavirus, consumers were scrambling to find alternative sources of meat – and small, direct-to-consumer operations, such as Ms. Esch’s, reaped the windfall.
Currently, she’s sold out of almost everything, her base of subscribers who sign up for periodic deliveries of meat has ballooned tenfold to 72, and she’s not accepting new subscribers until September. “The beef just started flying off the shelf,” says the newly minted college graduate from West Point, Nebraska. Her new videos on how to start a direct-to-consumer business go on sale Monday.
Every crisis offers opportunity – even one brought on by a pandemic that has slowed economies around the world and brought U.S. unemployment to levels not seen since the Great Depression. Although businesses large and small continue to struggle, new evidence suggests that the downturn is already beginning to ease. On Friday, the Labor Department reported that the unemployment rate fell from 14.7% in April to 13.3% in May. While there’s still a devastatingly high level of joblessness, the addition of 2.5 million jobs was a stunning surprise to many analysts who had expected further losses in May.
Editor’s note: As a public service, all our coronavirus coverage is free. No paywall.
And it offers new hope that the winners during the pandemic are simply leading the way toward a general recovery that is happening sooner than expected.
“We just came off our four best months in company history,” says Drew Greenblatt, president of Marlin Steel Wire Products in Baltimore, which replaced its plunging aerospace business by supplying booming medical-supply companies. “This is stuff that maybe they bought in China in the past; now, it’s being made in America. ... Nimble, adaptive companies are figuring out ways to add value in a challenging time.”
This year has seen obvious winners: online communications tools like Zoom and Slack, grocery stores, and cleaning product manufacturers. The pandemic has also created boomlets for not-so-obvious companies and industries, like cycling.
“We’ve sold thousands of bikes,” says Zak Pashak, owner and founder of Detroit Bikes, a made-in-America bicycle manufacturer. Sales are up sevenfold over the same period a year ago. And the company is taking preorders for some models that won’t be available until August.
During the pandemic, Americans have taken to biking in a big way. Families in lockdown, looking for some physical activity, have bought bicycles to roam around the neighborhood with or installed stationary bikes in their basements. According to NPD Group, a market research company based in Port Washington, New York, the cycling market grew 31% in the first quarter of the year, with half of that jump coming in March as schools closed down and lockdowns took effect.
“People are going back to touchstones that are comforting,” says Mr. Pashak. “There’s something that feels almost nurturing about being on a bicycle.”
With major league sports shut down, Americans have sought out other recreation. Online gaming companies like Activision Blizzard and Electronic Arts have seen sales surge. Traditional board games have also seen rising sales – even that most ancient of games, chess.
“It’s almost like November, before the Christmas holidays,” says Quentin Turner, president of ChessUSA in North Massapequa, New York, which bills itself as America’s largest chess store. While the brick-and-mortar store had to close, online sales have boomed as people have snapped up chess sets and fancy versions of other traditional board games, like Scrabble. Mr. Turner’s biggest concern is that he won’t have enough inventory when the real Christmas season comes around.
“If everyone places their orders in June and we have lost two months of manufacturing, are they [the manufacturers] going to be able to meet the demand?” he asks.
Online chess has exploded even more. Online tournaments, until now considered less serious than face-to-face matchups, are suddenly drawing big online audiences. The second-most important event in the chess world, which decides who will face the world champion in the championship match, started in Russia in March. Before the pandemic shut it down, it drew some 1 million viewers on TV and online.
But during the pandemic, world champion Magnus Carlsen helped organize an online tournament with a $250,000 purse – unheard-of for an online chess event – and convinced top players to play online from their homes. That tournament, which wrapped up last month, got 10 times more viewers than the Russia match.
“We’ve been completely blown away by the interest – and it has definitely worked and taken chess to a new level,” says Leon Watson, spokesman for Chessable, an online chess training platform and an organizer of the tournament. “We’re not trying to replace classical chess. The two can certainly run in harmony together. We’re just trying to broaden the appeal of chess.”
One reason for the online tournament’s success was its format. Unlike traditional tournaments, where players spend hours hunched over a chessboard and even the online commentators take breaks because the movement is so slow, the online tournament had only “rapid” games, where the time constraints are much tighter and players usually wrap up a game in about 45 minutes.
The event was so popular that the organizers have set up a series of online tournaments over the next few months with a total $1 million in prize money.
Good times for pets
A springtime of social distancing also fueled a boom in pet adoptions. That doesn’t mean the pet industry is recession-proof in the current upheaval, but pet-supply seller Chewy has seen sales surge – an uptick also driven by a more general migration of consumers online during the pandemic.
What happens as the economy opens back up is anybody’s guess. Will people put away their bikes and chess sets to watch college and professional football? Will they stick with their direct-from-the-farm supplier or go back to the grocery store for their steak and chops?
“Hopefully, we’ll see the surge continue,” says Ms. Esch. “People are really starting to realize it is even more important to support farmers directly, if possible.”
It may partly depend on whether the entrepreneurs can change their mindset to broaden their appeal.
“Images of sweaty, anguished riders with no body fat, [which] abound in cycling magazines, on television, and in broad-reach periodicals ... are increasingly being replaced by a new reality of families riding together, and everyday health and fitness enthusiasts riding their bikes indoors,” writes Dirk Sorenson, an NPD analyst, in a blog post. “To attract and retain families, it’s time the industry look at short-term improvements in the way it works with non-athlete cyclists to maintain enthusiasm.”
Editor’s note: This article was updated to clarify when Hannah Esch plans to start selling videos on how to start a direct-to-consumer business. As a public service, all our coronavirus coverage is free. No paywall.