Jefferies on Covid’s impact: how will we live, work and play?


Financial services company Jefferies has explored speculative hypotheses for how Covid-19 might affect our lives – and the knock on effect on which sectors and stock picks stand to gain. “Bullish for humanity”, it looks at the way we might live, work and play in the coming months, and how that might fundamentally change consumer habits. These include increased spending on home improvements amid increased ‘nesting’, the death of fast fashion to accommodate slow living, and an ‘urban exodus’ as people tire of being cooped up in our cities

Here are some of the key hypotheses:

  • Are you sitting comfortably? We wre!

Working from home and staycations lead to a massive boost in demand for athleisure. Comfort is king. Sales of sportswear accelerate. Demand for more formal and fashion-oriented clothing endures a sustained decline.

Good for: Sportswear
Bad for: Luxury, Beauty, Autos, Auto Aftermarket

  • Eating in: the new going out?

More than 50% of US food consumption takes place at home, the highest in any developed market. But Open Table bookings in US major cities declined > -50% last week. In Europe, 70% of meals took place at home before the onset of the virus. Expect food-at-home to increase indefinitely. We’ll also make increasing use of ready-made food clubs and, provided we can get comfortable with health and safety concerns, we’ll order more delivery meals as well.

Good for: Grocery, Food/Meal Delivery, Logistics
Bad for: Restaurants, Foodservice Distributors

  • Public transport: public enemy?

Transport habits regress as social distancing becomes the norm. Encouraged by environmental regulation, consumers buy electric vehicles at a rate not seen since the after-war period. The risks of ride-sharing extend beyond passenger safety to health. Fully licensed taxis could benefit, depending on their quality and the cities in which they operate.

Good for: Autos, Car Rental, Recreational Products
Bad for: Transportation Infrastructure, Bus & Rail, Ride Sharing

  • The High Street stages a comeback

Concerns over public transport and public spaces mean we prefer to shop locally. Going to a supermarket or shopping mall to share air particles with thousands of people doesn’t seem worth the savings. Plus, you know what you’re getting from the local butcher. Cheap plastic imports lose their appeal as we ascribe more value to locally produced products and services.

Good for: Online Web Development, Hobby/Gaming Products

Bad for: Real Estate, Toys

  • Business as virtual

Health, safety and sustainability concerns make business travel, broadly speaking, a thing of the past. Virtual and video conferencing become the norm. This creates a sense of remoteness from colleagues we used to visit often; yet we also feel a renewed proximity to more distant co-workers.

Good for: Telecoms Services, Software, Tech Infrastructure & Logistics
Bad for: Airlines & Hotels

  • Banks become utilities

Governments will require emergency financing and loan forbearance from banks to keep companies and individuals solvent. Unlike in 2008, banks will be part of the solution, not the problem. But the extent to which governments permit banks to profit from collective action remains to be seen.

Good For: Companies with Strong Balance Sheets
Bad for: Indebted Companies, Bank Profits

  • Home fitness kills the gym star

Fear of germs keeps us away from gyms and fitness studios. Exercising from home drives a resurgence in home sports equipment.

Good for: Home Equipment Providers, Telehealth, Sportswear
Bad for: Gyms

  • Slow living kills fast fashion

Sustainability concerns were going to kill fast fashion anyway. Does corona get there first? Trends become less short-term, shopping less experiential. Comfort takes precedence. In an era of staycations and quiet nights in, conspicuous consumption becomes almost an oxymoron.

Good for: Sportswear, Online Retail
Bad for: Luxury Brands, General Retail, Container Shipping