Why Is This Recession So Uneven?

The impact of the current recession is uneven. When I talk to fellow entrepreneurs, some are having the best year of their lives. (I know entrepreneurs who have more cash than ever.) Others are struggling to meet payroll.  I’ve thought about this, and I have a theory that drastic revenue redistribution is causing recession pain to be felt unevenly.

The pandemic has caused a sharp decrease in economic activity. I don’t think anyone can argue with that. Revenue is down for most businesses. However, I think something else is having an equal, if not greater, impact. Consumer habits changed almost overnight. The threat of contracting COVID-19 changed how we socialize, work, and do normal everyday things. In my opinion, this changed how consumers spend money, which is the true root cause of the unevenness.

Companies that were positioned to take advantage of changing habits are benefiting. Let’s take my eating habits, for example. Pre-pandemic, I ate out for lunch every day and had dinner out many times a week. I usually picked up groceries once every two weeks from a variety of grocery stores. The pandemic changed my comfort level with these old habits, but I still need to eat. So, I’ve changed how I go about doing it.

I no longer feel comfortable in confined spaces with people I’m not familiar with (no offense to anyone). Nor do I want to go to the grocery store. For the past few months, I’ve had groceries delivered exclusively from Whole Foods Market via Amazon Prime Now.

My overall spending on food has deceased, but only slightly. But the distribution of my spending has changed drastically. I spend $0 at restaurants. My spending at Whole Foods Market has increased 5X. My spending at other groceries is $0. Instead of many companies helping to feed me, I’m relying on just one. Whole Foods Market gets all my food dollars because it was positioned to meet my needs better than other companies were. There are lots of cons to this approach—reliance on a single source—but it’s my reality.

I think this scenario is playing out across our economy. It’s causing some industries (many of which were already struggling) to experience unprecedented pain, while others flourish.

What are your thoughts on why this recession is uneven?