China's food delivery segment only area seen to benefit during coronavirus outbreak: analysis

Short term downside risk to consumer spending is also forecasted.

China’s food delivery segment is the only area seen to benefit as the country’s whole retail sector remains under pressure from the coronavirus outbreak, according to new analysis from Fitch Solutions.

“Reports are emerging of increasing sales both in cities on lockdown (like Wuhan) and those that are not, for food delivery companies. This is unsurprising, food delivery might be the only way that Wuhan residents can get their food under lockdown, while in other cities not on lockdown it enables residents to stay home and reduce their chances of exposure to the virus,” the insights company said in their report.

Fitch cited a case in Singapore, where residents sought respite from the September 2019 transnational boundary haze from forests burning in Indonesia by getting their food delivered to their homes. At that time, they said, food delivery platforms in Singapore, such as Deliveroo and Pizza Hut reported a week-on-week sales increase of 3-10% when Singaporeans tried to reduce their exposure to the haze.

“Given the much greater severity of the Coronavirus outbreak, compared to a period of haze, we expect demand for food delivery services in China to be even higher,” the report added.

The government-imposed lockdowns and public call to stay in-doors to prevent people from contracting the virus pose a risk to consumer spending outlook, which the firm earlier projected to be at 7.32% year-on-year.