As the world contends with the consequences of COVID-19, a recession is imminent. We’ve seen the layoffs and business shutdowns in attempts of surviving the pandemic. Now, more than ever, one has to be strategic when making investment decisions.
Recessions happen for a wide range of reasons such as increased unemployment levels, reduced wages, high-interest rates, and so on. As you can imagine, the lower the earning power, the less money consumers spend on goods and services. However, there are the outliers, the industries that survive any economic setback.
For instance, five years after the 2008 recession, Reuters reported a record number of new billionaires. This proves that while recessions are unpredictable, there are industries that thrive in spite of an economic crisis.
Here are ten recession proof industries that are still profitable:
Industry #1: Consignment and Thrift
During a recession, consumers tend to cut down on luxuries to manage inflation. They seek out cost-effective ways to shop for clothing items and furniture. Stocking used items like clothes, jewelry, and furniture, thrift stores offer used quality products at decent price points.
In fact, shopping at thrift stores has now become a trend with young people. The stigma attached to buying used items no longer exists making the consignment industry a profitable business venture.
Industry #2: E-Commerce and Digital Marketing
E-commerce is one of the recession proof industries that provide a cheaper trading process for buyers and selling. Think about it, e-commerce businesses don’t need to have physical stores. Websites and other platforms make it easy for them to reach customers they ordinarily won’t have access to in a traditional setting.
Now, during a recession, people spend more time online to escape their realities. So, digital marketing companies help businesses target more people online through ads. From essential items like food to medication, many industries actually use digital marketing to maximize profit during a recession. With increased demand for e-commerce, this industry is fantastic for business investment opportunities in the future.
Industry #3: Healthcare and Pharmaceuticals
The healthcare industry thrives regardless of the state of the economy. The demand for healthcare products and services remains static in a recession. This isn’t necessarily a bad thing and shows how stable the industry is. Franchise opportunities in healthcare include senior care and pharmaceutical distribution.
Industry #4: Food Retail
Similar to the healthcare system, the food retail industry is another profitable venture that can withstand the consequences of a recession. Regardless of the state of the economy, people will buy groceries to survive, no matter the budget.
For instance, a New York Times report shows that food and beverage brands, Cadbury and Nestle reaped up to 30 percent and 10.8 percent profit respectively during the economic crisis of 2008.
Industry #5: Auto Repair
When cash is tight, one of the easiest ways people cut down on spending is by repairing their items instead of replacing them. Car owners tend to go down the maintenance route rather than making a new purchase altogether.
According to the Los Angeles Times, auto repair franchises offering a diverse range of services made up to a $ 36 billion increase in revenue in 2011.
Industry #6: Repossession And Debt Collection Industry
Recessions come with layoffs and pay cuts that take a massive toll on people’s finances. Unfortunately, this leads to default in loan payments, from cars to other assets.
When people can’t keep up with their monthly payments, debt collection agencies attempt to recover as much capital as they can and resell the assets to cover their losses.
This coupled with interest and insurance rates makes the industry one that can survive a recession.
Industry #7: Discount Retail
In a period defined by high unemployment rates, it only makes sense for consumers to turn to discount stores for their needs.
In fact, people bulk buy from dollar stores and discount retail shops to help them stretch their limited funds. This industry especially benefits from recession by offering much lower prices to their customers.
Industry #8: Utilities
While other industries would crash in the face of a recession, the utility sector feels the minimum impact. However, don’t expect to see any growth in profit since it’s a survival service industry.
Gas, water, sewer management, and heat make up the most essential utilities in any household. A recession won’t have any negative impact on these services since they’re consumer staples.
Industry #9: Telecommunications
By making communication easier and more efficient, the telecommunications sector has become an essential service in today’s digital world. Despite the unfavorable circumstances, telecommunications would do relatively well in a recession.
The internet makes communicating with friends and family more accessible. Due to economic constraints, people cut down their internet and phone payments. However, they tend to retain their mobile subscriptions since speaking on the phone is cheaper than visitations.
Industry #10: Education
To survive the impact of a recession, oftentimes, people enroll in courses and schools to build more skills. The aim here is to increase their chances of competing in a tight workforce.
With schooling now available on digital platforms, there are many ways the education sector generates income during a recession, from online tutoring to digital certifications and ebooks.