The global semiconductor shortage threatens economic recoveries and poses an urgent problem for carmakers, which have already announced production rollbacks—and billions of dollars in expected revenue losses—as a result. McKinsey experts examined the causes of the shortage, including a drop in consumer demand for vehicles at the onset of the pandemic, which prompted semiconductor suppliers to shift production to other products. Automakers and suppliers should consider significant strategic changes to head off a repeat (exhibit).
Grocery is another industry that has been turned upside down by the pandemic, not once but multiple times as consumers respond to the evolving situation. At Tesco, online sales doubled in the United Kingdom, where the company has a strong online business, and in Central Europe, where growth is coming off a low base, said Matthew Simister, Tesco’s Central Europe CEO, in an interview. Growing e-grocery leads to the question of whether brick-and-mortar grocers will survive in Europe, and if so, which formats are best positioned for success? McKinsey identified amply stocked “soft discounters” and moderately sized, centrally located “hypermarkets light” as winning models. Leading players are participating in the automated warehouse revolution that is lowering labor costs and supporting e-grocery. Another crucial tactic: convincing shoppers that a grocer offers the best value by strategically discounting, improving private-label lines, and offering a large variety of cheap products.
The devastation in India is among the saddest unanticipated turns in the pandemic. After the first wave of the disease faded quickly in 2020, the current disaster took the lives of nearly 28,000 people in one week last month, amid 2.3 million new reported cases. The world should take action, write partner Pooja Kumar and senior partner Navjot Singh, with support for oxygen and vaccine production and distribution. Such help not only serves a humanitarian purpose but also lowers the risk that variants will threaten recoveries elsewhere.
Some of the health repercussions of the pandemic are indirect, such as the side effect of fewer people seeking treatment for mental and behavioral health problems. McKinsey’s behavioral-health-services interactive tracks how many people are accessing care for problems including substance abuse and serious mental illness.
Other key findings from our sector research this week:
Our Author Talks series features Shankar Vedantam, host of NPR’s Hidden Brain podcast, about his Useful Delusions: The Power and Paradox of the Self-Deceiving Brain, coauthored with Bill Mesler. No one likes the idea of being duped, but our ability to persuade ourselves enables bonds and passions that logic would rule out. Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles relating to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.
This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.
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