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The pandemic
has forced us to change our behavior in dramatic ways. We make wide
arcs to avoid people on the sidewalk. The simple act of eating at a
restaurant has become a thrilling adventure. And our hands smell vaguely
like cheap tequila all the time.
If the
pandemic had lasted, say, one to two months, one could imagine society
snapping back quickly to “the way things were.” We’d return to eating
$18 salads at our office desks. We’d shake hands without flinching.
But Covid-19
has stuck around for, well, a really long time. And I’m curious about
which aspects of the pandemic lifestyle will outlast the plague. As The
Atlantic’s Derek Thompson put it,
“although the biological stage of the pandemic might come to an end in
2021, the infrastructural aftershocks will be with us for a while.”
What might
those aftershocks be? I’ll explore some of the trendiest trends that
developed over the past 10 months and try to paint a clearer picture of
2021 and beyond.
Work from home
Let’s get the obvious out of the way first: There will be a lot more remote workers, maybe triple or quadruple the amount there was before the pandemic, per McKinsey.
What about that trend is so sticky?
- It can save companies
lots of money on real estate. Travel publisher Skift made just over $10
million in revenue in 2018...and it was paying $600,000 a year to rent
office space in Manhattan. Once the pandemic hit, it quickly ditched the office.
- Companies are also
facing a drastically new landscape in the war for talent. To recruit the
best workers, you may have no choice but to allow them to work from a
cabin near Glacier National Park...because your rival will.
- Survey after survey
this year showed freshly minted remote workers enjoyed the flexibility
of their new lifestyle. Apparently, people really do not like spending
their mornings and afternoons stuck in traffic.
But “remote
work” doesn’t mean “WFH.” We can expect more companies to create tools
to support the remote worker, from asynchronous video startups like Loom
to companies aiming to replicate
the “serendipity” of random conversations in the office hallway. Plus,
in a post-pandemic world, people will be able to work in settings other
than their bedrooms, like a coffee shop or a library.
Will virtual tools fully replicate the office experience? Not 100%, which is why many execs expect some sort of hybrid arrangement
will emerge: Depending on your job function, you might come in a few
days a week to a “hot desk” setup (basically a flexible workspace where
people rotate in and out). It’s not crazy to think coworking companies
like WeWork might benefit from the emergence of the two-day-a-week
office worker.
Toward a framework
Is there
some kind of “rule” that determines whether a pandemic-inspired trend
will stick around after we’ve all gotten our shots? Maybe not, but I’ll
put one forward anyway: If the change a) made people’s lives better
and/or b) saved a company money, we can reasonably assume some form of
the behavior will stick around.
As an
example, take cross-border leisure travel, which the pandemic
essentially eliminated. Did that make people’s lives better? Well, I
don’t think I can name a single person who enjoys looking at pictures of
Paris more than actually walking the Rue Denoyez. In fact, the urge to
travel was so strong that people paid hundreds of dollars to eat dinner
on an Airbus A380 just for the “thrill” of boarding a plane again. For
all these reasons, we can anticipate a snapback for leisure travel next
summer.
Business
travel is another story. For companies, it’s costly. For employees, it
can be fun; it can also mean three nights at a Holiday Inn in Topeka.
But the pandemic experience has shown you don’t necessarily need to see
someone in person to onboard, strike a deal with, or sell something to
them.
- The WSJ’s Scott McCartney estimates 19%–36% of business travel will permanently vanish
(largely accounted for by intra-company meetings and training going
virtual). Bill Gates thinks more than 50% of company trips will never
come back.
Let’s talk about shopping
Like most Americans, you probably did more of it online this year. E-commerce sales accounted for 16.1% of U.S. retail sales in Q2 2020, up from 10.8% the year before. So will you suddenly start going back to strip malls once the pandemic is over?
Probably not. First of all, e-commerce was a growing share of retail sales before the
pandemic, meaning people were increasingly shopping online whether they
were forced to by lockdowns or not. Two decades ago, e-commerce made up
just 0.9% of U.S. retail sales.
What the
pandemic did was squeeze 10 years of adoption into just three months,
according to McKinsey. And Americans have indicated they’re satisfied
with this new shopping landscape.
- More than half of U.S.
consumers will continue ordering grocery delivery or curbside pickup
after the pandemic, per that same McKinsey survey.
- And almost 70% will continue to buy online for in-store pickup.
Zoom out: Overall
satisfaction with e-commerce is likely a good sign that other pandemic
winners of the “stay-at-home” economy, such as streaming and fitness,
could continue their momentum beyond 2020.
Finally, the future of cities
Here’s why NYC is dea—
Just
kidding. I’m not here to start a rumble by proclaiming New York City
dead or alive. And those who’ve predicted the decline of cities have
notoriously been forced to eat their words time and time again.
But the pandemic might’ve accelerated a reshuffling of the urban power rankings.
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Up: Mid-tier, cheaper cities like Madison, WI, and Sacramento, CA.
-
Down: Expensive megacities like NYC and SF. San Francisco studio rents fell 35% year-over-year in November.
What happened? A
lot of it has to do with the growing adoption of remote work. Many
people decided that, if they don’t have to commute to an office, they’d
rather not live in a cramped downtown apartment that guzzles up
40% of their monthly paycheck. Corporations also realized they could
take advantage of lower costs by moving out of places like California
without compromising access to top talent.
- But uber-expensive coastal regions were facing headwinds before the pandemic, too. New York City was losing an average of 376 people per day to other U.S. cities last year.
Bottom line: Cities
will always exist, but don’t take their size for granted. In 1950,
Detroit was a powerhouse with a population of more than 1.8 million. It
had just 670,000 residents in 2019.
+ Let’s start a conversation: Agree or disagree with any of my analysis above? Send me an email at neal@morningbrew.com—I’d love to chat.
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