From a business perspective, the past 12 months have been about as wild as anyone could have imagined. The dreaded pandemic, and the constant CDC alarms, led the consumer to be fearful of doing anything. This has caused major disruption and risk of survival in many industries. Let’s take a look at some of the major changes that have occurred:
Online Shopping – If you look at retail sales, according to market-measurement firm Digital Commerce 360, US e-commerce jumped to 21.0% of retail sales, up from 15.8 % in 2019. Total online retail sales were $839 billion. Naturally, online players like Amazon and Walmart.com won big. So did the aggressive retailers such as Target and Best Buy. But there were many laggards, with some filing bankruptcy, such as Nieman Marcus, J. Crew, J.C. Penny, Brooks Brothers, Lord & Taylor, Pier 1, and GNC
Streaming of Entertainment/News/Sports – With theaters, sports, museums, gyms, and most other venues of entertainment closed, streaming of movies and all sorts of content became a bigger part of day-to day life. Netflix now has 204 million subscribers, and Disney Plus is up to over 100 million, with others like Hulu, Amazon Prime Video, Sling TV, HBOMax, and Fubo TV also winning big. Many households subscribe to several such services. The big losers are the movie theaters and cable and satellite TV, where you don’t have the freedom to watch what you want when you want to watch it.
Work at Home – In March 2020, almost instantly, offices were vacated, and work at home became the norm, and will likely be a major tool for companies going forward. Recently PWC completed a remote work survey among executives, and it suggests that by August 1, about half of workers will be back to work, spending about half their time there and the other half at home. This is having, and will have in the future, a huge impact on commercial office real estate, lunch-time restaurant business, etc.
Domestic and International Travel – Again, almost instantly, the airline business collapsed. For at-home workers, Zoom and Teams meetings became the norm, and it taught people that a lot of the travel, particularly international travel, could be easily avoided by using these new tech services. I don’t think business airline use will ever get back to the level it was, especially international use.
Exercise at Home with Connected High-Tech Equipment – The pandemic supercharged growth in this area and the long-term health of gyms is up for grabs. A study by Harper’s Bazaar suggests only 30% of people will return to gym classes as they re-open.
Technology Infrastructure Providers – All the tech applications noted above require robust tech infrastructure, so the tech companies have thrived and will continue to thrive as these new ways to operate settle in and become part of life. Companies like Amazon and Microsoft, who provide the cloud technologies to implement online retailing and streaming; new players like Zoom and Peloton, and many other tach players have benefitted. Home-oriented tech equipment like PC’s, printers, speakers, and earbuds, has greatly benefitted. In 2020, the tech-heavy Nasdaq finished up +43% for the year.
As is always the case with change, the aggressive who adapt quickly do better, such as Target. Another example is Domino’s Pizza, who have had a banner year (revenue up +14% and stock price up +23%) by launching massive advertising for their “stay-in-your-car” pick-up service (while 1200 Pizza Hut outlets went bankrupt).