I had the Perspective Research Department look into how COVID-19 might affect us in the long run and they came up with some interesting scenarios!
Large swaths of the cruise-ship and theme-park industries might go away. So could many movie theaters and minor-league sports teams.
The long-predicted demise of traditional department stores would finally come to pass.
Thousands of restaurants would be wiped out. (Even if they would be replaced by other restaurants)
The point is that companies with flawed business models can look healthy in good times. Out of habit, many customers will continue to buy from them. But when the economy weakens, people have to make decisions about where to pull back and they often start with products and services that they find the least valuable or that they can replace with a cheaper alternative.
A downturn, says Emily Oster, a Brown University economist, “is an opportunity to revisit inefficiencies.” And the coronavirus is likely to cause a larger version of this phenomenon than a typical recession.
***
Local newspapers will be another casualty. They were already struggling, because Google, Facebook and Craigslist had taken away their main source of revenue: print advertising.
Between 2008 and 2019, American newspapers eliminated about half of all newsroom jobs.
The virus has led to further declines in advertising and more job cuts — and could end up forcing dozens more papers to fold or become tiny shells of their old selves.
If that happens, their cities will be left without perhaps the only major source of information about local politics, business, education and the like.
***
Traditional department stores are another example. In recent years, they have lost significant business to online retailers and quietly lost even more to big-box stores. (London is a perfect example... two of the five big regional malls here have re-purposed themselves to be multi-functional with less emphasis on retail sales!)
Many Americans have decided they prefer either specialty stores (like Home Depot) or discount stores (like Costco) over the one-stop-shopping experience that Sears, Macy’s and J.C. Penney have long offered.
Now the virus has interrupted in-person shopping and caused many consumers to shift even more business online, to Amazon, Target and Walmart. “The retailers doing fair to poorly are absolutely not coming out of this,” said Mark Cohen, a former executive at Sears and Federated Department Stores who teaches at Columbia Business School. “Many, many of them are going to fail, have already failed or will fail when they reopen.”
If they do, they will create spillover victims — the hundreds of malls that rely on department stores for rent and foot traffic. The roughly 250 fancier malls around the country, like The Westchester in suburban New York and The Galleria in Houston, are likely to survive, Mr. Cohen predicted.
Some will convert old stores into spaces for experiences, like dining, bowling, medical care or a golf driving range.
***
The virus is exacerbating almost every problem that colleges faced. They have already lost revenue from summer school, food service, parking fees and more.
Perhaps most significant, the recession is hammering state budgets, which will probably lead to future cuts in college funding.
The immediate question is whether colleges will be able to bring back students this fall, as administrators are desperately hoping. If they can’t, enrollment and tuition revenue are likely to drop sharply, creating existential crises for many less selective private colleges and smaller public universities.
Yuval Levin, a conservative policy expert and the founding editor of National Affairs, put it this way: “The top 20 schools are probably not going to change. But what is actually higher education — more than 4,000 universities — I think will change a lot.”
***
Of course, business failures can be healthy. They are part of the “creative destruction” that the economist Joseph Schumpeter famously described, allowing more efficient and innovative rivals to rise. The disappearance of many old department stores won’t be a tragedy if they are replaced by stores people prefer.
But some of the virus-related destruction will have damaging side effects. When local newspapers close, corruption and political polarization tend to rise, while voter turnout tends to fall. Academic research has found cuts to higher-education budgets could make it even harder for poor and middle-class students to graduate.
If you talk to students, parents and teachers about remote learning during the pandemic — from preschool through college — they’re likely to tell you that it’s been disappointing.
It went “very, very badly” last spring, Mr. Levin says, and many parents assume it will not be much better this fall.
But if you talk to white-collar workers about their experiences with videoconferencing, you will hear a different story: It doesn’t replace the richness of in-person conversations, but many meetings work perfectly well over Zoom, FaceTime or Google Meet.
***
Millions of workers are returning to the office or will be soon. Many have no choice, including teachers, janitors and retail workers. But for many white-collar workers, the remote-work experiment shows no sign of ending — a trend that could depress the commercial real-estate market and business travel long after a vaccine is available.
Twitter has told many employees that they can plan to work from home forever.
In New York, several major companies, including Barclays, JP Morgan Chase and Morgan Stanley, have said they don’t expect to use as much Manhattan office space as they did before the pandemic.
As Satya Nadella, Microsoft’s chief executive, said this spring, “We’ve seen two years’ worth of digital transformation in two months.”
Working from home creates its own efficiencies — less time spent on traffic-clogged roads, more flexibility for parents and people caring for elderly relatives.
***
“Business travel is going to fundamentally change.”
In-person meetings and conferences will continue to happen. But the threshold for what requires travel, and the time, cost and fatigue it brings, will rise.
“Maybe we’ve discovered that we don’t need to travel as much as we did before,” said Cecilia Rouse, the dean of Princeton’s School of Public and International Affairs. American Airlines and Delta Air Lines recently offered buyouts to employees, and Airbus cut thousands of jobs, signs that the companies expect airline travel to be depressed for years.
***
As of this writing (September 10th, 2020) colleges and Universities are already noticing marked increases in Coronavirus infections and how they react to it will determine if they become a traditional institution in the future or delegate themselves to being an on-line academy!
***
There is only one thing for sure... and that is that whatever happens in the future you can bet that this Pandemic will drastically alter society in ways that we cannot even imagine yet!
The way I see it anyway!
No comments:
Post a Comment