As we begin to see the light at the end of the pandemic tunnel, conversations are swirling about what the new normal will look like. Two-plus years of modified operations have prompted us to seek answers for what the world will look like going forward. While thinking forward is always the right frame of mind, the architecture for the latter half of 2022 and beyond should not be inspired by pre-pandemic conditions. Like any major macro event, some trends have changed forever, others were temporary, and most were impacted solely in terms of development time.
COVID-Catalyzed Trends
External events don’t change consumer patterns in a 180° fashion – they take trends already in place and accelerate them along their current trajectory. There are three main industries that we observed these catalytic effects taking place:
Commerce
The mid-aught’s development of e-commerce put consumers on a track to pivot from the limitations of brick-and-mortar retail towards the advantages of an inexhaustible online inventory. The 2-day-free-shipping era reduced friction and forced retailers to evolve in ways that approached the convenience of the online experience.
When the pandemic hit and store shelves emptied, people turned to online shopping to fulfill their evolving everyday needs. E-commerce sales grew at a breakneck pace and online-native shopping platforms reaped the benefits of home-bound consumers.
As the pandemic recedes, the landing zone for retail is somewhere in the middle. Customers demand frictionless access to large inventories of goods but they also desire the palpable and experiential component of shopping. Companies that have cultivated an omni-channel distribution strategy, such as curbside pick-up or ship-to-store, will thrive.
Healthcare
Between 2000 and 2019, the cost of healthcare in the U.S. skyrocketed 175% to $3.75 trillion1. These rising costs prompted patients to question the value of the care they were receiving – specifically the convenience and experience relative to out-of-pocket expenses. The widening gap between service expectations and service fulfillment set the stage for an industry-wide disruption to occur.
The onset of COVID-19 drove an immediate and seismic shift to virtual care. Patients’ ability to access care remotely removed much of the locus of control from legacy health systems. With this catalyzing stroke, patients were able to realize their desire to obtain care more conveniently through the use of consumer-friendly technology. It took the unique circumstances of the pandemic to break the barrier toward a decentralized, technology-forward, patient-driven system.
Workforce
The interconnected world has inexorably blurred the boundary between work and personal time to support the complex demands of corporations. As technology has developed and work has seeped into employees’ home lives, a resentment towards always being on the clock has emerged. Coupled with a historical run of low unemployment2, labor market leverage has shifted towards workers. The labor force participation rate has declined from a peak of 67.3% in 2000 to a trough of 62.4%3 in 2015 and has held steady until 2020. As of May 2022, the U.S. workforce is still 1.2 million3 workers shy of pre-pandemic levels.
The safety concerns of a global pandemic helped solidify employees’ demands for accommodation to work outside the office. When remote work became necessary to protect the general public, people realized the convenience of being able to work from wherever they wanted. Flexibility requirements are a countermovement to the encroachment of professional work on personal boundaries.
The ultimate goal is to rebalance the demands of modern families and current work expectations. Employee stipulations balanced with employers’ needs will likely land us in a fungible hybrid model that varies across industries.
Business Landscape
While the pandemic acted as an accelerant for certain trends, many things we relied on during lock-down phases are no longer central as the world opens back up. The demand for streaming services, online fitness, crafts, home renovations, and virtual services will never see the heights they did during lockdowns. Understanding what the future landscape will look like requires zooming out and differentiating between abrupt changes and long-term trends. Businesses that failed to make this distinction are currently under considerable financial stress and are urgently restructuring to remain viable post-pandemic.
Evolutionary Mindset
A dramatic event shouldn’t be the only time we rethink our strategies and market trajectories. Creating an improvement cycle posture in our everyday thinking sets the stage for true forward progress. Why did it take a global pandemic for us to notice the changing socioeconomic tides? Most dramatic once-in-a-lifetime events in a business cycle have happened many times over, but our thinking is often too granular to notice the similar patterns. Many businesses failed to realize this very notion – that the pandemic itself was the stimulus, and that as virus cases slowed demand would surely soften. Seeking out emerging trends and looking for constant changes can allow us to anticipate the pivot and prepare accordingly.
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