Since the sudden appearance of the COVID-19 changed our lives, government-imposed confinement has forced much of the world’s population to stay at home. This has led to increased demand for certain technologies, but will these consumer trends continue when we return to normal?
Now that most employees are teleworking, video conferencing has come to replace face-to-face meetings. Home entertainment services, such as streaming content and video games, have also benefited from confinement. Moreover, as people adapt to this profound change in their lives, consumers are increasingly turning to e-commerce. According to Leigh Todd, senior investment analyst at Mellon, part of BNY Mellon IM, these trends are here to stay.
“Social confinement and alienation will accelerate the abandonment of traditional discovery channels, such as physical stores or in-person interactions. Although at some point we will return to a more ‘normal’ life, it is likely that some of these behavioral changes will become permanent. That’s why we believe that digital marketing and interaction with brands and products is here to stay.
For Todd, it’s hard for people to forget the crucial role that technology has played during this period, fostering real-time communication through social networks and digital shopping at a time when social gatherings were forbidden and physical stores had to close their doors. Many people have realised that something as unexpected as a global pandemic can completely transform life as we know it, so some may consider adopting a more digital lifestyle on an ongoing basis. Or the desired freedom may have the opposite effect when confinement is lifted.
“Even if consumption through these channels is moderated when we are able to interact physically, they will still have a higher level of activity than before the crisis.
The use of technology had already been boosted prior to the lockdown, so Todd sees that the areas that have experienced the strongest increase in demand are likely to continue to grow in the future. For example, the percentage of people discovering brands online has risen from 22 percent to 24 percent in the last four years. As for other areas that have traditionally had a lesser digital presence, such as the food sector (with an estimated 5% presence), the analyst believes that the use of technology and digital discoveries will accelerate because changes in consumer behavior will endure after the current crisis.
“These changes will be positive for companies that have invested in digital capabilities, know their consumers well and can use that data to develop new products and services, as well as to identify potential new customers.
And what about telework?
The experience of recent months could encourage greater adoption of teleworking by companies. Some may sustain the new corporate dynamics, although not all are likely to do so.
Erik Swords, senior analyst at Mellon, highlights a recent study by the analyst and advisory firm Gartner4 , which found that 74% of financial managers surveyed expect at least 5% of their employees to move to work from home on a permanent basis. According to the same study, that figure is expected to rise to 30 per cent by 2030, due to the demographic changes taking place in the workplace and the arrival of Generation Z (the post-millennial generation).
“The impact of COVID-19 could accelerate this transition, as the enhancement of remote working brings certain benefits such as reduced operating costs, less travel and, in some cases, higher productivity and lower staff turnover. In the short term, we expect companies to enable technology capabilities that promote the sustainability of teleworking but we do not believe that they will completely replace normal consumer or business behavior.
According to Swords, the technological infrastructure has been one of the first adjustments that companies have had to make to facilitate teleworking and many have realized, during the real-time management of the crisis, that they were not sufficiently equipped to deal with such a major change in work behaviors. As a result, companies may now give much greater priority to information technology (IT), which could lead to greater capital expenditure on products designed to improve labour efficiency.
“In the short term, and especially towards the second half of 2020, we expect to see a significant rebound in technology spending as a result of accumulated demand. What is more interesting from a long-term perspective is how companies will use technology in the future as they seek to improve the efficiency of their businesses in those areas that have been exposed during the pandemic.
Beyond the short-term adjustments related to teleworking, Swords believes there is also increased interest in other important topics such as artificial intelligence, blockchain technology and next-gen security, among others that are already ready for mass adoption.
Author: Leticia Rial, Rankiapro