COVID-19 predictions: What does the post-pandemic future look like?
The top eight changes we'll see in how we work, eat, shop and live
2020 was a defining year. The global pandemic has monumentally changed the way we work, eat, shop and interact, and it has challenged our pre-COVID-19 ways of living. The escalation of lockdowns and stay-at-home measures forced a digital revolution as consumers and businesses alike have scrambled to innovate and adapt to operating online. For many, the health crisis has also put into perspective what is truly important to us.
There are signs Australia is approaching the steep path to economic recovery, but we predict the post-pandemic future will be irreversibly different. This article will explore eight ways in which our lives will be reshaped.
1. Economic recovery is looming
Australia is entering the initial phase of economic recovery. Unemployment remains above pre-pandemic levels and is expected to peak at under 8% before starting to decline, according to RBA predictions. The RBA forecasts GDP will have contracted 4% by the end of 2020, but the outlook over the next 6 months is promising, with a 6% growth projection for June 2021. This will be underpinned by growth in household consumption as the economy reopens. Economists agree that Australia will exit and stay out of a recession in 2021, according to Finder's RBA Cash Rate Survey.
The pandemic exposed how essential workers are paramount to the operation of society. Over the long term, greater investments in industries such as medicine and aged care may attract a growing workforce. On the other hand, we may also see more young people entering more job secure fields after bearing the brunt of the recession. Research from EngineeringUK reveals two in five young people say job security (44%) and job availability (41%) have become more important to them when considering career choices, while enjoying work (33%) and opportunities for career progression (26%) were rated as less important.
2. Consumers will keep their hands in their pockets
The household savings rate, heightened by the economic recession, has fallen from 22.1% in June to 18.9% in September, indicating consumers are increasing discretionary spending. The RBA predicts household consumption will have returned to 5% below pre-pandemic levels by the end of 2020. Historically low interest rates have driven up spending and borrowing in recent months, with owner-occupier home loans reaching a record-breaking $16.5 billion in October.
The pandemic has made consumers more proactive with their personal finances, according to The Way We Bank, a report by insights consulting firm Nature. More than two in five (43%) Australians started budgeting for the first time this year and will continue to do so, while 35% are regularly scanning the market for better deals on financial products.
As consumers look to minimise debts and prolong payment periods, buy now pay later (BNPL) services is projected to grow. The BNPL segment will be particularly popular for consumer segments most financially impacted by the pandemic. Nature's research shows buyers will be most likely to use BNPL for furniture and homewares, technology and electronics, and holiday bookings.
3. Employees will be working from wherever
The pandemic has forced millions of people to change the way they work, and those changes may be here to stay. According to Finder's Consumer Sentiment Survey, one in five Australians (21%) say they want to continue working from home in the post-pandemic future. An Accenture study found that nearly half (46%) of workers who had never worked from home previously now plan to do so more frequently.
Those working from home are also seeing significant time and money savings as a result. Commuting activity is expected to remain at 60-70% of pre-pandemic levels as a result of declining physical office presence, according to a report by the Department of Infrastructure.
However, there are discrepancies between what workers want and what businesses want. Boston Consulting Group's report The Expectation Gap in the Future of Work found on average, employers foresee one third (33%) of their workforce returning to the office full-time, and 73% of employers anticipate the majority of staff returning to the office early in the new year. In comparison, just 15% of employees want to return to the office full-time, and 63% want a hybrid remote working arrangement. Further, within the next 18 months, 42% of companies say they plan to reduce their real estate footprint.
What's clear is that COVID-19 has opened a Pandora's Box of home-working which employers may have been reluctant to engage with previously, and there will be no turning back.
4. We are entering a flexible learning revolution
According to Finder's Consumer Sentiment Survey in July, nearly one in three Australians (30%) were motivated to upskill over the course of the pandemic. Half of these people (50%) were driven by the desire to change their career. As a result, demand for online courses soared this year. In Australia, Udemy saw a 140% increase in enrolments. This surge challenges the traditional model of education with more flexibility, integration with work and life schedules, and the opportunity for self-directed learning, and it could increase global competition among institutions.
Physical classrooms for school-age children will remain, but with a growing integration with digital learning methods. While younger children will continue to require in-person learning, older students will benefit greatly from remote learning, with research from the Research Institute of America showing students retain 25-60% when learning online compared to just 8-10% in the classroom.
Education technology (edtech) such as online learning software, language app and video conferencing tools, has attracted skyrocketing investments. Global research firm Research and Markets predicts that by 2025 this market will grow from $25 billion to $460 billion.
5. The rise of the influencers
Online grocery sales grew to 5.3% in October 2020 from 3.1% in October 2019, according to ABS retail trade data. In June, Finder's Consumer Sentiment Survey found 14% of consumers want to continue to order their groceries online after the lockdown.
Clothing, footwear and department stores were the hardest hit from the pandemic, bearing a 35% decline in spending between March and April. On the other hand, spending on household goods has grown in line with stay-at-home measures, reaching 15% year-on-year growth in October.
The fashion industry, previously plagued by inflated designer prices, an oversupply of luxury brands and too many seasons for consumers to keep up with has suffered from a reduction in discretionary spending and will face major structural challenges as consumers turn to more accessible brands selling seasonless and comfortable items.
There are signs that online direct to consumer (D2C) channels will see prominent growth in the near future, replacing traditional runways with digital ones. In Australia, 33% of consumers say their social media usage increased last year. A report from social media firm the Sprout Social found an overwhelming 89% of consumers say they will buy from a brand they follow on social media, and 75% are willing to pay more for the brands they follow. With online shopping now at 17% of non-food retail sales, retailers can no longer afford to ignore this segment.
A wave of ecommerce growth, similar to that which followed the Global Financial Crisis, is predicted as consumer confidence reaches a ten-year high. Consumers are likely to be money-shy initially and are more likely to shop around for better deals as they remain financially cautious.
The events of 2020 are likely to change the way consumers think about shopping. In June, Finder's Consumer Sentiment Survey found 28% of Australians are interested in shopping more locally as lockdowns ease. Consumers are likely to be spending more on goods and services that improve their wellbeing, provide valuable experiences and support their local community.
6. Contactless comfort food is here to stay
Stay-at-home restrictions and heightened stress levels caused an incredible 160% surge in the consumer spending index for food delivery services in May 2020, while spending at local cafes, and pubs and venues fell by 32% and 85% respectively, according to analytics firm Alpha Beta's COVID-19 consumer spending index. And there are early signs that the pandemic has paved a new future for food delivery platforms. Innovations using drone delivery and autonomous vehicles are driving an increasingly seamless food-service future.
The concept of "ghost kitchens" – restaurants that exist solely for food delivery – will become increasingly attractive as a flexible operating model that allows businesses to test the market without major overhead costs.
Additionally, with the growth in food delivery, tipping could become less prevalent due to the lack of physical dining experience and social pressure from others. However, an increase in discretionary spending over the next year, coupled with a greater appreciation for local businesses, could make diners more likely to compensate wait staff and delivery drivers.
7. Doctors have gone digital
Telehealth services soared to account for over a third (36%) of Medicare consultations at the height of the pandemic in April, with over half (52%) of mental health consultations held remotely, according to statistics from the University of Queensland. While the portion of telehealth appointments has since declined, consumer demand and proven quality of service mean virtual care is unlikely to fall back to pre-pandemic levels. In June, Finder research revealed 10% of Australians indicated they would like to continue with telehealth after the pandemic.
The digital health revolution has challenged opinions on what constitutes quality service delivery. In May, Finder's Consumer Sentiment Survey revealed that 64% of those who had used telehealth were able to receive the right level of care. Meanwhile, the Royal Australian College of General Practitioners reports seven in ten general practitioners believe continuing telehealth post-pandemic will support access to high-quality care for patients.
The prevalence of telehealth has the potential to reduce socioeconomic and regional barriers to healthcare due to geographic reach. For clinics, virtual care allows practitioners to reduce the cost of overheads and minimise the prevalence of no-shows resulting in increased clinic revenue.
While telehealth cannot fully replace traditional clinics and hospitals, when used in conjunction with in-person care, it could result in a more efficient and equitable healthcare system.
8. Supply chains will be modernised
Economic activity among Australia's trading partners is expected to have contracted by 3% by the end of 2020, once the relevant data is reported, before undergoing a 6% recovery in 2021 according to the RBA. The travel industry contracted by 39% year-on-year in October, while agriculture and mining shrunk by 9%. The construction industry was down by an incredible 47%.
The agribusiness, tourism and education sectors will take the longest to heal because of major reliance on export revenue, incoming visitors and international students. However, blows to these sectors will be partially offset by mining exports, where the surge in iron ore prices will drive recovery in 2021 and ensuing years.
Beyond trade revenue impacts, COVID-19 emphasised the weaknesses of globalised supply chains and exposed the vulnerability of relying on imports, particularly for essential goods. As a result, there may be a shift towards more integrated supply chains, with nearshore or onshore manufacturing plants to mitigate risk. In the long term, the need for less labour-intensive factories will drive supply chain digitisation through production line automation and software-based management tools, according to KPMG.
The bottom line
The beginning of 2021 marks a pivotal moment in time. Some of last year's defining characteristics – scrambling to set up home offices, homeschooling our children and cancelling our overseas trips, while at the same time many of us lost jobs, witnessed our loved ones fall sick and struggle with our mental health – have triggered irreversible changes. The technological revolution has pushed businesses and consumers alike into the digital universe, and while the easing of restrictions will inevitably see many face-to-face services return, the ways we work, study, shop and eat will never be the same.