The coronavirus pandemic has posed an unprecedented crisis that suddenly changed the way of life for billions of people around the world. As a result, the way people interact and do business with each other has been dramatically changed, and in many cases, halted altogether. The economic consequences have been unprecedented as well, with a likelihood that the ripple effects from the crisis are still to be felt.
SUDDEN ECONOMIC DOWNTURN
In April 2020, 20.5 million Americans lost their jobs, resulting in a 14.5% unemployment rate. Of this group, 78% reported that they were temporarily laid off. Since the onset of the outbreak in the United States to mid-May, more than 35 million Americans applied for unemployment benefits. Some estimates suggest that 40% of the layoffs will be permanent. In February, the American unemployment rate stood at 3.5%.
The restaurant industry lost 5.5 million jobs in April, and 5.9 million jobs since the outbreak, reports the Bureau of Labor Statistics. In total, roughly 7.7 million leisure and hospitality jobs have been lost. Hotels have lost roughly 3.9 million jobs, accounting for 70% of the industry’s employees, reports Oxford Economics and Hotel Effectiveness. Hotel occupancy rates are projected to fall 38% reports market research firm STR. The firm forecasts a 50% decline in revenue per available room for 2020 with a sharp rebound of 63% expected in 2021.
More than 60% of U.S. retailers have temporarily closed between March and May, reports CBS. As a result, retail sales plunged 8.4% in March, a record at the time, and in April dropped another 16.4%, reports the U.S. Commerce Department. Coinciding with the loss in demand was a 0.8% decrease in the Consumer Price Index from March to April—the largest decrease since December 2008.
A recent Gallup poll showed that consumer spending across all major income groups is down in recent months. Overall, 51% of Americans are spending less, the highest rate since 2010. Forty-seven percent of those who say they are spending less expect it to be temporary compared with 33% who said the same in 2010. Fifty-three percent say the reductions will become their new, normal pattern for years ahead.
While the U.S. stock market plunged dramatically in March, as of early June the Dow Jones has regained much of its losses.
GOVERNMENT RESPONSE
As a result of the economic shutdown, the U.S. government initiated an unprecedented response to keep businesses and individuals afloat financially. According to The Washington Post, the U.S. government has committed more than nearly $7 trillion to combat the virus’ health care and economic impacts, including the $2.5 trillion CARES Act. This response represents roughly one-third of the 2019 U.S. GPD. Trillions more in relief may be committed to support businesses and individuals as the crisis enters new phases.
While the government’s fiscal response has been dramatic, the longer-term economic consequences may outlast the immediate threat from the pandemic. A reopened economy may not correlate to business as usual as concerns remain regarding both the supply and demand for products and services as consumers and businesses are not fully confident about how they can safely operate and interact with one another. However, in other cases, consumers are eager to participate fully in the economy. The economic forecasts from the coronavirus remain wide-ranging, with projections calling for depressions to a strong, V-shaped recovery. As more is understood about the virus and how businesses and individuals can protect themselves and stop the spread, new data can more definitively point to where the economy is heading.
SAFETY SENTIMENTS
A poll from SSRS and Lot Sports indicates that as of early May, only 38% of Americans feel totally safe around just one other person. That number decreases to 21% when asked about a few people, and to 11% around less than 100 people. Sentiment disparities among different demographics exist based on region, gender and political leanings. The data indicates that individuals in the northeast feel less safe when compared to other parts of the country, males feel safer than females, and Republicans feel considerably safer than Democrats.
Among Gen Z and millennials, 55% would return to restaurants as soon as isolation ends, reports a mid-April survey by TruePublic. Sixteen percent would wait until months after isolation ends and 29% would wait until at least a vaccine is out before they eat at restaurants. Regarding the gym, 35% would go as soon as isolation ends, 19% months after isolation ends and 46% would wait until at least a vaccine is available.
Expanding to all Americans, a Datassential poll showed that when businesses open, 17% completely trust and 55% somewhat trust counter service/fast food restaurants. Sixteen percent and 55% trust and somewhat trust sit-down restaurants respectively.
AFFLUENT MARKET
As spending habits have changed dramatically since the onset of the virus, luxury spending is due for a shake up as well as people shift to a more health-based lifestyle. “Mental and emotional wellness has been the biggest trend in the wellness space before coronavirus and it will become even more important after,” says Beth McGroarty, director of research and public relations at the Global Wellness Institute. In this same vein, a recent YouGov Affluent Perspective Survey reports affluents are spending the time they would have been shopping decluttering their homes (45%), crafting or hobbies (35%), spending time outdoors (26%) and exercising (23%). They are also using relaxation and meditation apps.
According to Unity Marketing Luxury Market Expert Pamela Danziger, the luxury sector to benefit most is the $4.5 trillion global wellness economy. This includes wellness tourism, physical activity, health and nutrition, personal care and other markets focusing on enhancing one’s health. Prominent displays of wealth may become less attractive, Danziger adds, as individuals become wary of the optics of wealth. There is a likelihood that high-earning individuals who are not wealthy yet will shift from indulging in luxury to saving more and enjoying more discrete luxury purchases that last long and have a high quality.
RESTAURANTS RE-ENVISIONED
A combination of ingenuity, new menu items and loosened alcohol laws enabled many restaurants to switch to to-go food service to stay in operation. Many restaurants offered multi-serving meals or kits for entire families. In addition, with profit margins higher for alcohol—and relaxed regulations for to-go alcohol—many restaurants were creative in offering premade cocktails and pitchers of margaritas in addition to bottles of wine or beer.
The coronavirus has forced most restaurants to reimagine how they operate, and as they reopen, what’s inside their brick and mortar locations, reports Restaurant Hospitality. Custom decals marking six-foot intervals for customers are almost ubiquitous and offer restaurants the opportunity to enhance their brand with their logos and customized messaging. Curvware provides a comfortable utensil for diners and provides for more effective cleaning in a dishwasher than flatware. Touch and interaction limiting apps utilize QR codes that can be scanned by phones in order to give customers access to digital restaurant menus. OneDine lets customers scan a QR code in a parking spot, allowing them to order from their car and have their meal delivered.
As restaurants rebound from the virus, new menu trends are emerging. Consumers are exploring foods and beverages that build immunity to ward off infections, including teas made with strawberries, honey, lemon and avocado, and immune-booster foods like ginger and brown sugar. Comfort sweets remain popular in Asia, but now with some twists including the creamy-whipped coffee beverage, Dalogna, being turned into a thin crepe. Meal kits have grown increasingly popular during lockdowns and items like grilling kits continue to see their popularity grow.
CHANGES FOR GOLF
Golf was one of the few group activities that was not completely shut down by the virus. During the state lockdowns, courses innovated, and as they reopen, several trends may emerge. Here are new trends forecasted from golf journalist Bradley S. Klein.
- Signage and communication encouraging social distancing will be present throughout the course.
- Wider spacing of tee times—to 10-15-minute intervals or more—to allow for greater separation among groups.
- Less reliance upon banquets and profitable business outings and more focus on direct service to consumers in smaller, private groups.
- Limited availability of on-course bathrooms, subject to stringent measures of multiple cleanings per day.
- Gradual and limited return of caddie programs, emphasizing forecaddies and single-bag carriers,
- Superintendents will be relying on smaller, more efficient crews, which means more interaction among golfers and workers
- Delayed starting times as reduced crews attend to necessary daily setup.
- Increased reliance on long-term, labor-saving equipment such as robotic fairway mowers.
The Back2Golf Operations Playbook, produced by a coalition of golf industry leaders, recommends three phases to reopening:
Phase One (Individual Play): Minimal Course Set up and Minimal staff. Holes will be filled to allow for easy ball retrieval, no bunker rakes; trash removed by individual players. Flags should not be touched for any reason. No on course amenities. The player should bring their own water and remove trash upon leaving.
Phase Two (Restricted Programming): Minimal Course Set up and Minimal staff. Holes will be filled to allow for easy ball retrieval, no bunker rakes; trash removed by individual players. Flags should not be touched for any reason. No on course amenities
Phase Three (New Normal): Facility is fully operational. No restrictions. Enhanced sanitation protocols.
CHANGING PERSONAL AND SPENDING HABITS
The lockdown has changed behavior in many other ways. “Clean comes before green,” says Alison Angus, Euromonitor’s lifestyle head of research. The demand for reusable products has gone down due to concerns of cleanliness while disposable product demand has increased. Locally produced goods are more popular as communities strive to keep their businesses afloat and as they are perceived to be in less people’s hands.
Privacy concerns have decreased as more people embrace online shopping, and increased trust in robots, particularly no-touch voice assistants as they provide a hygienic way to complete tasks.
HOME AS A NEW HUB
As millions of office workers navigate the work-from-home experiment, it’s likely that remote work will be here to stay. With virtual meetings and platforms for videoconferencing like Zoom, Facebook and Microsoft Team Meetings, the transition to working from home has allowed management to communicate regularly with employees.
The home has become a hub for virtual social gatherings as well. Additionally, the home is becoming a viable venue to exercise, cook, learn and work (“See Ready or Not, Here Zoom Comes” on page 18).
The multifunctional home plays a key role during the pandemic lockdown. Access to broadband and a place to work separate from play (especially for families with young children) can be challenging. Additionally, high-cost metropolitan areas could see a population decline as already exhibited in the country’s three largest population centers: New York, Los Angeles and Chicago saw the number of residents decline, reports Brookings Institution Demographer William Frey. The suburbs, with larger homes and easy to access outdoor spaces may look more desirable in the coming months.
TRAVEL AND TOURISM IMPACT
Travel may experience a variety of changes. Overall, many hotel experts believe that travelers will consider safety more prominently, avoiding crowds and full flights. Experiences that limit interactions may become more popular, such as smaller hotels, road trips, outdoor activities and private flights for the affluent.
EXPERIENCING CHANGE
The coronavirus has dramatically altered the way businesses operate and individuals interact, leaving an uncertain future for billions globally. While much is unknown, effectively responding to these changes will provide the best chance to successfully emerge from this crisis and enter a new normal.