No I’m not at all suggesting that we’re in the middle of an apocalypse but then again, maybe we are. We’re at a period in time which is largely unparalleled with any other. We’ve had the Spanish Flu, SARS, the share market crash of ’87 and most recently the GFC. However, none of these truly draw a comparable line with the global pandemic and economic situation unfolding at the moment.
So, what does the post covid-19 world look like?
This was a question posed by Paul Bloxham in a recent seminar and it’s a great, mind tingling question. It’s a question that no one has the answers to right now because we are in completely unprecedented times. So, I’m going to throw a dart at the board of guesses and see if I get close. I’ll front-foot this with the assumption that the lock-down gets extended.
For me, this will largely spell the end of Retail as we know it. Retail has been facing headwinds for some time now and the reality is that the lockdown will force a lot of retailers to close up shop and I don’t see them reopening. Most businesses in NZ will be able to struggle through the 4 week lock-down with no income. Very few (and I mean very few) will be able to last the 8 weeks without a significant impact on their business. They simply won’t be able to sustain the costs associated to keeping the shop open whilst having no money coming in.
I say “as we know it” because retail will still exist, but it will be dominated by online. This isn’t really anything new. We’ve been seeing this coming for a long time, but the situation we find ourselves in will speed this up.
Certain brands that rely on the experience (and where that is needed) as part of their offering will likely still have shop front presence.
This also poses an interesting question for retail property. With retail businesses failing we are likely going to see a fall in rents and increase in vacancy rates. Both of these will lead to a fall in values. It could mean a shift of investment capital or a repurposing of retail stock to other purposes – what will Queen Street look like in the future?
This for me is an interesting one. Irrelevant of how long we remain in lock down for or at level 4, how long will the borders remain closed to international travel? An article released today suggested that NZ is the only Western country that looks like eradicating the virus soon. If that’s the case then why would we open our borders?
It seems highly likely to me that we remain closed off, or heavily restrictive, to international travel for the foreseeable future. At least until we have a vaccine. Post that, how many people will decide that international travel just isn’t for them based on fear. Air NZ have already come out and said that they will largely be a Domestic Airline in the future.
Contrary to this though is the innate desire for us to travel and see the world, the OE is a right of passage for many young kiwis. Much like after many financial crisis I wonder how short our memories will be and when we may return to international travel. Maybe the biggest affect will be where we go – there will be countries that will come out of this crisis with their reputations in tatters and some that handle it well. NZ I am picking, as are many, to be one of the few that have handled this well and we could see our inbound tourism numbers boost on the back of that once borders are re-opened.
Four day work week?
There’s been evidence mounting for some time now that moving to a 4-day work week in fact improves productivity. We’re now seeing businesses forced to move their teams onto this in light of reducing their pay to 80%. These aren’t really the times to be making these decision but it’ll be interesting to see what happens to performance as a result of this. Will businesses realise that they’re teams deliver just as higher output by working 4 days and will that therefore become more common practice in the future?
In the same light, will working from home from home become far more accepted? Companies already toy with this and it’s always polarised opinions, but now everyone has been forced into seeing if it really does work or not. For me, I’m getting almost 3 hours of my day back from not having to sit in traffic!
For those that have children working from home lately has probably been pretty tough (I know I have found it hard in some moments!). It is important though to remember that day care’s and schools will re-open and you won’t have to manage your workloads and children.
Which brands that we’ve known for so long won’t exist post Covid-19? I floated the idea of running a sweepstake on this but found it far too negative to go through with. But seriously, we’ve already seen Bauer Media’s fall and FE Investments insolvency. What about your favourite restaurant? Or clothing store? Or Airline?
Without doubt, I’m of the opinion that we haven’t seen the worst yet. However, I also genuinely believe there will be some fantastic positives that come out of this event. Like always, it’s in tough times where opportunity presents and I watch with excited anticipation for where the world goes post Covid-19.
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