While four million human beings are still struggling with the unprecedented situation caused by Covid-19, experts around the world are debating about the “world post-crisis”. From the Financial Times to Forbes, The Economist, or the World Economic Forum, all experts tend to align on certain points and disagree on many others. Here are three things I believe will change forever due to pandemics.
Embracing A Full Online Life. The End Of Cash?
With home containment, people had to change their habits to a more digital life. During the past couple of month, we learned how to work from home, school our children from our living rooms and buy food and other shopping needs online. It is a very important change, especially as physical stores were closed and people were very limited on the distances they could cover.
According to Forbes, online sales increased around the world by 278% due to the virus situation. We understand why Jeff Bezos won USD 24 billion during the period. In the US, Wallmart had a growth of 460% with its mobile app for groceries. The same trend is observed in Europe and Asia. The world went online and the consumer followed. Most interesting is the fact that people took new habits and estimates say that more than 50% of consumers who adopted a more online shopping routine will not turn back to physical stores (Pymnts.com).
Although home containment is almost over, around 58% of online shoppers will continue their online shopping activity afterward. Consumers are committed to continuing online shopping to reduce their exposure to others amid the outbreak. According to Kantar, more than 60% of online shoppers in Europe will maintain their level of online consumption after the crisis. Consumers will fulfill essential and non-essential purchases. This will require a lot of adaptation from brands, especially the ones with a low online presence.
The online shopping game has a simple rule: You cannot find it, you will not buy it. Because of product scarcity, consumers spend more time searching for their beloved products. In some countries, Google searches have increased by 175% and even Wikipedia got a tremendous burst during the Covid-19 period. Brand will fight for the top position in the search engine result pages. SEO and SEM will be the battle fields to improve and guarantee sales. Researchgate.com evaluated that around 25% of online shoppers cannot find immediately what they are looking for. Brands were not ready for such a dramatic change and now they have a good context to improve their online footprint.
On the consumer side, we are experiencing a new facet of things: The end of cash! If you cannot go to a physical store, you cannot pay cash, therefore digital wallets, credit cards, and other online payment methods have increased their activity as they are the only method to pay the purchases. Given the rise in online shopping, Business Insider Intelligence estimates that the revenue for companies processing online payments will increase from $82 billion to $138 billion between 2018 and 2024.
Would our generation see the end of cash? It is an interesting idea since the burst of digital currencies (eg: Bitcoin) and the cover-19 containment. Would this affect the world order and exchange rates? Not sure. We would see a dematerialization of wealthiness to a more digitalized world.
From Globalization To Short Local Networks
During the health crisis, countries around the world realized how fragile their economic model is, all dependent on China. This dependence is at the production and at the end-consumer level. Basically, China became the factory of the world. China produces for all countries at all levels of complexity and price. Is it normal to produce everything in China? When we see how fragile the system is, we might want to re-evaluate our production model to something more reasonable, more local. As expressed in Forbes magazine, the coronavirus might represent the end of China as a manufacturing hub for the world.
The US might review its production model and turn itself to something more local and closer like Mexico. Is Mexico the new China? According to Sebastian Miralles, managing partner at Tempest Capital in Mexico City, the US might transfer up to USD 15 billion of manufacturing from China to Mexico.
In Europe, each country might review its model as well and privilege countries like Portugal, Spain, Greece, and Eastern-Europe to become the new manufacturing hubs for the region. In a world post-covid19 where several people lost their jobs, it is a good perspective to create new jobs because of a geographic shorter supply-chain.
If we take the example of NIKE, we can see that the sports shoe company has been talking for a number of years about digitizing its supply chain. By introducing 1’200 automated machines nearby the US, this means that lead times are cut from 60 days to 10 days. The company will also see a big reduction in shipping expenses, import duties, and risk of over-production. NIKE would reduce by 30% the total amount of steps in the process and provides much more resilience.
Health and medical care businesses are also reviewing their production model as well. 85% of all chirurgical masks are currently produced in China. This is due to historical reasons but also a cost efficient aspect. With the Covid-19 crisis, countries seemed exposed to massive insecurity because of lack of quality masks. We could wonder why each country is not producing their own masks? Why should they, right? Well, now we know.
Switzerland is one of the countries to acquire specific machines (delivered from China) to start local production. Swiss company Wernli, a company specializing in the manufacture of medical bandages in Rothrist, Aargau, is determined to start producing large-scale hygienic masks. The company’s owner, Felix Schönle declared to the newspaper Le Temps, that he had invested around CHF 100’000 (USD 102’000) on a new machine to produce these masks. The Swiss company has already ordered textile material from Germany and Eastern Europe, enough to produce 6 to 7 million masks. The company plans to hire up to ten more people to run the machine 24 hours a day. At maximum capacity, it can make 120,000 masks a day.
We All Need A Strong Health Care System
Among all the challenges we faced during this crisis, one thing seems crucial: a strong health care system. Countries with strong health care systems can survive the crisis and protect their population. This crisis has shown gaps in health systems around the world. According to one estimate from the UN, more than 5 billion people will lack access to essential health services by 2030. Those services include the ability to see a health worker, access to essential medicines, and running water in hospitals.
This access is complicated by a shortage of trained healthcare workers. The 2020 State of the World’s Nursing report found that the world would need 6 million more nurses by 2030 to reach global health targets. Shortages of health care workers are felt most acutely in low- and middle-income countries.
The world currently spends approximately $7.5 trillion on health each year or 10% of global gross domestic product (GDP). While spending has increased steadily, dangerous public health gaps exist, especially in rural or conflict-ridden areas where access is difficult and infrastructure is lacking.
According to the UN study “Primary Health Care on the Road to Universal Health Coverage,” increasing spending on primary health care in just low- and middle-income countries by $200 billion annually could save 60 million lives.
The math is quite simple. Currently, the world is investing around 15% of its GDP to fight the Covid-19. In order to improve healthcare around the world in a more sustainable way, it would only require about 2% of the world’s GDP. This should motivate countries and companies to improve their health care coverage in order to prevent massive world crisis to happen in such a dramatic level. The solutions are here. It is all about fighting the right battles, convincing the right lobbies, and bringing a true political and economical change.
How many crisis of this level will the world be able to resist? Things are changing and although Covid-19 brought Greta Thunberg to silence, the world has great climate challenges to face still. The good news is that change might happen fasten than we think and in ways we would not have expected. Let’s be optimistic for the greater good.
Information sourced by the author for luxuryactivist.com. All content is copyrighted with no reproduction rights available. Images are for illustration purposes only.