The Covid-19 crisis brought unprecedented disruptions and changed the world forever. The pandemic accelerated certain trends while rendering many prevalent ones irrelevant. The future of the world – in 2021 and the years beyond, largely being known as the “next normal”, will be deeply affected by the changes brought by the pandemic.
Businesses today, are taking charge and making required adjustments to accommodate the changes and seize the opportunities unleashed by the pandemic. Here are a few key trends that are expected to shape businesses in the near future, as put forth by a McKinsey article.
Change in buying patterns alter consumer businesses forever
The pandemic has altered shopping behavior all around the world. In McKinsey’s consumer survey spanning 13 countries over two-thirds of consumers admit of trying new kinds of shopping. Online shopping has received a tremendous boost. In US, in the first six months of 2020, e-commerce witnessed a surge that was equivalent of the past ten years.
The picture is quite similar throughout the globe (with some degree of regional variation) and that trend is more or less likely to continue even after the virus is gone. However, this new breed of consumers lack loyalty and exhibit inconsistent shopping behavior. The tables have turned and now businesses must reach consumers through online presence. The retail industry is expected to undergo a sea of change and brands are expected to try selling directly to the consumers, if they haven’t already started doing so.
Rebalancing and shifting the supply chains
Covid-19 crisis gave businesses a golden opportunity to review the flaws in their supply and distribution chains. Leaders found that even if a single link in the expansive chain of production is broken the whole process of production comes to s standstill. Hence a conscious effort of better risk management began with a complete rebalancing. This could cause a shift of $4.5 trillion or a quarter of world’s goods exports by 2025.
Three important factors emerged about supply chains:
- Supply shocks are not unusual and can be predicted if all the links are adequately tracked
- Adoption of Industry 4.0 principles are lowering the cost gap between developing and developed countries. (For instance, labor cost differential between China and US can be halved.)
- Currently, businesses are unable to track the small players in the supply-chain. This can be changed with increased digitization
These revelations don’t mean that multinationals would shift their production to home markets, but they certainly indicate that companies would be more thoughtful about their decisions.
Before-time arrival of the future of work
Satya Nadella, the CEO of Microsoft said in April 2020, that two years’ worth of digital transformation unfolded in two months. Most of the world’s workforce started working from home effectively almost overnight. With enhanced digital infrastructure and consumer need, tele-health or virtual health grew exponentially and can account for 30% of total healthcare visits in near future.
For IT and other knowledge sectors, remote working and freelance talent hiring became mainstream. The McKinsey Global Institute projects that over 20% of the workforce (mostly high-skilled knowledge jobs) could work remotely with equal effectiveness.
A major restructuring of workplace and the corporate work-culture would be required to accommodate these major shifts. Moreover, with increased digital and technological adoption, companies would also need to reskill or upskill their workforce in order to address the skill gaps.
Increased emphasis on green initiatives
The international leaders were already increasing efforts on curbing pollution and boosting environment-friendly practices when the pandemic showed what a real global crisis looks like. Impending climate change crisis has been projected to be worse than the pandemic and hence, many countries are pushing their environmental policy priorities through their recovery plans.
EU has planned to dedicate 30% of its $880 billion Covid-19 crisis plan to fund measures related to climate change. China, Japan and South Korea have pledged to expedite their carbon emission targets. In US, president-elect Biden committed to invest $2 trillion in green energy.
Businesses thus, must take into account sustainability concerns of investors and take strategic decisions like enhance climate resiliency of their capital investments or supply chain diversification. More importantly, green economy offers great growth potential in long term. Thus, green business opportunities are expected to gain optimum attention in the coming time.
