New York – Writing to shareholders this week, BlackRock Inc. Chief Executive Officer Larry Fink ruminated on how business and society will be reshaped by the searing experience of the new coronavirus: “People worldwide are fundamentally rethinking the way we work, shop, travel and gather. When we exit this crisis, the world will be different. Investors’ psychology will change. Business will change. Consumption will change. And we will be more deeply reliant on our families and each other to stay safe.”
I had a similar epiphany this week while trying to cut my own hair — it turns out my regular $30 haircut isn’t as essential as I’d thought. Preparing a meal for my family later that evening made me think that eating out or getting dinner delivered isn’t as rewarding as home cooking. Right now the do-it-yourself version also feels a whole lot safer, and probably will do for a while.
Compared with the courage shown by medical workers and those in other essential functions, and the devastation wrought by the coronavirus on already vulnerable communities, many of us in the Western world have it easy. We’re asked to do no more than stay home. But in between worrying about our jobs, our parents and how to entertain or home-school children, we’re re-evaluating priorities. What will we do differently when this is over? What will we prize more and what will we give up?
Once the immediate battle to protect employees and remain solvent has passed, the business world will have to confront these questions too.
Two themes stand out: Instead of visiting far-flung places and seeking out mass entertainment, I’m sure there will be a bias toward more modest, local activities. And where the coronavirus has exposed dependency or vulnerability, as with the business world’s complex cross-border supply chains, we’ll seek more security and resilience.
Looming above all of this is the damage that the lockdowns are inflicting on people’s incomes. The longer the economic shutdown lasts, the more reluctant the world’s consumers will be to spend, period. With more than 10 million Americans filing new unemployment claims in the past few weeks, the omens aren’t good.
In the worst-affected sectors such as travel, hospitality and leisure, businesses are already facing a bleaker future. Increased consumer awareness about the negative environmental and social impact of mass tourism has now been compounded by the realization that people on planes and pleasure boats carried the virus around the globe.
Even once travel restrictions are lifted, demand for cruises may remain weak for a “significant length of time,” Carnival Corp. warned. The beleaguered company had to offer bond-buyers an 11.5 percent interest rate to get them to back a $4 billion debt offering. That’s a bad sign.
Fitness is another industry that relies on cramming people into confined spaces. Until recently it was booming, but customers are discovering much cheaper ways to work out. Having sampled online classes and the time-saving benefit of exercising at, or close to, home, some memberships won’t be renewed. Good news for Peloton Interactive Inc.’s indoor cycling business, perhaps not for Planet Fitness Inc. or The Gym Group PLC.
Until the coronavirus came along, the tech world seemed hell-bent on taking agency away from individuals and consigning ownership to the dustbin. Why learn to cook when you can have food delivered in 30 minutes? Why own a car when you can take an Uber? Why look after your gadgets, when those nice people at Apple will fix them for you. But as my colleague Adam Minter pointed out, it’s only in a crisis that you discover the drawbacks of not being able to repair your own phone.
There will be winners from this realignment too. Right now, auto sales are collapsing in Europe because you can’t go to a showroom and you’re not meant to drive far, but the freedom and security of owning a vehicle might cause sales to rebound more quickly than other discretionary purchases (provided of course that governments can curb unemployment). In China, emerging from the first virus wave, cautious consumers have begun returning to car dealers.
Home improvement stores saw a brisk trade from customers wanting to fix up their homes, balconies and allotments while on lockdown. Once the housing market reopens, urbanites may decide they’ve had enough of crowded cities and tiny apartments. The countryside is suddenly more appealing — the more so if employers become more trusting of those who want to work from home.
The coronavirus has exposed our vulnerability and it won’t be the last crisis. Faced with uncertainty or disaster, humans respond by trying to strengthen their communities. We’ll also seek more control over our lives. For societies, that means equipping our health services, paying key workers properly and securing supplies. As individuals, it means out-sourcing fewer decisions and mastering things for ourselves.
Chris Bryant is a Bloomberg columnist.
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