We have all witnessed significant lifestyle changes caused by the onset of a Covid-19 pandemic where people spent more time at home than ever before and when the importance of health and healthy living was emphasized.
Generally, Covid-19 and the resulting turbulence have profoundly transformed the economy. Businesses have had to move their operations online at full speed, telecommuting has become the norm and the way of doing things has changed a lot. For investors in our Global Consumer Trends strategy, these developments mean long-term opportunities.
In our view, the most promising opportunities for this year and years after will lie at the intersection of consumerism and health. Health and well-being have become central themes in recent years and the Covid-19 has only amplified this phenomenon in 2020. In this article, we take a quick look at the 2021 business and consumer trends that were largely shaped by the Covid-19 pandemic.
The Rise of E-Commerce
The pandemic has triggered a digital explosion which proves that e-commerce is now part of the daily life of consumers around the world. In the weeks following the first wave of contagion, individuals stockpiled the basics: toilet paper, disinfectant gel, and non-perishable foods such as pasta.
But, when they figured out that the movement restrictions would stay in place much longer than initially expected, they changed their behavior. First, new buyers have ventured online, namely the elderly. The total reopening of the economy and the return to normal life should not change this.
The future of commerce will be a mix of online shopping and shopping in physical stores. Many consumers have indeed indicated that the ease with which one can make purchases is more important than the price of the items.
The rise of electronic commerce during the crisis has boosted online retailers, including Amazon in the United States, Alibaba in China, and MercadoLibre in Latin America. But these are not the only ones, and some of the beneficiaries of the e-commerce boom are more unexpected. For many private brands whose physical stores have had to close, selling online has become a fallback.
The demand for local products also exploded last year. Consumers have signaled their intention to support the businesses and brands they want to survive, demonstrating growing customer loyalty to their favorite retailers. Companies that promote sustainable and local e-commerce should also benefit from this development.
The pandemic has sparked a digital rush and increased competition. While Amazon has recruited 400,000 employees to meet the surge in demand, smaller digital companies and e-commerce sites linked to physical stores have grown even faster. Investors must now more than ever focus on identifying future winners.
The Care and Hygiene Economy.
Covid-19 has forced states around the world to put public health at the heart of their policies. Thus, in many countries, populations have been made aware of the need to wash their hands often or to use disinfectant.
This emphasis on well-being and hygiene should translate into a lasting increase in spending on personal hygiene, childcare, and even animal care. We believe that current trends, which work in favor of the home and personal care industry, will remain dynamic in 2021 and beyond, as home care and body care habits continue.
The care economy also encompasses the childcare market. Taking advantage of the increase in the number of working women and the growing interest in early childhood education and quality childcare, this booming sector has grown steadily in recent years. Despite the Covid-19 crisis, the long-term drivers of childcare are still the same and this sector offers interesting investment opportunities.
The Rise of Streaming
Streaming is one of the sectors that have benefited the most from the health crisis and lockdowns. Disney's streaming service, Disney+, for example, has garnered more than 86.8 million subscribers since its inception a year ago, exceeding "the wildest expectations," in the words of Walt Disney Company CEO Bob Chapek. Disney also plans to reach 300-350 million subscribers paying for its streaming services by 2024.
Streaming should therefore continue its good momentum. Warner Bros. has already announced that all its films scheduled for theaters for 2021 will be released simultaneously on the streaming platform HBO Max.
The increase in the world's population and the climate crisis are forcing people to reduce their consumption and waste. More affordable and better quality, telecommunications technologies contribute to flexible work as consumers increasingly become digital nomads.
Over the next decade, social tensions will only increase as competition for resources intensifies. This could lead to greater social stratification and an inability to meet the need for smart urban planning and more efficient use of resources. Cities will be forced to continue their expansion, encroaching on the remaining wilderness and rural agricultural areas, exacerbating the cost of food production, and even raising the price of commodities.
Workplaces in New Spaces
Before the pandemic, the home was where you re-treated when there was nothing else to do. Today, it’s where many people do just about everything. Other than eating and sleeping, the home has also become our new workspace, and this not reversing anytime soon.
Our home setup and the activities we do at home have permanently changed. Most people now plan to work remotely more often even as the pandemic seems to subside. Sales of expensive in-home gym equipment like treadmills and stationary bikes grew exponentially in 2020 as more people spend more time at home.
Tablets, Smartphones, and teleconferencing platforms like Zoom allow colleagues to collaborate face-to-face from a distance. Today, Zoom and Skype meetings have become a new normal.
The Covid-19 has changed consumption habits. We believe this is particularly the case with e-commerce and the care economy. Buying reflexes are extremely interesting from an economic point of view and for well-positioned companies.
As the pandemic recovery materializes in 2021, the longer-term implications of these consumer changes should become even more visible, and your portfolio needs to be well-positioned to benefit from these developments.