The United States federal government has been in overdrive as of late, vaccinating citizens, distributing COVID-relief checks to the tune of $5 trillion (one-quarter of the nation's GDP), and developing a multi-billion-dollar infrastructure plan intended to be partially funded by raising the corporate tax. All this spending is to lower the impact of the pandemic physically and financially, protecting citizens’ health and putting some money in their hands to spend, which is ultimately intended to deliver numerous economic benefits. This spending is also expected to kick certain sectors of the extremely sluggish economy into high gear — especially companies with the bulk of their revenues coming from US domestic operations. Sectors expected to see the most impact include retail, healthcare, telecom, and technology.
The return of the US economy will be driven by both consumers and employees buying or making products and services, and a re-ignition of consumer appetite and purchasing behavior. The last one is particularly relevant in the post-pandemic world because our consumption habits having changed significantly, irreversibly in many cases. It would be helpful to look at how this plays out in various industry sectors.
Let's start with retail. Until the pandemic hit, retail had been growing its share of US employment every year since 2014, employing one in four Americans and contributing nearly $4 trillion to the US economy. Then, the pandemic hit hard, and 2020 turned into the year of omnichannel retail. Online commerce grew 44% YoY and crossed the 20% threshold, with Amazon leading the pack as expected. Surprisingly, brick-and-mortar retail has been a major partner for online, rather than the competitor it’s historically been. As store associates return to their workplaces, their job requirements will likely change to accommodate aspects of online retail like curb-side pick-up and remote support via phone and online.
As supply of specific necessities and durable goods ran out at various times (sanitizers, toilet paper, even exercise machines), CPG companies questioned the resilience of their supply chains and were forced to evaluate the possibility of local manufacturing, re-shoring, and near-shoring. As prediction models fell by the wayside and direct-to-consumer sales surged, demand planning and allocation became key differentiators with heavy scrutiny of last-mile capabilities.
Another industry that bucked trends from before the pandemic is the health and medical insurance industry, the second largest sector in US after retirement and pension plans. While unemployment rates grew during the peak of the pandemic, so did enrollment in Medicare and Medicaid (6.7% in 2020 and 4.1% in 2021). Adoption of telemedicine also increased significantly, “from 11% in 2019 to 46%” according to a McKinsey survey, to replace in-person healthcare visits. “Providers have rapidly scaled offerings and are seeing 50 to 175 times the number of patients via telehealth than they did before.”
As consumers were confined at home with more time than ever before to watch content, the media and entertainment (M&E) industry fared well with many more consumers switching to online streaming services. However, drop-off rates were predictably volatile considering the economic uncertainties subscribers were dealing with. Tailoring plans, offering flexible or tiered models, increasing support for multiple devices: Solutions like these might help keep customers from switching services.
Another interesting trend in M&E has been the blurring of content categories. What makes a program a music concert, a reality television show, an interactive game or a talk show? Today we often see multiple elements come together to make programs more socially engaging. This is making it difficult to classify a program under a single genre or category.
As 5G gains momentum, enterprises will need to tailor separate strategies for consumers and the business to provide hyper-personalized experiences and drive loyalty.
To better understand consumers, shoppers, patients, subscribers, businesses must intensify their applications of advanced analytics to design products and services that help align consumer preferences with purchasing behavior. This would mean mapping consumer data across multiple parameters like consumption patterns, product and service or channel and delivery preferences, local demand surges; weather patterns, local/state/national regulations, and competition data.
5G can be the high-speed pipe which streams multimedia data to give businesses real-time insights into consumers interactions and locations, including homes. This would enable retail, CPG, and healthcare providers to gain direct insights into what offerings are being received well, how and where are they consumed, and how to proactively prevent drop offs.
In the post-pandemic world, hyper-personalization will be key, and businesses will need to have offers and promotions that are in sync with consumers’ behaviors and preferences. What role would technology play?
At a foundational level, organizations would need to overhaul their technology capabilities to match business expectations. This could mean XaaS (everything-as-a-service) on cloud, IoT/edge computing coupled with AI/machine learning for autonomous supply chains and virtualized IT operations. New-age tech would work with service design elements in a design-of-experiments mode to make innovation continuous. Potential benefits would include both increased revenues and lower costs. In health, for example, this would mean improved convenience and access to care, better patient outcomes, and a more efficient healthcare system.
From an organizational standpoint, the people angle would extend to workforce capabilities. Frontline workers would have the exact same or better information than consumers have in their devices, while insights from the front-end would need to be fed back all the way to new product or process design. Finally, behavioral patterns and shifts are not static, necessitating the need to have a constant mechanism to monitor and respond to changes.
Coming out of the pandemic, the US economy is slated to cross the 6% mark in terms of GDP growth after decades of flattish growth. Sectors and organizations that are truly local will need to quickly invest in digital transformation to be among the beneficiaries.