What Comes Next: Expected Trends in H2
While most attention remains understandably focused on navigating a locked-down Covid-19 world, the current crisis and lockdown measures will likely begin to recede by the end of Q2. The core question then for every forward-thinking company is what comes next? What will be the emergent trends in a post-coronavirus world and how can businesses prepare now?
Below are what we at Runway see as the key themes likely to unfold in the second half of 2020. As always, we are available to discuss these in greater detail and strategize how best to position yourself for success in the rest of this year and beyond:
Remote Work is Here to Stay.
The office is not obsolete by any means, nor will it be anytime soon. However, it has been apparent for years that significantly more jobs could be performed remotely, with institutional resistance being the main obstacle. Now, firms that would previously have never allowed remote work have been forced to do it on a previously unfathomable scale.
The sky has not fallen. And many workers will not want to give up the new-found flexibility remote work offers. As a result, employers looking to attract and retain top talent will be forced to accede and offer at least partial remote work as an option for many roles.
Rather than fighting it, businesses can capitalize on this trend by saving money and streamlining operations through measures such as rethinking and reducing overall office space. Moreover, businesses quicker to embrace remote work and build around a more remote workforce will not only benefit in quality of talent but by maintaining a more streamlined and efficient workforce. For example, we expect post-coronavirus office layouts to increasingly focus much more around collaborative group spaces than individual desks.
Embrace of Virtual Health Platforms.
In an environment where the health system is stretched to capacity and going to a doctor’s office feels unsafe, the growing appeal of digital and online health services has accelerated and is unlikely to slow. Even in a normal world, many questions for doctors do not actually require an in-person visit. Virtual health platforms, then, offer significant time-savings for individuals and massive efficiency gains for an already overworked system.
A major obstacle has been a lack of familiarity and comfort with utilizing online services for healthcare. Covid-19 has and will continue to push people toward utilizing virtual options as even post-quarantine many people will remain wary of visiting doctors’ offices unnecessarily due to lingering concerns regarding coronavirus. Of particular note, given the increased recognition of the importance of mental health in recent years and generally limited coverage of mental health by insurance, we expect virtual health platforms focused on mental health and counseling to grow especially quickly.
Online Retail’s Growth Continues to Accelerate.
It is hardly groundbreaking news to say online retail has seen an uptick in business since the onset of the quarantine. Amazon and Walmart alone are hiring a combined 300,000+ workers to deal with the growth in demand. We believe the quarantine will ultimately further fuel online retailers’ already long-running ascent in the retail marketplace.
Certainly this will be due in part to the large number of customers becoming accustomed to increased use of online shopping during the crisis (as well as some customers trying these it for the first time). But long-term shifts in behavior will play a role as well. For example, more people working remotely means more people at home more of the time, buying goods previously supplied and used in offices (everything from coffee to office supplies to toiletries).
Techlash Revisited.
The crisis has indeed given many large tech companies the opportunity to demonstrate the value their scale can bring to society. Moreover, for all the good work done by governments, the crisis has in many ways brought into sharp relief the disparity in efficiency, nimbleness, and pace of innovation between governments and that of the Googles, Amazons, Apples, and Facebooks of the world. We agree with many others this will lead overall to a waning in the techlash movement, but we believe the likely extent of that shift has been overstated.
While we recommend companies remain alert for increased opportunities to collaborate with governments, companies should expect continuing scrutiny on core issues such as privacy and tax. As an example, while the crisis is indeed helping demonstrate the positive potential of big data, uses such as geolocation tracking for contact tracing are another tangible example of just how much large tech companies know about their users. Consternation over that reality will not evaporate. Similarly, following massive spending to control the virus and support the economy, governments will be starved for revenue. As a result, effective corporate tax rates, particularly for cross-border digital companies, will almost certainly remain firmly in the crosshairs.
Increased Government Flexibility on Regulatory Change.
The demonstration by the private sector during the crisis of its agility, innovation, and ability to make positive impacts at scale will likely open the door to increased receptiveness by governments to lower barriers to growth and fix outdated regulation.
Moreover, given the need to refill public coffers, companies whose growth equates with increased tax revenue are likely to be very well-positioned to secure government support and drive meaningful regulatory change (this may be a watershed moment for industries such as cannabis and sports gambling businesses).
Companies whose business models are significantly limited by existing regulatory frameworks should plan for an aggressive push in H2 for regulatory change. And the time to build the strategy for that engagement is now.
