3/25/2020
With shelter in place orders mandated through the land, folks are counting on the web more than ever. Zoom teleconferences, Amazon toilet paper orders, Netflix and decompress, and online gaming marathons are the new normal.
At work
With modern telecommunication and collaboration tools advancing, more work will be done remotely and virtually. Slack, Zoom, skype (Microsoft), AWS (Amazon), and Cisco TelePresence are some of the tools that businesses will count on to keep employees connected and coordinated.
Entertainment
The global box office is getting hammered. Domestically the trend of higher ticket prices sold to fewer people has been a worrisome pattern even before corona. The smash hits of movies like “Avengers Endgame” and “Black Panther” have masked these cracks in the foundation. The saving grace for Hollywood is the exponentially growth of the Chinese market. With the huge population and growing wealth of China, the future of movies is international and especially Asia. The US will soon cede its title as the biggest box office market to China. With months of the complete shutdown of the Chinese cinemas, that day appears to be delayed.
What still works domestically are the huge event movies produced by Marvel, Disney, Pixar, and DC. Even box office champ Star Wars is losing ground with the more discerning movie audience as evidenced by the disappointing “Solo” and the ho-hum results of the can’t miss “Rise of Skywalker”. Every once in a while a horror film like “Us” and “A Quiet Place” hits the zeitgeist but these happy surprises are not enough to offset the increased frequency of box office booms such as “Doolittle” and “Terminator Dark Fate”. Comedies, non-Oscar nominated dramas and original content are having a tough go as well. The strength of original content on Netflix, Amazon and HBO is making a hard argument for a potential moviegoer to leave the comfort of their couch and plunk down $32 for a pair of tickets to “Richard Jewell”.
Besides streaming, a huge and growing market is online gaming. The quality, graphics and interactive nature of online and console gaming is engaging and addictive. Add Youtube and social media time-sucks like Tik Tok, Snap, Instagram and Facebook and your free time has now evaporated.
Retail
One word, Amazon. You can divide the retail sector into 3 sectors.
- Non-perishable, non-clothing goods.
- Clothing.
- Perishable goods.
The first is the prime sector to get Amazoned. Due to the feel of the fabric, the fit of the cut, and the importance of real-world color fidelity, clothing is a more challenging online shopping experience. Perishable goods are also problematic for logistics and warehousing. The decimation of brick-and-mortal retailers at the hands of Amazon will continue. Amazon is pursuing all aspects of retail as evidenced by their acquisition of Whole Foods. Even fashion and groceries are not safe from the cardboard smiling arrow.
With the forced closures of non-essential retail outlets, Amazon has been given a temporary monopoly on non-essentials goods.
Restaurants
A restaurant has two choices.
- Pick an expensive and desirable retail location.
- Choose an out of way inexpensive retail spot.
In scenario 1, the restaurant needs to drive huge foot traffic or charge more than a similar restaurant to cover high lease costs. In scenario 2, the restaurant must market and brand in order to drive traffic to their out of the way location.
With the popularity of Grubhub, DoorDash and Ubereats, the ghost kitchen option is becoming a viable third alternative. Focusing exclusively on preparing food for delivery orders, a ghost kitchen can offer a high quality meal at an attractive price point. Ghost kitchens can optimize labeling, online ordering menus and to-go packaging. They can also feature meals that hold up well to the stress and time-lag of a delivery order.
With the forced closure of dine-in orders, restaurants are counting on take-out and DoorDash, Ubereats, and Grubhub orders to generate some sorely needed income.
Transportation
With more people telecommuting, the number of cars per household should drop. If an engineer only has to go into the office twice a week, these less frequent work commutes can be served via a ride-share app. As autonomous delivery vehicles become more sophisticated, human-powered ride-sharing and meal-deliveries may give way to these less expensive alternatives. As the cost and convenience of home deliveries improves, trips to the grocery store, mall and local eatery will drop.
Currently gas prices are coming down as workers are forced to work from home. Without the commute traffic, the freeways and gas pumps are congestion free.
Travel
With people more accustomed to working in virtual teams, the need for face-to-face business trips should drop. On the flip side, leisure travel may increase as workers have more flexibility work schedules and the ability to work from anywhere, allowing the time needed to travel to interesting global destinations.
Congress has just passed a $2 trillion stimulus bill to save the airline and cruise industries.
Summary
Virtual experience and work combined with on-demand shopping and ordering are poised for huge growth. The resilience of the internet to support huge increases in traffic is impressive. With all the free time saved by watching movies at home, not having to fight commute traffic and having groceries and goods delivered to our homes, we might just have time to head to the beach for a change.
