The Effects of COVID-19 and Technology Pivots for the Future
The COVID-19 pandemic has fundamentally reshaped our lives in numerous ways. From cultural dynamics to international alliances, the world is transforming before our eyes. One of the broadest and most far-reaching areas is technology. The seemingly overnight transition from a bustling economy to social isolation caused many to drastically expand their reliance on tools that had only formed a token part of their lives previously.
Between April and March, global internet usage surged by 30 percent. Although the world was already becoming increasingly interconnected, this represented a tenfold increase in the pre-pandemic monthly growth rate. Every area of our lives increased in virtual connectivity, from ordering food to online birthday parties to dealing with various government agencies.
The Transformation of the Global Economy
Companies that already had an online presence thrived, while those that had formerly conducted business exclusively in-person scrambled to catch up. Between the end of January and the middle of April, the number of online transactions nearly doubled, and Amazon’s value had increased by an astonishing $24 billion. By the end of April, one-fifth of the S&P 500’s value was made up of five companies: Apple, Facebook, Amazon, Microsoft, and Alphabet (the parent company of Google).
The drastic increase in online entertainment nearly overwhelmed providers; Netflix had to dial down its resolution in certain areas to ensure streaming services could still be delivered. The strategy worked, and within a short period, Netflix became more valuable than ExxonMobil.
Many businesses went to a primarily or even exclusively “work from home” model in short order. Although many executives had reservations about this, the results were surprisingly positive. Employees reported that, by and large, they were more productive at home and were able to get the same amount of work done in less time. Major corporations signified that this would become a permanent change: Twitter, for example, announced that all of its employees could work from home permanently. Other businesses opened the doors for hybrid models and indicated that those who were interested could continue to work from home after the pandemic ended.
The effects weren’t all positive, however. The pandemic revealed the fragility of long, intricate global supply chains and how vulnerable “just in time” shipping models were to disruption. In some sectors, such as pharmaceuticals and medical supplies, the public discovered shocking realities, including how 97 percent of antibiotics used in the US were made in China. Since January, supply chains in numerous industries reshaped and shortened, indicating a shift from globalization to regionalization, and in some cases, nationalization. These effects are unlikely to be short-lived and will reshape the economy and even international relations in years to come.
Specific Industries, Unique Effects
Many sectors of the economy were fundamentally and permanently changed in the wake of broad social distancing measures. While many things will return to normal after a vaccine is developed, just as many will change, forming a new normal. The following industries experienced rapid and mostly irreversible evolution.
Prior to the pandemic, government regulations prohibited many forms of telehealth due to privacy and security concerns. Insurance companies refused to reimburse for anything other than in-person visits. The first question asked by doctors and patients was how they would interact for non-emergent, non-COVID treatment during a quarantine. By the end of March, the federal government responded with a relaxation of restrictions and permitting an increased online healthcare presence, forcing insurance companies to follow suit. The response was both immediate and almost inconceivable. Within the first two weeks, the medical industry saw a tenfold increase in telehealth appointments.
The FDA relaxed numerous regulations in an attempt to fast track vaccine development. Processes that had previously taken years were now accomplished in a matter of weeks. This environment of decreased regulatory requirements so far hasn’t resulted in any significant breaches or healthcare issues, and will likely continue through 2021 at the very least. After years of not having to comply with apparently unnecessary regulations, it will be virtually impossible for the government or the insurance industry to reinstate these. People will rightly question why these were needed in the first place and strongly resist any effort to return to the old, burdensome model.
If anything, the Internet of Things (IoT) and the advent of remote healthcare will likely expand the services offered. People who struggle with systemic health conditions may have advanced diagnostic equipment installed in their homes, allowing doctors not only to monitor but also to treat them remotely to some degree. When artificial intelligence (AI) is added to the mix, the possibility of a drastically simpler and more efficient healthcare system has a high likelihood of success.
The retail industry experienced a complete upheaval, turning traditional business models on their heads. Big box retailers like Walmart and Target had traditionally conducted the majority of their business in-store, with online purchases comprising a not insignificant minority. When COVID-19 hit, that dynamic reversed. The percentage of online sales skyrocketed, and in-person customer counts dropped substantially. These were the success stories.
Smaller retailers who had failed to establish an online presence before social distancing measures found themselves with few options. Many shut their doors permanently, with major brand names like J. Crew, Neiman Marcus, JCPenney, and Pier 1 Imports declaring bankruptcy. Although in-store shopping will undoubtedly experience a substantial resurgence once the pandemic ends, online shopping is here to stay. The FAA has given the go-ahead for drone-delivered package testing, indicating that rapid evolution in virtual retail will be an ongoing trend.
In the future, retail survivors will undoubtedly be characterized by a required combination of physical storefronts and an online presence. Businesses that cannot maintain at least a web-based outlet will quickly be ousted by those who can. There will likely be a temporary dynamic of the rich getting richer (e.g., Amazon, Walmart, Target) and the poor getting poorer (i.e., companies that had not previously established a web presence failing to catch up). However, like all economic scenarios preceding this one, a host of smaller, nimbler retailers will likely spring up post-pandemic to challenge the market-dominating forces of the big players.
The entertainment industry became more than just another business during the pandemic; it cemented its role as a community cornerstone. Shows like Tiger King: Murder, Mayhem, and Madness trended globally, spurring an onslaught of memes, gifs, and even social movements. Movie theaters shut their doors to crowds, many of them permanently. Sporting events were canceled en masse, accelerating the transition away from traditional cable packages toward online streaming.
Films that had been slated for theater release were distributed directly to audiences. In the wake of restrictive social distancing requirements, studios began to make adjustments to their primary approach, relying heavily on digital animation to replace scenes and backgrounds that would have formerly been filmed onsite or in-studio.
The music industry experienced an even stronger upheaval as concert tours and music festivals were canceled. Artists took to social media to connect directly with fans, only to discover they had competition from unlikely sources. The pandemic served as an equalizer: when everyone's products were essentially the same, the most entertaining won out. Videos on social media were viewed based on how entertaining they were, and viral productions were just as likely to be produced by an ordinary person in his or her bedroom as they were to be created by a celebrity. To what degree this level of democratization remains post-pandemic remains to be seen, but its fingerprints are likely to be seen for quite some time.
The Post-Pandemic World
COVID-19 has impacted not only our health but also our entire lives, from social interactions to economic realities. While some changes are only temporary in nature, many industries have been permanently altered by the experience, and how we interact with healthcare, retail, and entertainment going forward will firmly mark a generational shift.