COVID-19 and its impact on our everyday life are here to stay for the foreseeable future. With the exception of a handful of US states that refuse to comply with health protocols and continue to pay the price for doing so in citizens’ lives, the rest of us are learning to adapt to the global pandemic. Businesses have also been adapting, and some far better than people expected. If there is one thing that we should all be thankful for it’s that this didn’t happen 25 years ago.
After all, how much worse of a condition would the world be without the internet and computers in every home? Thanks to the current state of technology many businesses have been able to continue on with little to no interruption, while others have been forced to shutter.
For those of us heavily involved in the technology industry this is no! surprising. If anything, it’s the continuation of two big trends that have been changing the world for the las! 10-20 years and one new one that is just starting to have an impact. These technological trends don’t exist because of Covid, but they are certainly forcing businesses to get on board with these changes faster than they ever thought they needed to.
The first trend is the move to online retail. Amazon has gone from a website that sold books online 20 years ago to one of the most dominant companies in the world and has made its founder the richest man in the world. While Amazon and others have had a big impact on countless retail businesses, there were plenty that still did quite well catering to clients in bricks and mortar setting. COVID-19 not only made that impossible for a period of lime, but it has left these businesses that are no reopening with less pedestrian traffic, limits on the number of people in the stores, and the never-ending threat of another wave that could force them to close down again.
The only solution for those who want to keep doing business is to follow the trend: Start selling online as it’s the only way to reach your customers when they can’t come into your store. For proof that businesses are doing this, look no further than Ottawa based Shopify. Shopify is a company that makes it easy for businesses to sell their products and services online. They can provide you with everything from easy to build websites, online stores, payment processing, even outsource manufacturing and delivery. Basically, they are the anti-Amazon. You can sell your stuff on Amazon, but at the end of the day, it’s Amazon’s site, experience and customer. Shopify gives you everything you need to sell direct. Prior to COVID-19 Shopify was known by only a subset of Canadians, now they are becoming a household name and their stock price has made them the most valuable company in Canada.
The second trend is that of work from home using cloud technologies. Here is a simple truth that most businesses struggle with. In any business where you absolutely don’t physically have to be in the same place as the client, there is pretty much no need for an office. With the right technology, which these days doesn’t cost much as is easy to implement, calls to your work number can come into your computer or cell phone, meetings can be held via video chat, forms never need to be printed and can be e-signed, and as long as your company has had all your old files scanned, there isn’t a single reason that people need to be in the same place.
Prior to COVID many businesses were likely operating with an office because they were nervous about the concept or they felt that clients weren’t ready to deal with a business that wasn’t bricks and mortar. Post-COVID, every business owner and executive whose business is still operating well under these conditions is likely looking at their lease expenses and wondering why they are paying for so much space that they don’t need, especially given the cost of leasing in Toronto. It’s a safe bel that many businesses will either abandon their offices, have smaller spaces for only client meetings or work that requires in-person contact, have staff in the office only a few days a week and rotate them in the same space, or break up their staff into local and remote workers. Think this sounds like fiction? Shopify has already said they are going 100% virtual and Google and Facebook are officially giving their staff the option to work from home forever. The longer COVID lasts, the more businesses will come to the realization that commute times just so you can do the same work, with more distractions and pay expensive rent doesn’t make sense in the modem world.
The last trend who’s impacted is just starting to be felt is that of artificial intelligence. The adoption of work from home technologies is leading lots of businesses to look into how to more efficiently manage their businesses and what other tools are available to help with that. ln the last several year’s countless simple AI solutions have been coming to market that will automate workflows, eliminate routine administration, and the need for “paper pushing.” This will lead to a few end results: First of all, businesses will be able to be more efficient and accurate with routine work, but it will also mean that there will be less need for people in those administrative positions.
While businesses are fast-forwarding into the future out of need, one area of the economy that will be impacted by these trends in an interesting way is the real estate market. What happens to commercial real estate rental rates, and in turn property values, when their tenants start to opt for more work from home workspace and eliminate the need for multiple floors of back-office workers? What about the brick and mortar retailers that convert to online so successfully that they realize they can make the same money if they went online only? And what happens to residential rental rates, occupancy levels, and property values when people no longer have to move to the big city to work for a big company? We’re already starting to see the impact of this last reality as individuals move faster than businesses when it comes to what they pay in rent.
Rental rates are down double digits in Toronto, Vancouver, and San Francisco while NYC is seeing decade high vacancy rates.
One thing is for sure, the longer COVID goes on, the more likely businesses that exist after it will look very different that existed before it. As for the rest of us, it could have a massive impact on where and how we work. These trends were going to end up with us being in that reality sooner or later. Covid just hit the fast forward button.