[ 2020 ] Predictions of Change

[WalnutBaron]

One thing I find fascinating about the social impact of COVID-19 is how it has accelerated changes that were already in the works. I will first say that much of what I am sharing here is my own opinion--and I'm sure there will be many who disagree with some or perhaps all of what I am forecasting below:

• The shopping mall was a dinosaur. Now it's a dead one.
• The big anchor department stores that were on their last legs won't survive, with perhaps one or two exceptions (Nordstrom, for example, may make it because of their reputation for over-the-top service). We may have seen the last Macy's Thanksgiving Day Parade. Don't get me wrong: the parade will still be there, but it may be the Amazon Thanksgiving Day Parade by next November.
• The oil market is a complete mess--and not just because the wheels of industry are frozen or that people are not driving these days. One industry expert said, "The global oil industry is experiencing a shock like no other in its history. The fundamentals are horrifying."
• The collapse of the oil markets could have far-reaching geopolitical impacts, particularly on nations that have an overarching dependence on oil revenue. Think Russia, Venezuela, Saudi Arabia, Iran, Iraq, Mexico, even Norway. Not only is the entire world getting hit by the worldwide economic shutdown, but the countries that are oil-dependent will have a much, much longer recovery--if they recover at all.
• As we know, the markets react to the future as much as they do to the present, and the future for combustion engine-driven automobiles doesn't look good. Electric vehicles will accelerate in grabbing market share, which means Ford may not survive and Tesla is beautifully-positioned.
• Distance learning will accelerate and will not only threaten the massive infrastructure of colleges and universities, but will also begin to penetrate the public school system. Parents will learn that home schooling is actually possible and--though the teachers unions will resist--the public school districts will see fewer students returning when students are finally asked to come back to traditional classrooms. Even for parents who are not having a great time with the adjustment of helping their students with school projects at home now, they will be very reluctant to return their kids to school until they're absolutely convinced that it's safe.
• Several restaurant chains that were on the bubble before the virus outbreak will not return. Yahoo Finance reported that these chains may not survive to the end of 2020 or will be significantly pared down: Outback Steakhouse, Red Robin, Ruby Tuesday, TGIFriday's, Joe's Crab Shack, O'Charley's, and Marie Callendar's. And thousands of independent restaurants will fail simply because their guest counts--which are zero now--will very, very gradually return once shelter-in-place orders are lifted. And unlike the fast food and casual dining concepts that can adequately handle take-out orders, take out just doesn't work for the white tablecloth concepts, where dining in an elegant setting with the ambience of live music, for example, cannot be duplicated with even a very nice doggy bag.
• Long commutes to work may be over, giving rise to the growth of the suburbs and reversing the Millenial trend of living in the center of major cities. People are getting pretty good at working from home, companies are realizing that productive work can happen under such circumstances, and--according to an article in yesterday's Wall Street Journal--the traditional office as we know it is a thing of the past. Here's a snippet: "Here’s a scenario: The coronavirus goes on hiatus in late spring, and cases begin to drop. Social distancing eases. But many onetime office workers realize they have little interest in going back to the way things were. The age of the office as we know it is probably over, and the bell can’t be unrung. And there’s really no need to try. The traditional office was already fading into obsolescence. The coronavirus pandemic radically sped up the timeline. Give people the leeway and trust to schedule their work lives around their personal lives (not the other way around), and they will discover that they tend to be more productive, more driven and happier. Organizations will learn that they benefit tremendously from losing the limitations that come with traditional office settings."
• Related to the item above, I sure wouldn't want to be owning large--or even small--office buildings right now. And the manufacturers of office furniture, office supplies, or those restaurants that cater to captive customers in major office complexes are not going to do well, even when the virus threat has subsided.
• Youth sports are in for a big adjustment, especially traveling teams. Why risk your child's health just because he/she is talented athletically? Driving a child across town? Yes, possible. Putting that child on a crowded bus to travel hundreds of miles for a weekend tournament? Uh, no.
• Business travel will never be the same. Will it continue once the siege of the virus is lifted? Yes. But the frequency will not. Companies are learning that virtual meetings, while not a replacement for the face-to-face meetings, are about 80% as good for about 0.5% of the cost, both in terms of money and time. This means the big hotel chains are quaking in their boots right now. Their resorts and leisure properties will eventually recover--and will have a huge burst of business when all the millions who've been cooped up for months will be chomping at the bit to take vacations. But those business properties...ouch. There will be many closures of business hotels, especially in large cities.
• There will be fewer cruise lines once this is over, but those that survive will eventually thrive. Right now, cruise ships are the poster children for where not to be in the event of a pandemic. But it's amazing how short people's memories are and, though their memories will be longer after COVID-19 passes, the lure of relatively inexpensive travel, unlimited food, and myriad activities onboard will be too tempting to keep cruisers away forever.

Okay, there are some predictions. Challenge me and tell me why I'm wrong (which, in at least some cases, I undoubtedly will be).

 

[TravelTime]

@WalnutBaron This is a very interesting list. Thank you for compiling it and throwing it out there. I am a little more optimistic that over the long run, more will return to normal. I think that many businesses will not survive long enough to see us get back to normal. I think in the short run (next 2 years or so) many people (but not all) will still be very fearful to go out and do many of the things they used to do. It will be a long, slow recovery IMO. I think your list seems appropriate for the short term as well as I could see some predictions happening longer term too. I am not convinced that distance learning for elementary and high school kids will become the norm because parents have to work and many homes do not have internet access or have spotty access. I could see an increase in online classes for college students. I could see many of the retailers you mentioned going out of business permanently. I am not sure that companies will endorse the work-from-home for the majority of their employees, mainly because many companies value collaboration and some jobs can't be done as well from home. I suspect in a couple of years that travel will return to normal, along with business travel. Businesses already use video conferencing a lot, yet they still value in person meetings. I suspect a lot of people will have Zoom PTSD and just the thought of using Zoom will give them flashbacks LOL. I agree with your prediction for the cruise industry. One thing you did not mention is how the health care field will change. I wonder if telemedicine will become more the norm.

 

[rboesl]

That is an interesting list. But, I think it's missing a couple of items:

1. I think more people have gotten used to grocery shopping online and either having that delivered to the home of ready for pickup. It takes less time overall.
2. A result of #1 above is that more people will continue to cook at home. Especially as people continue working from home. This will result in a slower recovery of those restaurants that decided to close rather than do takeout. In fact I expect many of those restaurants that decided to close will remain closed.
3. A recent trend in construction in my area was to re-purpose shopping malls, or larger empty former factory buildings into basically closed communities of housing and small retail businesses to support that housing. I expect this to continue or increase as a strategy. You may see large scale businesses start to crop up that are providing many, many, small footprint stores to these types of communities.

 

[easyrider]

Mick Jagger, Paul McCarthy, Steven Tyler and other classic rock stars will be getting closer to 80 before concerts start back up in late 2021.

And then there is the second and third waves of covid - 19 that could be a problemo.

Really though, things are never the same. I'm use to it. Kind of reminds me of David Bowie Changes.

Bill

 

[Patri]

I think Telemedicine will grow in popularity.
Education on all levels will change, including colleges. Some parents will stick with homeschooling, but the anecdotes I see online is most will be thrilled to send their kids back. During the economic slowdown, kids from private schools may actually return to public because of the cost. Charter schools will recruit students heavily. But again, parents have to be home and involved, which is difficult with fulltime jobs. Traditional schooling is going to change dramatically. It will be interesting to see how.
People have learned how much they don't HAVE to spend or do or go, so our activity habits are not going to bounce back to pre-COVID levels quickly.
Social norms (hugging, shaking hands, etc.) will probably remain at a reduced level.

 

[R.J.C.]

One thing I find fascinating about the social impact of COVID-19 is how it has accelerated changes that were already in the works. I will first say that much of what I am sharing here is my own opinion--and I'm sure there will be many who disagree with some or perhaps all of what I am forecasting below:

• The shopping mall was a dinosaur. Now it's a dead one.
• The big anchor department stores that were on their last legs won't survive, with perhaps one or two exceptions (Nordstrom, for example, may make it because of their reputation for over-the-top service). We may have seen the last Macy's Thanksgiving Day Parade. Don't get me wrong: the parade will still be there, but it may be the Amazon Thanksgiving Day Parade by next November.
• The oil market is a complete mess--and not just because the wheels of industry are frozen or that people are not driving these days. One industry expert said, "The global oil industry is experiencing a shock like no other in its history. The fundamentals are horrifying."
• The collapse of the oil markets could have far-reaching geopolitical impacts, particularly on nations that have an overarching dependence on oil revenue. Think Russia, Venezuela, Saudi Arabia, Iran, Iraq, Mexico, even Norway. Not only is the entire world getting hit by the worldwide economic shutdown, but the countries that are oil-dependent will have a much, much longer recovery--if they recover at all.
• As we know, the markets react to the future as much as they do to the present, and the future for combustion engine-driven automobiles doesn't look good. Electric vehicles will accelerate in grabbing market share, which means Ford may not survive and Tesla is beautifully-positioned.
• Distance learning will accelerate and will not only threaten the massive infrastructure of colleges and universities, but will also begin to penetrate the public school system. Parents will learn that home schooling is actually possible and--though the teachers unions will resist--the public school districts will see fewer students returning when students are finally asked to come back to traditional classrooms. Even for parents who are not having a great time with the adjustment of helping their students with school projects at home now, they will be very reluctant to return their kids to school until they're absolutely convinced that it's safe.
• Several restaurant chains that were on the bubble before the virus outbreak will not return. Yahoo Finance reported that these chains may not survive to the end of 2020 or will be significantly pared down: Outback Steakhouse, Red Robin, Ruby Tuesday, TGIFriday's, Joe's Crab Shack, O'Charley's, and Marie Callendar's. And thousands of independent restaurants will fail simply because their guest counts--which are zero now--will very, very gradually return once shelter-in-place orders are lifted. And unlike the fast food and casual dining concepts that can adequately handle take-out orders, take out just doesn't work for the white tablecloth concepts, where dining in an elegant setting with the ambience of live music, for example, cannot be duplicated with even a very nice doggy bag.
• Long commutes to work may be over, giving rise to the growth of the suburbs and reversing the Millenial trend of living in the center of major cities. People are getting pretty good at working from home, companies are realizing that productive work can happen under such circumstances, and--according to an article in yesterday's Wall Street Journal--the traditional office as we know it is a thing of the past. Here's a snippet: "Here’s a scenario: The coronavirus goes on hiatus in late spring, and cases begin to drop. Social distancing eases. But many onetime office workers realize they have little interest in going back to the way things were. The age of the office as we know it is probably over, and the bell can’t be unrung. And there’s really no need to try. The traditional office was already fading into obsolescence. The coronavirus pandemic radically sped up the timeline. Give people the leeway and trust to schedule their work lives around their personal lives (not the other way around), and they will discover that they tend to be more productive, more driven and happier. Organizations will learn that they benefit tremendously from losing the limitations that come with traditional office settings."
• Related to the item above, I sure wouldn't want to be owning large--or even small--office buildings right now. And the manufacturers of office furniture, office supplies, or those restaurants that cater to captive customers in major office complexes are not going to do well, even when the virus threat has subsided.
• Youth sports are in for a big adjustment, especially traveling teams. Why risk your child's health just because he/she is talented athletically? Driving a child across town? Yes, possible. Putting that child on a crowded bus to travel hundreds of miles for a weekend tournament? Uh, no.
• Business travel will never be the same. Will it continue once the siege of the virus is lifted? Yes. But the frequency will not. Companies are learning that virtual meetings, while not a replacement for the face-to-face meetings, are about 80% as good for about 0.5% of the cost, both in terms of money and time. This means the big hotel chains are quaking in their boots right now. Their resorts and leisure properties will eventually recover--and will have a huge burst of business when all the millions who've been cooped up for months will be chomping at the bit to take vacations. But those business properties...ouch. There will be many closures of business hotels, especially in large cities.
• There will be fewer cruise lines once this is over, but those that survive will eventually thrive. Right now, cruise ships are the poster children for where not to be in the event of a pandemic. But it's amazing how short people's memories are and, though their memories will be longer after COVID-19 passes, the lure of relatively inexpensive travel, unlimited food, and myriad activities onboard will be too tempting to keep cruisers away forever.

Okay, there are some predictions. Challenge me and tell me why I'm wrong (which, in at least some cases, I undoubtedly will be).

Until an electric vehicle can go 500 miles on a charge and recharge back to full in 5 minutes the gas vehicle will still dominate.

 

[CalGalTraveler]

@WalnutBaron I think you nailed it. Great list.

Colleges and the cost of college should significantly decline if parents don't need to pay for room/board and the students live at home. The "college experience" will be limited to one or two years on campus for lab classes, the wealthy elite, and college sport teams. Remote college student meetups and clubs will emerge in metro areas as the new "college experience."

80% of in-person business conferences are dead. Zoom meetings will dominate. Companies will save on travel costs to survive.

I believe that public schools will resume for the reasons cited previously. But some AP classes for high school kids may be taught virtually in order to reduce cost and provide access.

Most trades will continue unless robots and drones can do more.

Agree that the parade will not be Macy's

 

[WalnutBaron]

Until an electric vehicle can go 500 miles on a charge and recharge back to full in 5 minutes the gas vehicle will still dominate.

If you're driving 500 miles one way for a vacation, I agree. But if you're using your car to commute to/from work, there is no hassle with plugging in overnight when you get home. It's nothing more complicated than charging your cell phone overnight.

 

[linsj]

If you're driving 500 miles one way for a vacation, I agree. But if you're using your car to commute to/from work, there is no hassle with plugging in overnight when you get home. It's nothing more complicated than charging your cell phone overnight.

This assumes you have a place to plug in. People who live in condos and apartments don't.

 

[Sapper]

@WalnutBaron This is an interesting list. Thank you for taking the time to put it together. I’ll respond to each under your point.

• The shopping mall was a dinosaur. Now it's a dead one.
  —-> I think the malls that were struggling to survive will be repurposed. I like the idea someone presented of small communities with a mix of small business and residential. The malls that have activities tied to them (like an ice skating rink) which draw people for other reasons will trend more upscale / luxury (Rolex vs Timex).
  
• The big anchor department stores that were on their last legs won't survive, with perhaps one or two exceptions (Nordstrom, for example, may make it because of their reputation for over-the-top service). We may have seen the last Macy's Thanksgiving Day Parade. Don't get me wrong: the parade will still be there, but it may be the Amazon Thanksgiving Day Parade by next November.
  —-> I think the massive footprint of these stores will be reduced significantly, but the stores will remain. If for no other reason than to be a site for returns, discount sales that would be difficult to do online (one off pair of shoes that were returned), and to attempt to remain relevant in the community.
  
• The oil market is a complete mess--and not just because the wheels of industry are frozen or that people are not driving these days. One industry expert said, "The global oil industry is experiencing a shock like no other in its history. The fundamentals are horrifying."
  —-> I owned a baby upstream oil company at one point, so my perspective is from there (as opposed to an energy trader). The hydrocarbon energy market is experiencing a triple whammy. 1) Russia vs Saudi race for the bottom dollar to secure long term energy contracts has pushed the supply side price lower. 2) The world has been becoming more energy efficient and moving demand from hydrocarbon sources to electric, reducing demand. 3) COVID Pandemic has temporarily destroyed short term demand. The fundamentals have shifted, I would not call them horrifying... but my keeping a roof over my family’s head is no longer dependent on the price of a barrel of oil. It’s a feast and famine business cycle, always has been. I just see it taking a very long time to recover this time.
  
• The collapse of the oil markets could have far-reaching geopolitical impacts, particularly on nations that have an overarching dependence on oil revenue. Think Russia, Venezuela, Saudi Arabia, Iran, Iraq, Mexico, even Norway. Not only is the entire world getting hit by the worldwide economic shutdown, but the countries that are oil-dependent will have a much, much longer recovery--if they recover at all.
  —-> Even Canada has a heavy dependence on oil. Venezuela was a hot mess even when oil prices were high, but the government heavily depended on PDVSA $$$ just to maintain a basic functionality. With that gone, I expect they are facing collapse before countries like Mexico which have diversified there economy. There will be some geopolitical issues between neighboring countries (boarder wars) in a fight for resources, particularly in the Middle East. The UAE has long been the financial center of the Middle East, they might want to think about buying some additional military hardware and making some very public donations to their neighbors.
  
• As we know, the markets react to the future as much as they do to the present, and the future for combustion engine-driven automobiles doesn't look good. Electric vehicles will accelerate in grabbing market share, which means Ford may not survive and Tesla is beautifully-positioned.
  —-> I’m going to disagree on this one. A big driver (pardon the pun) of electric vehicle sales is the cost of fuel. If gasoline drops in price, people will not want to have a heavy upfront capital expense for an electric vehicle. For example (a simple example, excluding interest on initial purchase, insurance, maintenance, taxes, additional equipment (charging station), or opportunity cost) gas car sales price is $50,000 / electric car sales price is $100,000. Electric fuel cost is $100 per month ($1200/yr), gasoline cost is $300 per month ($3600/yr); a fuel expense delta of $2400 per year. It would take more than 20 years to break even. Once you add back in the items I removed to make it a simple example, there is no comparison. Now, all that being said, I also believe this is going to force the electric vehicle manufacturers to compete and reduce their vehicle costs through efficiencies in design, engineering, and manufacturing. As they do this, the cost of hydrocarbons will be increasing and the math will change to the electric vehicles favor... but you are talking a decade out. Short term, Tesla will be hurting.
  
• Distance learning will accelerate and will not only threaten the massive infrastructure of colleges and universities, but will also begin to penetrate the public school system. Parents will learn that home schooling is actually possible and--though the teachers unions will resist--the public school districts will see fewer students returning when students are finally asked to come back to traditional classrooms. Even for parents who are not having a great time with the adjustment of helping their students with school projects at home now, they will be very reluctant to return their kids to school until they're absolutely convinced that it's safe.
  —-> Too many reasons this new distance learning will not hurt K-12 public schools. Cost, infrastructure, educational barriers for the teachers, socialization of children, but most of all... parents have to work and cannot stay home to teach their kids. The big Ivy League type universities will offer distance learning, but will be fine because the upper income families will spend the $$$$$$ to make sure their kiddos receive what they perceive as the best education possible. The city colleges and non-traditional schools will see the most dramatic changes, and the ones who make inroads now will probably be the winners in their segment. As an aside, I think this will, in the long term, cause further class segregation. You went to Harvard, your resume goes into the executive stack. You went to the city college, your resume goes into the middle management stack.
  
• Several restaurant chains that were on the bubble before the virus outbreak will not return. Yahoo Finance reported that these chains may not survive to the end of 2020 or will be significantly pared down: Outback Steakhouse, Red Robin, Ruby Tuesday, TGIFriday's, Joe's Crab Shack, O'Charley's, and Marie Callendar's. And thousands of independent restaurants will fail simply because their guest counts--which are zero now--will very, very gradually return once shelter-in-place orders are lifted. And unlike the fast food and casual dining concepts that can adequately handle take-out orders, take out just doesn't work for the white tablecloth concepts, where dining in an elegant setting with the ambience of live music, for example, cannot be duplicated with even a very nice doggy bag.
  —-> I think to survive, the stores that were borderline will shift their business model and store footprint to carry out / delivery only. However, stores from the same chain that were top performers will continue as full restaurant with seating. The overall reduction of full service restaurants will drive business to the remaining full service stores.
  
• Long commutes to work may be over, giving rise to the growth of the suburbs and reversing the Millenial trend of living in the center of major cities. People are getting pretty good at working from home, companies are realizing that productive work can happen under such circumstances, and--according to an article in yesterday's Wall Street Journal--the traditional office as we know it is a thing of the past. Here's a snippet: "Here’s a scenario: The coronavirus goes on hiatus in late spring, and cases begin to drop. Social distancing eases. But many onetime office workers realize they have little interest in going back to the way things were. The age of the office as we know it is probably over, and the bell can’t be unrung. And there’s really no need to try. The traditional office was already fading into obsolescence. The coronavirus pandemic radically sped up the timeline. Give people the leeway and trust to schedule their work lives around their personal lives (not the other way around), and they will discover that they tend to be more productive, more driven and happier. Organizations will learn that they benefit tremendously from losing the limitations that come with traditional office settings."
  —-> I have been a proponent of telecommuting for more than a decade. For the most part, I can only add to your reasons for telecommuting. However, there are some jobs which cannot telecommute... and if you can telecommute, then possibly a beancounter will decide someone in a cheaper labor market can do your job too... then someone decides the beancounter’s job can be outsourced as well. Haha.
  
• Related to the item above, I sure wouldn't want to be owning large--or even small--office buildings right now. And the manufacturers of office furniture, office supplies, or those restaurants that cater to captive customers in major office complexes are not going to do well, even when the virus threat has subsided.
  —-> Maybe. My guess is that the owners will do something similar to the dead mall scenario above and make it mixed use. Alternatively, if they want to move the building liability from their balance sheet, I can see them condo-ing the building... first floor commercial, second and third office, everything else residential. The former owner becomes the management company and has healthier balance sheets.
  
• Youth sports are in for a big adjustment, especially traveling teams. Why risk your child's health just because he/she is talented athletically? Driving a child across town? Yes, possible. Putting that child on a crowded bus to travel hundreds of miles for a weekend tournament? Uh, no.
  —-> People like to compete... maybe once there is a vaccine and a well vetted medical procedure to test and fight the virus all that will return.
  
• Business travel will never be the same. Will it continue once the siege of the virus is lifted? Yes. But the frequency will not. Companies are learning that virtual meetings, while not a replacement for the face-to-face meetings, are about 80% as good for about 0.5% of the cost, both in terms of money and time. This means the big hotel chains are quaking in their boots right now. Their resorts and leisure properties will eventually recover--and will have a huge burst of business when all the millions who've been cooped up for months will be chomping at the bit to take vacations. But those business properties...ouch. There will be many closures of business hotels, especially in large cities.
  —-> Honestly, I have no idea why this was not already happening. The company I currently work for has virtual meetings all day and night long. The simple ability for separate groups and individuals to effectively communicate and coordinate globally has put us light years ahead of the competition. It allows the company to efficiently implement changes, large and small, in minutes as opposed to months. When I was hired, I was shocked at the pace this company operates. For example, early on I suggested a design change of internal software that would allow better coordination with a third party global network. At my former company, the meetings to discuss this and analyze cost and outcomes would have taken months... not to mention the software modifications themselves. During this meeting, my new boss (who was in a different part of this state) said that’s a good idea, hold on, brought in other individuals from around the globe to quickly analyze and coordinate this idea. It was fully implemented in less than a week.
  
• There will be fewer cruise lines once this is over, but those that survive will eventually thrive. Right now, cruise ships are the poster children for where not to be in the event of a pandemic. But it's amazing how short people's memories are and, though their memories will be longer after COVID-19 passes, the lure of relatively inexpensive travel, unlimited food, and myriad activities onboard will be too tempting to keep cruisers away forever.
  —-> I tend to think of cruise ships as floating Petri dishes to begin with... so I’m not the target market. My guess is once a vetted vaccine and medical procedure for testing and combating the virus exist, you will see a return of the cruise ship market. That being said, my guess is it will be a younger target market with shorter memories, and who were less impacted by COVID, that the cruise lines pursue.
  

Okay, there are some predictions. Challenge me and tell me why I'm wrong (which, in at least some cases, I undoubtedly will be).

—-> I’m sure I will be incorrect on some of this as well. Time will tell. It will be fun to revisit this thread in three, five, ten years to see how this all plays out.

 

[Luvtoride]

[mention]WalnutBaron [/mention] very interesting topic and well thought out list. I’ll add 1 or 2 other industries/ activities to your list and the very thoughtful comments already made.

-Live Sports and entertainment- I think it will be a long time before 10’s of thousands of people will pack stadiums to watch sports. As a season ticket holder for hockey which I love, I just don’t think putting myself back in that position (I’m 62 years old) is worth the “thrill”. With sports television already so awesome I think more of us will be happy to watch from home. Increased viewership = ad revenue maintained or increased will mean athlete salaries may not be impacted as those revenues already pay most of the bills for major sports. Just the fact that baseball would consider playing its season in empty stadiums in FL and AZ indicates this is a viable alternative.

As for theater and concerts, I think this will be much more impacted! I don’t know what the alternative is (despite the Elton John hosted show with performers playing from their homes was great). I don’t see the numbers of people packing theaters that make these shows and concerts financially viable returning for a long time! The mess that ticket services face with the thousands of cancelled events already will likely put most of them out of business. Like with sports, as much as I enjoyed seeing The Rolling Stones at their farewell tour at Met Life stadium last summer, I just won’t put myself in that position in the future. It’s just not worth it!

-Delivery and pick up of EVERYTHING! Online ordering and shopping was already becoming the norm through Amazon and e commerce but the way many local businesses have adapted and offered these services has been remarkable. Unfortunately this will have an impact on the overall economy as fewer “in store/ restaurant workers” will be needed but consumers have adapted well to this type of service (vs self serve/ in person) economy. Entrepreneurs have and will continue to find ways to serve their customers remotely and those who figure it out best will thrive.
I don’t miss shopping in supermarkets and I’m happy to have the convenience of online ordering and pick up of groceries, drug store items, coffee (although this was already pretty well established with Dunkin’ Donuts and Starbucks apps).

It is an interesting subject to give thought to as well as a way to predict the winners and losers in the economy/ stock markets going forward.


Sent from my iPhone using Tapatalk

 

[Brett]

One thing I find fascinating about the social impact of COVID-19 is how it has accelerated changes that were already in the works. I will first say that much of what I am sharing here is my own opinion--and I'm sure there will be many who disagree with some or perhaps all of what I am forecasting below:

• The shopping mall was a dinosaur. Now it's a dead one.
• The big anchor department stores that were on their last legs won't survive, with perhaps one or two exceptions (Nordstrom, for example, may make it because of their reputation for over-the-top service). We may have seen the last Macy's Thanksgiving Day Parade. Don't get me wrong: the parade will still be there, but it may be the Amazon Thanksgiving Day Parade by next November.
• The oil market is a complete mess--and not just because the wheels of industry are frozen or that people are not driving these days. One industry expert said, "The global oil industry is experiencing a shock like no other in its history. The fundamentals are horrifying."
• The collapse of the oil markets could have far-reaching geopolitical impacts, particularly on nations that have an overarching dependence on oil revenue. Think Russia, Venezuela, Saudi Arabia, Iran, Iraq, Mexico, even Norway. Not only is the entire world getting hit by the worldwide economic shutdown, but the countries that are oil-dependent will have a much, much longer recovery--if they recover at all.
• As we know, the markets react to the future as much as they do to the present, and the future for combustion engine-driven automobiles doesn't look good. Electric vehicles will accelerate in grabbing market share, which means Ford may not survive and Tesla is beautifully-positioned.
• Distance learning will accelerate and will not only threaten the massive infrastructure of colleges and universities, but will also begin to penetrate the public school system. Parents will learn that home schooling is actually possible and--though the teachers unions will resist--the public school districts will see fewer students returning when students are finally asked to come back to traditional classrooms. Even for parents who are not having a great time with the adjustment of helping their students with school projects at home now, they will be very reluctant to return their kids to school until they're absolutely convinced that it's safe.
• Several restaurant chains that were on the bubble before the virus outbreak will not return. Yahoo Finance reported that these chains may not survive to the end of 2020 or will be significantly pared down: Outback Steakhouse, Red Robin, Ruby Tuesday, TGIFriday's, Joe's Crab Shack, O'Charley's, and Marie Callendar's. And thousands of independent restaurants will fail simply because their guest counts--which are zero now--will very, very gradually return once shelter-in-place orders are lifted. And unlike the fast food and casual dining concepts that can adequately handle take-out orders, take out just doesn't work for the white tablecloth concepts, where dining in an elegant setting with the ambience of live music, for example, cannot be duplicated with even a very nice doggy bag.
• Long commutes to work may be over, giving rise to the growth of the suburbs and reversing the Millenial trend of living in the center of major cities. People are getting pretty good at working from home, companies are realizing that productive work can happen under such circumstances, and--according to an article in yesterday's Wall Street Journal--the traditional office as we know it is a thing of the past. Here's a snippet: "Here’s a scenario: The coronavirus goes on hiatus in late spring, and cases begin to drop. Social distancing eases. But many onetime office workers realize they have little interest in going back to the way things were. The age of the office as we know it is probably over, and the bell can’t be unrung. And there’s really no need to try. The traditional office was already fading into obsolescence. The coronavirus pandemic radically sped up the timeline. Give people the leeway and trust to schedule their work lives around their personal lives (not the other way around), and they will discover that they tend to be more productive, more driven and happier. Organizations will learn that they benefit tremendously from losing the limitations that come with traditional office settings."
• Related to the item above, I sure wouldn't want to be owning large--or even small--office buildings right now. And the manufacturers of office furniture, office supplies, or those restaurants that cater to captive customers in major office complexes are not going to do well, even when the virus threat has subsided.
• Youth sports are in for a big adjustment, especially traveling teams. Why risk your child's health just because he/she is talented athletically? Driving a child across town? Yes, possible. Putting that child on a crowded bus to travel hundreds of miles for a weekend tournament? Uh, no.
• Business travel will never be the same. Will it continue once the siege of the virus is lifted? Yes. But the frequency will not. Companies are learning that virtual meetings, while not a replacement for the face-to-face meetings, are about 80% as good for about 0.5% of the cost, both in terms of money and time. This means the big hotel chains are quaking in their boots right now. Their resorts and leisure properties will eventually recover--and will have a huge burst of business when all the millions who've been cooped up for months will be chomping at the bit to take vacations. But those business properties...ouch. There will be many closures of business hotels, especially in large cities.
• There will be fewer cruise lines once this is over, but those that survive will eventually thrive. Right now, cruise ships are the poster children for where not to be in the event of a pandemic. But it's amazing how short people's memories are and, though their memories will be longer after COVID-19 passes, the lure of relatively inexpensive travel, unlimited food, and myriad activities onboard will be too tempting to keep cruisers away forever.

Okay, there are some predictions. Challenge me and tell me why I'm wrong (which, in at least some cases, I undoubtedly will be).

I agree with some trends --- businesses will certainly rethink travel and restaurants with big buffets could be in trouble

The annual traditional holiday Amazon Thanksgiving Day Parade ....

 

[WalnutBaron]

@WalnutBaron This is an interesting list. Thank you for taking the time to put it together. I’ll respond to each under your point.
—-> I’m sure I will be incorrect on some of this as well. Time will tell. It will be fun to revisit this thread in three, five, ten years to see how this all plays out.

Fascinating response, Sapper. Thanks for your thoughts on this. You're right: it would be great to come back years from now and look back to see what we got right and what we totally missed--as well as the huge changes wrought by the virus that we didn't even mention here. I love the story about your current employer and their ability to act with light speed to address a new idea and new opportunity. Your example addresses something that I only lightly brushed over in my comment about changes in business travel. We tend to focus on the cost advantages of virtual meetings, but there is also a huge cost savings in time. Under the old, traditional model, an idea like yours might have prompted a series of meetings, perhaps creating the need for subsequent face-to-face meetings with other team members, meaning several people would fly in to one central location. Not only would this cost tens of thousands in travel costs, but it would be weeks in the making. With your example, the opportunity got addressed at a tiny fraction of the cost of the traditional method--at light speed. Again I will say that Marriott and Hilton and the big airlines are looking at the current and future impacts of the virus and don't like what they see. Airlines' most profitable customers are the business customers, and I just think a meaningful percentage of those customers aren't coming back.

 

[WalnutBaron]

[mention]WalnutBaron [/mention] very interesting topic and well thought out list. I’ll add 1 or 2 other industries/ activities to your list and the very thoughtful comments already made.

-Live Sports and entertainment- I think it will be a long time before 10’s of thousands of people will pack stadiums to watch sports. As a season ticket holder for hockey which I love, I just don’t think putting myself back in that position (I’m 62 years old) is worth the “thrill”. With sports television already so awesome I think more of us will be happy to watch from home. Increased viewership = ad revenue maintained or increased will mean athlete salaries may not be impacted as those revenues already pay most of the bills for major sports. Just the fact that baseball would consider playing its season in empty stadiums in FL and AZ indicates this is a viable alternative.

As for theater and concerts, I think this will be much more impacted! I don’t know what the alternative is (despite the Elton John hosted show with performers playing from their homes was great). I don’t see the numbers of people packing theaters that make these shows and concerts financially viable returning for a long time! The mess that ticket services face with the thousands of cancelled events already will likely put most of them out of business. Like with sports, as much as I enjoyed seeing The Rolling Stones at their farewell tour at Met Life stadium last summer, I just won’t put myself in that position in the future. It’s just not worth it!

-Delivery and pick up of EVERYTHING! Online ordering and shopping was already becoming the norm through Amazon and e commerce but the way many local businesses have adapted and offered these services has been remarkable. Unfortunately this will have an impact on the overall economy as fewer “in store/ restaurant workers” will be needed but consumers have adapted well to this type of service (vs self serve/ in person) economy. Entrepreneurs have and will continue to find ways to serve their customers remotely and those who figure it out best will thrive.
I don’t miss shopping in supermarkets and I’m happy to have the convenience of online ordering and pick up of groceries, drug store items, coffee (although this was already pretty well established with Dunkin’ Donuts and Starbucks apps).

It is an interesting subject to give thought to as well as a way to predict the winners and losers in the economy/ stock markets going forward.


Sent from my iPhone using Tapatalk

Great additions, @Luvtoride . My brother-in-law lives in Manhattan, is a professional musician, and has made his living playing for Broadway shows and in orchestras at venues like the Lincoln Center, Radio City Music Hall, and Carnegie Hall. He has voiced the same concern to me: how long will it be before people willingly shoehorn themselves into small seats to see a theater or musical production? It's going to take a long time, and a very large number of the production companies and theater companies on Broadway in New York, the West End in London, and many other cities will not only suffer, but won't survive.

 

[Big Matt]

I agree with a lot of your list, but have to weigh in on a couple of items that are related. I agree with the other poster that until electric cars can go more than 500 miles they will not be widely sold. The problem is that we don't have the infrastructure to handle the key problem that is: it takes a long time to charge the car battery. I don't think people are going to buy a gas powered car just to use it for longer trips. With gas prices low, there isn't a real good cost play on electric vehicles. Second, you say that more people are going to work from home. I agree with that. This is going to mean less driving, period. I could imagine that new types of vehicles may emerge to bop around the neighborhood (maybe safer golf carts), or maybe the use of electric scooters, bikes, etc. makes a big push in the suburbs as they have in urban areas.

I also believe strongly that once a car manufacturer finds a better alternative fuel or can create quickly replaceable batteries (think about a model where you can exchange them like propane tanks), Tesla will be toast. I'm very concerned about their manufacturing quality.

Thank you for putting so much time into your post. It was very interesting and thought provoking.

 

[CalGalTraveler]

• As we know, the markets react to the future as much as they do to the present, and the future for combustion engine-driven automobiles doesn't look good. Electric vehicles will accelerate in grabbing market share, which means Ford may not survive and Tesla is beautifully-positioned.
  —-> I’m going to disagree on this one. A big driver (pardon the pun) of electric vehicle sales is the cost of fuel. If gasoline drops in price, people will not want to have a heavy upfront capital expense for an electric vehicle. For example (a simple example, excluding interest on initial purchase, insurance, maintenance, taxes, additional equipment (charging station), or opportunity cost) gas car sales price is $50,000 / electric car sales price is $100,000. Electric fuel cost is $100 per month ($1200/yr), gasoline cost is $300 per month ($3600/yr); a fuel expense delta of $2400 per year. It would take more than 20 years to break even. Once you add back in the items I removed to make it a simple example, there is no comparison. Now, all that being said, I also believe this is going to force the electric vehicle manufacturers to compete and reduce their vehicle costs through efficiencies in design, engineering, and manufacturing. As they do this, the cost of hydrocarbons will be increasing and the math will change to the electric vehicles favor... but you are talking a decade out. Short term, Tesla will be hurting.
• 
  
• 
  
• 
  —-> I have been a proponent of telecommuting for more than a decade. For the most part, I can only add to your reasons for telecommuting. However, there are some jobs which cannot telecommute... and if you can telecommute, then possibly a beancounter will decide someone in a cheaper labor market can do your job too... then someone decides the beancounter’s job can be outsourced as well. Haha.
• Youth sports are in for a big adjustment, especially traveling teams. Why risk your child's health just because he/she is talented athletically? Driving a child across town? Yes, possible. Putting that child on a crowded bus to travel hundreds of miles for a weekend tournament? Uh, no.
  —-> People like to compete... maybe once there is a vaccine and a well vetted medical procedure to test and fight the virus all that will return.

Great comments @Sapper. A few thoughts:

1) Electric autos: Your thoughts relative to the price of gas are interesting however your model assumes consumers pay for electricity. My DH gets free charging at work (3 hours fast charge). This is common at many workplaces in Calif. Plus we already have solar panels (sunk cost) installed on our home = free charging. Maintenance on electric is lower so there still is a cost advantage to electric if infrastructure is in place. The price of the auto will continue to decline as more auto manufacturers have committed to retooling their plants.

2) +1 Scary thought on telecommuting. The next wave may be global outsourcing of professional jobs!

3) +1 Sports will return. Perhaps the hardest part of SIP is that there are no sports to watch. People will still want their kids to get those athletic scholarships too. The 1920s Great Gatsby parties returned after 1918 social pandemic subsided.

 

[Sapper]

Fascinating response, Sapper. Thanks for your thoughts on this. You're right: it would be great to come back years from now and look back to see what we got right and what we totally missed--as well as the huge changes wrought by the virus that we didn't even mention here. I love the story about your current employer and their ability to act with light speed to address a new idea and new opportunity. Your example addresses something that I only lightly brushed over in my comment about changes in business travel. We tend to focus on the cost advantages of virtual meetings, but there is also a huge cost savings in time. Under the old, traditional model, an idea like yours might have prompted a series of meetings, perhaps creating the need for subsequent face-to-face meetings with other team members, meaning several people would fly in to one central location. Not only would this cost tens of thousands in travel costs, but it would be weeks in the making. With your example, the opportunity got addressed almost instantaneously--all done at a tiny fraction of the cost of the traditional method at light speed. Again I will say that Marriott and Hilton and the big airlines are looking at the current and future impacts of the virus and don't like what they see. Airlines' most profitable customers are the business customers, and I just think a meaningful percentage of those customers aren't coming back.

Welcome. It’s an interesting topic, I’m glad you started the thread.

One downside of being as interconnected as the new company is, there is no down time. Instead of working eight hours a day, I am doing twelve most days. This is because at 8AM local, the folks in Europe are winding down their day and need to discuss things. Then there is the normal “work day” here in the US, Canada, Central and South America. In the evening here, it is morning in Asia and we are communicating with the folks over there. Thank goodness we don’t really have things happening over in India or the Middle East, so there is a slow down in middle of the night and I can sleep. However, my phone makes a “clunk” sound when someone messages me in middle of the night with something they need a response to... irritating my wife and waking up the baby. We recently hired three new folks to deal with the overnight stuff so my team and I can get some sleep. At the same time, when it is the middle of the day here in the US, and night time elsewhere, I am messaging those folks when I need a response quickly, thus disturbing them in the same way. We have all become much more conscious about prioritizing demands on others and trying not to disturb folks when it is their down time; in a business that moves at such a rapid pace, delaying hours for someone to wake up can cause systemic problems as the delay has a cascade effect delaying other operations down the line.

 

[CalGalTraveler]

One more trend:

Some manufacturing will return to the U.S. There will be a push to repatriate (or at least move to Mexico/other low cost on same time zone), manufacturing for critical items for health and national security such as PPE and basic industry. The government may need to subsidize cost to create even footing for businesses. Companies will continue to seek robotic solutions instead of hiring.

What is scary is that 3M was put under the defense production act for PPE only to find out that their N95 masks are made in Chinese factories.

If there is a silver lining to Covid-19. This was a wake-up call.

 

[Ironwood]

Pro sports will change significantly if they can't fill stadiums again!

 

[VacationForever]

Pro sports will change significantly if they can't fill stadiums again!

... and maybe they will bring down the ridiculous pay of professional players.

 

[Sapper]

Great comments @Sapper. A few thoughts:

1) Electric autos: Your thoughts relative to the price of gas are interesting however your model assumes consumers pay for electricity. My DH gets free charging at work (3 hours fast charge). This is common at many workplaces in Calif. Plus we already have have solar panels (sunk cost) installed on our home = free charging. Maintenance on electric is lower so there still is a cost advantage to electric if infrastructure is in place. The price of the auto will continue to decline as more auto manufacturers have committed to retooling their plants.

2) +1 Scary thought on telecommuting. The next wave may be global outsourcing of professional jobs!

3) +1 Sports will return. Perhaps the hardest part of SIP is that there are no sports to watch. People will still want their kids to get those athletic scholarships too. The 1920s Great Gatsby parties returned after 1918 social pandemic subsided.

Thanks.

1) ok, so make the electric vehicle fuel cost zero and keep the gasoline cost at $3600. Assuming the same $50k delta, the time to break even is still just shy of 14 years. At some point the cost ownership will come to equilibrium and electric vehicles will win, but I think that’s a decade out.

2) It may be. That being said, with my current company I am seeing my value less on what I initially brought to the table (education, licenses, experience) and more of what I bring to the table on a daily basis and understanding the intricacies of how the company functions that takes a new hire months to get up to speed, and months in this company is a long time. Could they outsource my job? Yes, absolutely. It would just be uncomfortable for them at this point.

3) We had also just finished a world war that devastated economies in Europe, allowing for rapid economic expansion in the US.... so folks had money, and a reason to be happy to be alive. A good reason to party. As for the sports stuff, I think humans at their core love competition, sports will return... the viewing experience may be different, but it’ll all come back.

 

[PigsDad]

I'll probably get some flak for this, but I think there is another angle to look at what will come back as before and what will be much slower or never come back: age. I tend to see that older people are the ones who are afraid of getting back to socializing or being in larger crowds, whereas younger people are less afraid of the disease (and rightfully so).

Activities that are now popular for the older generation will be much slower to make a come back. Think symphonies, opera, plays, cruises, travel tours, etc. And I think there will be a shift to younger people attending live sporting events -- there will still be a big demand, more driven by younger people and older people will choose to give up those season tickets. Youth sports -- since that is more associated with younger families, that will come back in force.

The large gathering activities more popular with the younger generation will recover much quicker: popular music concerts, theme parks, festivals and fairs, skiing, traveling to beaches and family-friendly locations, etc. I also think restaurants that market to the younger people will be quick to recover (coffee shops, fast food, health-inspired and new cuisine, etc.). The fine dining places, along with the more traditional "old people" places such as Denny's, Perkins, and especially any buffet places will find it harder to survive.

Schools -- younger families have to work, so their kids will still need to go to school. As for colleges, there may be some shift toward online, but that would be more driven by those who need a lower cost option (which will be many more in the next few years as we head into a deep recession), but for those who can afford it, many will want the college experience that simply cannot be reproduced with distance learning.

Kurt

 

[CalGalTraveler]

Thanks.

1) ok, so make the electric vehicle fuel cost zero and keep the gasoline cost at $3600. Assuming the same $50k delta, the time to break even is still just shy of 14 years. At some point the cost ownership will come to equilibrium and electric vehicles will win, but I think that’s a decade out.

Compared to a Tesla, yes, but that's more like a Mercedes or Porsche which runs in the same range. But even the low end Tesla is $35,000. If you buy an eGolf or Chevy Bolt, they cost $25 - 40k. In fact we could have purchased a new 2019 eGolf for only $12,000 after government rebates.

 

[Old Hickory]

The greedy corporations will find a vaccine and/or medicines for coronaviruses and it will become just another annual virus like the annual flu. We'll get accustomed to 100,000s of deaths a year like we do today, and our lives will change little. Oh, we may play this social distancing game for a few more months but then we'll climb back into our daily ho-hum routines and the past few months will be a distance memory. The flyover states are going to lead the reopening of the U.S. and I see July 4th as the date that we're mostly open. Play ball!

Today I got my reorder notification for SEC Football Championship tickets. No way we're going to sit out the SEC football season.

 

[WalnutBaron]

Thanks.

1) ok, so make the electric vehicle fuel cost zero and keep the gasoline cost at $3600. Assuming the same $50k delta, the time to break even is still just shy of 14 years. At some point the cost ownership will come to equilibrium and electric vehicles will win, but I think that’s a decade out.

@Sapper : Your payback model is based on the assumption that an electric vehicle's initial cost is $100,000. A Tesla Model 3 will set you back between $40-50,000. And a Chevy Volt can be had for well under $40,000.