From the 14th to the 17th centuries, the European Renaissance took hold and provided societal and artistic changes, ending some of the darkest and less enlightened periods in world history. The end of Covid (or hopefully the worst of it) seems near.
So now what? Will the past two years spring the world into a new renaissance? The world has certainly changed. How will it morph moving forward? Housing, travel, healthcare, employment and retail (among other industries) have been slammed in various ways. How do we get back to Normal? Or better yet, how do we improve society to benefit from the changes that Covid has wrought?
Life After Covid
Housing
Let’s start with Housing. Prices are ridiculous. According to RamseySolutions.com, inventory or the total number of unsold houses was down 16% in November, 2021 compared to November 2020. Fewer sellers are listing their houses right now and more people are looking to buy. Mortgage interest rates are rising. Many home buyers have slammed on the brakes and for good reason. Inflation and demand have created a peak and many people who want to buy are waiting and watching.
According to Zillow, it will probably take years to shake out. Zillow’s latest forecast estimates “home prices are set to spike 16.4% between December 2021 and December 2022.” Many buyers since Covid hit were investors who saw opportunity as supply began increasing as people were not going to move in the early days of Covid. Since jobs were lost or waylaid as companies were forced to shut down, demand plummeted. Home prices stalled too and smart investors moved in, acquiring homes to flip when the market returns.
People need houses, people need to move for whatever reasons, so the market will open up again. But home buyers will be a lot smarter and even more cautious and selective than they were in the past. Banks and mortgage companies will be eager to loan money and many consumers have been able to save money for larger down payments. So they won’t be borrowing or mortgaging as much as they did in the past. That will make banks anxious if the average amount they loan out decreases: after all, to banks, it’s all about their interest income.
Will consumers gain leverage? As home prices peak, smart consumers will wait to see where the best opportunities are. Investors will begin to lose interest as housing prices stabilize.
When Trump raised the Standard Deduction on income taxes, it largely eliminated the tax write-off on mortgage interest we all were paying. So it made it easier financially on homeowners. But once that happened, renting a house became a lot more attractive since everyone was getting a huge deduction on their income taxes, even if they did not have mortgage interest to write off. And for renters, property taxes were always just part of the rent. Result: there was a lot less demand to own a house when you could just rent one for about the same monthly cost. And you could walk away without worrying about selling such a huge investment.
Watch for the turnaround. Prices will not return to 2020 levels. The growth in house prices is slowing but is not likely to reverse. In Bloomburg Opinion (2/9/22), “the median single-family house price jumped 14% to $357,000 from a year earlier,” according to Redfin. “The median-priced house leaped from 4.2 times median household income in the first quarter of 2019 to 5.6 times median in the fourth quarter of 2021.”
Perhaps a really smart millennial entrepreneur will develop an app whereby millennials, home buyers and sellers can bypass the traditional real estate market forces and sign up users to sell and buy homes directly to its members at “fair market” prices. Something is going to break the system – the internet has already disrupted so many other industries.
Travel
My wife and I had been planning on a visit to Italy to scout out properties in Sicily for a second home. Then Covid hit and our plans went on the back burner. Now there are too many unknowns. New restrictions could be established or new virus strains could be detected making travel dangerous or difficult. I don’t know if this dream will ever be realized or morph into something different.
We just returned from a 4,000 mile journey from Pennsylvania to Florida and back, zig zagging around the Southeast with many side trips. Between here and there, there were few restrictions as things have eased up everywhere and most states relax mask rules. The restaurants we visited were busy (good sign) but the hotels were not (great for us, bad for the hotel owners). Yet in winter paradise, such as Sarasota, FL, we noticed hotel rates were double last year’s rates.
We noticed that at many tourist sites and state or federal parks we visited, huge expansive parking lots were dotted with only a few cars. From the Everglades National Park to various state parks to Maclay House Botanical Gardens to the Jimmy Carter Presidential Library to Luray Caverns, VA and others, our car was always easy to find. That’s because we were often parked in the front row since we were one of the few visiting. In many of these tourist destinations, many features or add-ons were not provided due to lack of staffing. Instead, most tours were “self-guided.”
Everything seems to be cautiously opening up. But when will things really open up? It’s complicated as it relates to the “Great Resignation”: many of these parks and visitor sites require guides. But these are service jobs and tourist destinations require service employees, which have been among the hardest hit in terms of job loss.
On the other hand, I did come across a new site, Wander.com which provides members a chance to buy in to a model where they can stay at various houses in spectacular locations across the U.S. offering beautiful views and luxury amenities – including a Tesla in the garage. Outside of a $100 Member fee, I did not see anything yet about costs. It is early as it is still in start-up phase. Will this be the new concept of travel or will it be just another time-share?
I’ve also noticed I keep receiving a lot more ads related to train travel. From the Amtrak Cascades to the Rocky Mountaineer to Amtrak’s Maple Leaf Train to the Coast Starlight to the Pacific Surfliner and a whole lot more, the tourist train industry has made a big comeback. People are still wary of jet travel but trains have recaptured a bit of their romance.
According to Expedia, 37% of Americans are planning domestic and international vacations for 2022. People are looking for more splash and cultural/immersion type adventures. According to Contiki, younger travelers are bypassing the local beach to instead venture far and wide to places like the Maldives, Thailand, Ireland and more. Many have sat home for two years and have saved and now want a larger experience. Some include the trip of a lifetime: African safaris, world cruises, climbing Kilimanjaro, according to TravelPulse.com.
Many are joining up with their friends as they are making up for lost time from the isolation of Covid. Make it a party! This ties in with an idea I had been mulling: gather all my old friends and their families and reserving a resort in a far-off, beautiful and exotic location.
And travel advisors and agents will be making a big comeback as travelers seek out guidance on safety and Covid protocols as well as great deals.
Healthcare
How has Covid affected the healthcare industry? According to Philips.com (Ten Healthcare Technology Trends for 2022), there will be “improved access to care through virtual collaboration between providers” with most of that occurring as a result of virtual care (64% of HC leaders report they are currently heavily investing in this area) and improved innovations in medical imaging using more satellite locations which improves access to care. “With the rise of AI in healthcare, we now have the tools to automate such tasks to relieve the burden on imaging technologists.” AI assisted medicine will grow across other medical platforms to allow doctors and HC professionals to diagnose more people with quicker diagnoses.
60 Minutes reported on its February 6 broadcast about the growing crisis in nursing. Many hospitals have lost large portions of their nursing staffs due to Covid. Call it burnout, overwork or just day-to-day exhaustion, hospitals are losing experienced nurses and the time it takes to replace them can take four to five years in training of their replacement hires. That does not bode well for the next five years. Will we see more nursing skills transition to robotic nurses, at least in terms of the more mundane nursing tasks?
According to Lifestyle News, telehealth “is especially beneficial for patients who are injured…or located in remote areas. With telemedicine, quick diagnosis, real-time patient insights…and treatment without even paying a visit to the doctor have become possible and easy.” Telehealth benefits patients who are especially concerned about being compromised or infected with Covid at a hospital or doctor’s office.
Employment
According to the Harvard Business Review (11 Trends that will Shape Work in 2022 and Beyond, 1/13/22), “the level of volatility will only increase in 2022” in the workplace. They expect employee turnover to increase for two reasons. First, since more employees work remotely or hybrid, they have fewer friends at work and fewer emotional connections to the company. Second, employees looking for a new job have a wider net to use since they can open up their geographic radius to almost anywhere if they are working from home.
The Bureau of Labor Statistics reports that the average hourly earnings were up 4.8% from last year. And LinkedIn’s Chief Economist, Karin Kimbrough says, “In March 2020, only 1 in 67 paid U.S. jobs on LinkedIn offered remote work, but now that number has exploded and is up to nearly 1 in 6 jobs.
Also, Kimbrough cites the “Great Reshuffle” as millions of Americans have become entrepreneurs over the past year and a half as laid-off employees took the plunge to become freelancers and business owners using the skills they had acquired. Company formation surged “36% year over year in 2020” and the number of woman-founded companies on LinkedIn grew 27% while the number of male-founded companies grew by only 17% during the same period.
Robert Half Talent Solutions identifies the five top industries having a talent shortage:
- Administrative and support services
- Information technology
- Business and professional services
- Advertising, media and publishing
- Finance and insurance
RHTS also reveals the reasons workers are looking for a new job: (% who cited these reasons)
54% Higher salary
38% Better benefits and perks
34% Ability to work remotely long-term
30% More opportunity to advance
28% Greater appreciation
The Bureau of Labor Statistics reports a near-record 4.3 million Americans quit their jobs in December, 2021 but the job openings for the same period are a staggering 10.9 million.
So as we are witnessing, the Great Resignation is transitioning to the Great Reshuffling. Employees have not had an opportunity like the new job market to totally rebrand themselves. Openings and opportunities abound. Employees and job seekers have more leverage than they have ever had. Wages and salaries are up to attract talented prospects. And working remotely allows job seekers to expand their search to a much wider market of prospective companies.
And entrepreneurial types, with the money and the skills, will start up new, nimble ventures. These will match specific skill sets with a new type of worker. Workers who used to be known as employees – but who are evolving to become contractors. And as most contractors, they will be hired for specific jobs and assignments – then be free to offer their skills to another entrepreneur needing those skills for a new client.
Retail
With all these opportunities for more employment, retail opportunities at first glance look a whole lot different. Last May, my wife and I were travelling and stopped at a hotel in GA. Across the street was a shopping center and not a single car was in the parking lot. So we looked further to discover not a single store had survived Covid. Wow. We had seen plenty of restaurants and stores close but this was the first time I had noticed an entire mall – an entire town – so decimated. And this shopping center was situated on I95, right at the exit. Not exactly a bad location. Sure, not as many people were travelling down I95 the past two years, but the townspeople, the overnight visitors and many other travelers could not offset the lost volume of business.
We have seen the demise of many stores, many chains. I remember a 60 Minutes report almost two years ago where the news segment featured a young woman talking about her innovative store that had just opened before Covid hit and how it was growing and seemed to be on the road to success. Once Covid forced people to stay home and shuttered non-essential businesses, her business was wiped out. And so was all her investment she had put into it. Multiply that by the thousands of retailers across the nation and you have a national tragedy, not just a personal one.
Normally, we hear of the high failure rate among new stores, restaurants and service establishments. Now we are talking about failure rate among all locations, not just new ones. And even though most stores have been able to reopen, according to the National Retail Federation, the two largest factors include the ongoing labor shortage and supply chain issues such as the bottleneck at major shipping ports.
How bad has it been? According to Forbes.com, 7/6/2020:
# stores closed
2017 8,000
2018 5,700
2019 9,879
2020 15,542
Data is not yet available for 2021. However, as the National Retail Federations reminds us, there were twice as many store openings than closings in 2021. Headquartered retailers (including chains) among NRF members reported 8,100 new store openings “more than double the number of closings…which totaled roughly 3,950. It is important to note that many of the store openings in 2021 were “skewed toward the dollar store, discount, off-price and warehouse club spaces. Combined, these sectors accounted for 47 percent of all opening announcements last year.”
So what is happening to swing the retail tide in the right direction? 83% of retailers “are investing most heavily in employee recruitment and retention,” according to Deloitte (2022 Retail Industry Outlook). And as FinanceOnline’s 10 Future Retail Trends and Forecasts for 2022/2023 reports, “global retail ecommerce sales grew by 27.6% in 2020 compared to the previous year.” Retailers are responding in part by investing in AI aimed at mining the data from their customers’ smart phones. Retailers “use big data and AI insight to personalize the products for the individual customer.”
“AI adoption can save retailers $340 billion annually due to a more efficient supply chain,” according to Capgemini Worldwide.
More retailers are mining their customer data to incorporate more customer experiences into their retail environments. Stores are investing in more areas of their stores where customers can try out their products, providing an advantage over ecommerce. McKinsey reports that Ikea and Nike are testing out concept stores that provide customers a more engrossing experience in the purchase of their items; “Millennials are the driving force behind these changes.”
Mood Media reports that “45% of consumers admit to missing touching and trying on products.” And Square reports that “35% of consumers are interested in seeing virtual reality incorporated into their shopping experiences.”
88% of customers surveyed by PriceWaterhouseCooper say they would “pay more for same-day or one-day delivery” from their local retailers. Expect to see more retailers stepping up to combat the advances of Amazon on their business.
The store within a store concept is heating up. According to Raconteur.net, The 2022 Trends Every Retail Leader Needs to Know About, Target in 2021 began testing “micro-shops from Disney, Apple and Ulta Beauty into many of its stores.” This trend will be a large part of any department store revival allowing stores to create and host brand colloborations and build more loyalty as shoppers are given reasons to return.
Finally, Statista.com provides this retail sales picture and forecast in the U.S.:
| Year | Retail Sales | Ecommerce Sales | % of Retail |
| (in trillions) | (in billions) | Sales | |
| 2019 | 4.85 | 517 | 10.7 |
| 2020 | 4.85 | 644 | 13.3 |
| 2021 | 5.15 | 768 | 14.9 |
| 2022 | 5.23 | 875 | 16.7 |
| 2023 | 5.27 | 1,002 | 19.0 |
| 2024 | 5.31 | 1,151 | 21.7 |
| 2025 | 5.35 | 1,329 | 24.8 |
What we see from these numbers and estimates above is Ecommerce growing steadily and taking up a larger piece of the total retail sales pie; projections of 24.8% of total retail sales for 2025 versus 10.7% of sales only a few years ago. That is disruption.
Although we have seen many store closures over the past two years, increasingly we will see continued adaptation as brick and mortar stores and chains fight back or develop deeper online partnerships to provide a shared experience. Kohl’s and Amazon are just one example of this trend.
Conclusion
This is a huge topic and I don’t pretend to cover every detail in these five industries. This is just a snapshot of how we are emerging from the crisis of the past two years. There is so much more to the story, so much more research that needs to be conducted and analyzed, so many more forecasts that need to be completed. Suffice it to say, I have tried to shed some light on how the end of Covid might look. Instead of doomsday, these industries are in the middle of a revolution and revivalism. One day, the post-Covid era will be considered a renaissance.
Chris Ebel
2/16/22
Photo credit: @cempey