The coronavirus pandemic has forced a reckoning of the business world. Good times over the past decade provided cover for companies to play loose. Now their debt is coming due. Even companies with solid balance sheets are fretting. They eye deconfinement warily hoping that revenue will scale back up as fast as it was lost. Few could successfully withstand a second wave of the pandemic and another couple of months of lockdown.
Consumer demand is suppressed by lockdown in a vicious cycle. Numerous sectors are closed. People can’t spend money even if they want to. Because those sectors are closed or running on limited capacity, millions are on unemployment or have lost their jobs. This means they are not earning as much (or anything at all) and so there is less money to go around. With such a large portion tightening their purse strings, the recovery is going to be very slow. The slow recovery dictates a gradual reopening and subdued hiring.
Then there is consumer confidence. Having seen how quickly an economy can tank, consumers will probably be less likely to spend and more likely to save in the post-coronavirus era. That is, if they have jobs again.
Much of the former economy was based on physical spaces that will not pass in a post-coronavirus, pre-vaccine world. Companies are already having to figure out how to produce the same goods and services with strict sanitary measures in place. There is only so much space though. Social distancing requirements will slow hiring for the next few years until a vaccine is found.
Consumers still exist, of course, and so marketers want to reach them. My LinkedIn feed consists of invitation after invitation to webinars from experts on all sorts of topics to discuss what’s happening and what comes next, which brands are “authentic” during the crisis, which companies are innovative and what I can do to take advantage of the situation. While this is probably helpful to certain people, no one has any idea of what comes next, and many of these webinars are thinly-veiled sales pitches for agencies that have fallen on hard times and are becoming desperate for a deal.
B2B businesses are suffering too as B2C companies trim spending to stay afloat (hence the deluge of invitations – I’ve never unsubscribed from so many newsletters in my life). Consultancies and agencies are in particularly dire conditions. The tap of new projects has gone dry. It seems as if everyone and their neighbor is jostling to give advice for how to navigate the coronavirus storm and how to reopen once that happens. There will be many players in need of help, that is certain, and a lot of the consultancies out there have smart people, but none of them have ever seen anything like this.
The longer this goes on the more people will be added to the unemployed labor pool. Fewer and fewer companies will be hiring (unless you want to be a cog in Amazon’s warehouses). Those that do will justify lower salaries. But rents won’t be lower and neither will costs of goods so workers will face the brunt of the economic fallout: their purchasing power will be crippled no matter what happens. If coronavirus is anything like the recession a decade ago, people will be even more underpaid and overworked for the foreseeable and unforeseeable future.
That’s shitty, but not everything stinks. Coronavirus is an infection of innovation. Companies are transforming at breakneck speed and in ways that people thought impossible 52 days ago. The problems posed by the virus are being overcome by solutions that would have been batted around endlessly in boardrooms before. Now individuals are taking initiative and chains of command are getting out of the way. Coronavirus provides the necessity to try something new as well as cover if it doesn’t work. It also breaks old tenets and habits that were just “they way we do things around here.”
New solutions will forever change how we will live. Technology will play a big part in that. It will necessarily equate to gains in efficiencies, having a negative impact on workforces in the short term but it will create fabulous new opportunities for businesses moving forward. Because at each major moment of disruption in the past, the economy has found a new equilibrium. The cotton gin risked mass unemployment before those agricultural workers were reutilized elsewhere as the Industrial Revolution created the manufacturing sector. The World Wars accelerated technological change and shifted economies. Digital has created as many opportunities as it destroyed.
It will take a while – and it definitely won’t be easy – but we will find a new economic balance post coronavirus.