The debates are raging about the short term impacts of COVID-19, but what might some of the longer term impacts be? Will we see fundamental changes in behaviour, and if so how should the property and development industry respond?
Here are some notes from a presentation we put together for members of Revo's Urban Design Council.
1. Covid 19 is rewriting the rules for all of us…
- Globalism is being exposed and increased emphasis on the local: Local experience and community… form of resilience…
- Individualism is an achilles heel for many: New values and changes emerging? Power of collective action… form of collective security…
- Post-growth capitalism… economic collapse and the great reset?: Scope for a greener agenda to tackle climate change?
2. Why the future is difficult to predict…
Consumer behaviour: We’ll see polarised responses - will we maintain and internalise crisis-time behaviours, or actively rebel against and reject them?
- Scenario One: We go crazy…. After weeks or months in isolation, consumers strive for experiences that make the best use of their time. Sustainability becomes less of a priority for consumers than the fulfilment of their needs and desires, and variety and diversity take the place of loyalty.
- Scenario Two: We focus on the positive aspects of isolation… We embrace minimalism and introspection. Quality is given priority over quantity, and self-reflection comes before new experiences.
In the longer-term, there will be winners and losers. We will we see some people more affected by the economic downturn than others. The outlook for UK jobs is the gloomiest in almost three decades… particularly affecting young people… and others furthest from the labour market.
3. Are there precedents?
- The early 1980s and early 1990s recessions were associated with big falls in employment among older workers … Firms found it cheaper to lay off older workers through early retirement …
- This trend was reversed in 2000s. Young people entering the labour force for the first time more likely to be in precarious employment.
- The financial crash of 2008 produced a generation of hardworking and career driven young people (Gen Y, 26 - 40) who prioritise personal development as much as they do their careers.
- Gen Y are highly competitive. But, many of them are also rejecting professional careers and more prepared to carve out their own career paths.
- They are perhaps the ‘nothing to lose generation’ - and are most likely to drive the post-growth and green agenda.
- This generation is most likely to shape the companies of the future; it is the Gen Y cohort that is driving the ESG agenda...
Impact of Covid-19?
- This will have the greatest impact on Gen Z (5-25 year olds)
- 73% of 18-24-year olds say the Covid-19 has had the biggest impact on their lives
- 63% saying they worried about their future prospects
- 52% are worried about their ability to save for the future and 49% worry about their ability to buy a property as a result of the economic fallout of the virus
4. The new normal? What is on the horizon that will have an impact on real estate?
Blurred boundaries: Deeper trends have been emerging for some while …
- Boundaries will continue to blur between work/home and play
- Work: 46% of people who never worked from home previously now plan to work from home more often in the future
- Retail: Emphasis on phygital - i.e. a blend of physical and digital, such as click and collect
- Rise in digital commerce, especially among new or low-frequency consumers, is likely to continue post-pandemic.
- There will be an increased demand for co-location and local amenity, and social infrastructure will be important… green, community spaces, etc
Ethics and values: Companies must be attuned to the ethics and values of young people …
- Gen Z (5-25): This generation has seen the struggle of Millennials and has adopted a more fiscally conservative approach. They want to avoid debt and appreciate accounts or services that aid in that endeavour.
- For this generation, consumption is about access rather than possession - sharing, reuse, circular economy, etc. It is also a matter of identity and ethical concern.
- This group of shoppers have a greater awareness of the environment, health and cost, favouring locally-sourced products and neighbourhood stores.
Data-driven solutions: New tools to track people’s movement …
- These tools have become a way to meet requirements for social distancing and health systems to deal with future threats
- But, they might also become a way to enforce environmental sustainability and social responsibility protocols.
- Pros and cons: This raises alarm bells for some consumers … They are a double edged sword - providing more data with which to be responsive, but there is also increased skepticism about government control from consumers.
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