“We are suffering just now from a bad attack of economic pessimism.”
That is the first sentence of a roughly 4,000-word essay titled “Economic Possibilities for our Grandchildren,” written in 1930, by economist John Maynard Keynes. One of the most famous and influential economists of all time, Keynes wrote the essay to offer a more optimistic view of the future for a world that was, at the time, in the grip of the Great Depression.
Keynes used an economic framework to make his case, using data to remind everyone that the best days were ahead of them and not behind them. He called attention to the gains in business and workforce productivity, thanks to innovations in technology at the turn of the century that contributed to an increase in worker wages, a decline in hours worked and a corresponding increase in leisure time.
That, he said, drove the expansion of consumption. People with more money and more time bought more things — which, in turn, drove economic growth. That made it possible for capital to be raised and invested to keep the economic flywheel moving. Collectively, these forces created the strong and resilient economic foundation that would both get the economy back on its feet and, he believed, power its growth for the next 100 years.
In his essay, Keynes also cautioned that to focus solely on the negative risked missing the not so visible but no less important trends that would lead to this more prosperous future. He urged the world to pay attention to what he described as “the advance guard” — those who, he said, are “spying out the promised land for the rest of us and pitching their tents there.”
Now, 90 years later, with a world in the grip of a pandemic that has already cost hundreds of thousands of lives, Keynes’ words are prescient.
We’re living in a world that now, too, seems to suffer from a “bad attack of economic pessimism,” as new outbreaks of the virus threaten the economic recovery. In a global economy, any outbreak anywhere generates ripple effects. Look no further than the businesses and economies that thrive on travel and tourism from those who remain locked down, are prevented from entering their countries or, if they did gain entry, would be subjected to quarantine.
Today, economists also routinely debate what letter of the alphabet the shape of the recovery will take. The stock market gyrations have reflected that uncertainty. Businesses debate that, too, many recognizing that their individual recovery may be a different letter than that of the overall economy. The world seems to have finally come to grips with the notion that knowing what letter the recovery might take is directly related to how long it will take for a consumer to feel safe engaging in the physical world the way she did in 2019 — and, frankly, whether she will ever do so again.
But as Keynes wrote 90 years ago, there is much about the foundation of our economy that sustains it now and will support its future growth, with our best days firmly ahead and not behind us.
As was the case in 1930, innovations in technology over the last many decades — and its rapid acceleration over the last decade — have created the foundation for future economic growth, and are responsible for the current resilience of our economy. The investments in technology platforms have made it possible for consumers and businesses to adapt, survive and even thrive amid the abrupt lockdown of the physical world and the rapid shift online.
In 2020, we also have our own advance guard: the Digital 3.0 personas we’ve been studying since March 6, 2020 — a week before the physical economy shut down — based on our national surveys of almost 20,000 consumers. Overall, U.S. consumers shifted digital, en masse, when the world locked down. They are also now deciding how physical fits into their digital-first world as the economy opens back up and, in theory, they are able to get back to their physical routines in some capacity.
Just as Keynes wrote in 1930, focusing only on what’s wrong (and there is a lot that can go very wrong) also risks missing what’s right. It is the “what’s right” that will power our future and is making our present very much a functional reality.
Since March of 2020, we have seen massive waves of goodness bubbling beneath the surface, as businesses heed the call of innovation in the name of survival, and consumers gravitate to the digital innovations that make them feel safe.
Businesses — some small, some very large — are out there “pitching their tents.” And they’re following the lead of the advance guard of consumers who are helping the rest of us see what our digital-first future holds — an advance guard that is also inspiring innovators to do more to bring the rest of the world along.
Digital 3.0 Personas
The concept of an advance guard dates back to the medieval times and how wars were fought, and hopefully won. The battle strategy was simple: The only way to get a good sense of what the enemy might do, or what might be effective in defeating them, was to send a small team of the best soldiers into battle first, who then paved the way for the rest of the militia to follow.
We’ve examined the behaviors of U.S. consumers since March and assembled them into four personas who all have one thing in common: They’ve made a pronounced shift to digital in all or in some part of their lives.
Here’s what these Digital 3.0 personas look like.
We classify roughly 36 percent of the consumer base as social-shifters. These are the personas who most like to shop in physical stores, and miss it — but who have most shifted online to make retail purchases as a result of the pandemic.
Safety-shifters are at the other extreme. This is the 13 percent of the consumer base who have embraced digital channels to buy groceries and other products because they are also the most concerned about contracting the virus when going into a physical store — more so than other consumers.
The 21 percent of the consumer base who have always put a premium on speed and convenience, we have dubbed the convenience-shifters. These are the personas who report making decisions about where and how they shop based on the digital-first experiences merchants offer — a behavior that has become even more pronounced since the pandemic.
Then there are the office-shifters, representing 17 percent of the consumer base who report working from home more frequently than pre-pandemic. This group, maybe not surprisingly, also say they are most eager to return to the physical world — particularly offices, stores and restaurants.
But here’s what’s interesting about these personas: Many of their digital shifts appear to be more than just a temporary break from their physical world interactions.
Social shifters and office shifters, those who said they are most eager to return to their physical shopping experiences report that many of their shifts to online shopping for retail products (69 percent and 72 percent, respectively), online shopping for groceries (77 percent for both) and online ordering from restaurants (61 percent and 68 percent, respectively) will stick once the pandemic passes.
Convenience shifters, whose MO is what’s fast and efficient, report that 70 percent, 75 percent and 63 percent of their online retail, grocery and restaurant digital behaviors, respectively, will mostly or entirely stick.
For safety shifters, the numbers are 71 percent (online retail), 75 percent (online grocery) and 64 percent (online from restaurants).
As of the end of May, across all of these Digital 3.0 personas, some 41 percent of the U.S. adult population were using digital channels more today than they did before the pandemic, and said they plan to stick with some or all of those digital behaviors moving forward.
And all in the space of just three months.
In data that we will report in the next two weeks, we see consumers across each of these personas, each of whom has had a taste of the physical world reentry, only strengthening their Digital 3.0 convictions. It isn’t as if the physical world is irrelevant to them, but their interactions in it are different now. The consumer’s expectations of those experiences are now different, too — they are digital-first, with physical complementing that experience in some way.
Some of the permanence of that shift is the result of businesses ramping up their digital games and meeting this digital advance guard where they have already pitched their tents and plan to keep them. And part of the reason that those shifts are some and not all relate to the nature of the business. Consumers will eventually want to experience the 2019 in-dining experience, but the interactions with the restaurant in the future may be more digital than they ever were.
But most of the digital shift that will stick is the result of a consumer who has overcome the inertia of shifting to digital, and who has experienced the innovations that businesses have offered to accommodate her digital preferences — first under lockdown, and now as part of what has become her preferred interaction.
This is a consumer who likes, and also feels safe, living her life in a digital-first, Digital 3.0 world.
This is the 104 million Americans who like digital-first enough to say that they now want it to comprise at least some of their new routine.
This is our advance guard.
Scouting Out The Trends
Delta Airlines released its Q2 2020 earnings last week, and it was a sea of red.
Coming off a 93 percent decline in bookings, CEO Ed Bastian said it was the airline’s worst quarter since 2008. That wasn’t much of a surprise to analysts. Something else Bastian mentioned may have been surprising, though: He told analysts that he does not expect business travel to ever return to 2019 levels.
“Ever” is a pretty strong word.
“Road warriors,” he said, have found suitable alternatives to hopping on a plane to take a business trip. And those suitable alternatives haven’t diminished the ability or even the effectiveness of firms to do business with each other in that way.
Part of the reason that business travel is unlikely to return to its former state is that businesses — which are now accustomed to the cost savings, productivity benefits and lack of wear and tear on their key executives — will divert those funds to other, more business-critical functions. That will mean corporate travel will be reserved to those instances when it is really essential. Meanwhile, rapid advances in virtual gatherings are taking place, which further reduces the need for the trips that were once second-nature.
Marc Geigher, CEO of the four-day music festival Lollapalooza, said in an interview that he doesn’t expect concerts in the U.S. to return until sometime in 2022, when there is a vaccine. Lollapalooza hosts 400,000 people in Grant Park in Chicago and is typically a sellout. If he’s right, that’s a two-year break in the action. Streaming platforms, platforms that move branded merchandise and live-streamed digital concerts integrated with digital payments are helping to fill the gap, as the industry explores new, digital-first ways to keep fans engaged in the interim.
KFF, a nonprofit source of healthcare-related data, reported in late May that 48 percent of Americans have put off going to the doctor’s office because of the pandemic. Independently, several of the medical professionals I have spoken with report that hospitals are eerily absent patients, but for COVID-related medical conditions and otherwise essential medical procedures. It isn’t that people aren’t getting sick or don’t need medical care — it’s that they are uncomfortable going to the hospital or a doctor’s office to get it.
What some are doing instead is seeing a digital doctor.
A study of patient visits at the NYU Langone Health done between March 2 and April 14 reported a 683 percent increase in the number of urgent care visits done virtually and a 4,345 percent increase in non-urgent care visits. Granted, the base is small — JD Power reports that only 10 percent of consumers had used telemedicine services in 2019 — but the trend is clear. Not only do consumers feel safer using teledocs now, but the convenience, speed and efficiency it affords them will mean they’re likely to make it an overall part of their healthcare routine in the future.
Airbnb reorganized last week, a move that CEO Brian Chesky said was motivated, in part, by the shifts in behavior by Digital 3.0’s advance guard. Airbnb’s bookings now reflect a consumer who is less interested in taking a long trip to an exotic locale than visiting one 300 miles or less from their home. Whether motivated by people’s desire to get out of the house and do something within driving distance of their homes, or the need to find a short-term rental as work-from-home scenarios become more permanent, the company’s reorganization was all about what Chesky described as “getting back to great hosting,” recognizing that it may be a long time before consumers hop on a plane and travel far from home.
Restaurants and Main Street SMBs, perhaps two of the hardest-hit segments, struggle to make up for the lost sales that foot traffic once brought to their establishments. These businesses found a lifeline online, as technology platforms, touchless payments, apps and digital wallets made it possible for their digital shift to happen in weeks rather than months or years. For instance, QR codes make it possible for every transaction to become contactless and touchless — and in restaurants, they can trigger a complete order-to-pay experience.
More than half of the Main Street SMBs we have studied since March report adopting some digital innovation to get them over the hump, with many saying that their own digital shifts will stick, as the advance guard has led the way.
Meanwhile, we are seeing the world’s greatest scientists, medical researchers and doctors come together with one common goal: to develop a vaccine to prevent the spread of the virus that has brought the world to its knees. The rapid advances that are taking place in medical research, including the rapid development of vaccines, will bring benefits for years to come.
These are but a few of the trends rippling beneath the surface that will shape the future of how we live, how we work, how we buy and eat food, how we spend our leisure time, and more. These businesses, and many like them, recognize that their future — and ours — depends on how FIT® their organizations are to simultaneously manage the friction, inertia and time necessary to accommodate a consumer whose embrace of the physical world will be digital-led.
And with no turning back.
To The FIT® Goes The Spoils
At the conclusion of his essay, Keynes encouraged businesses to innovate and experiment, but to also recognize that there were four things — largely out of their control — that could slow the pace of growth, despite their best efforts to advance progress.
One of those four things was the people’s willingness as an economy to let science do its work when, as he stated it, “matters of scientific concern required it.” Today, we have seen businesses and local governments step in when impediments make it otherwise difficult for science to prevail. Uber’s new television ad perhaps said it best: The front-line workers have done their job for us, and now it’s time for us to do our jobs: No mask. No ride.
A stampede of large retailers is also leading that charge.
What we have seen over the last four months is a pandemic that has spawned a level of innovation across every pillar of our economy, and at warp speed. It’s been almost impossible to step back and take stock of it all — the pace of innovation and change has been relentless.
When we do, we will see that in our darkest moments, the sheer grit and determination of entrepreneurs and innovators and SMBs — which are desperate to save their businesses — has inspired everyone, across every nook and cranny of our economy, to go where the Digital 3.0 advance teams have already planted their flags.
To a future shaped by digital, and open to all.
Selected by Fintech Tube