(Bloomberg Opinion) – Larry Fink, chief executive officer of BlackRock Inc., wrote to shareholders this week, reflecting on how businesses and society are being transformed by the scorching experience of the new corona virus:
“People around the world are fundamentally rethinking the way we work, shop, travel, and collect. If we leave this crisis, the world will be different. The psychology of investors will change. The business will change. Consumption will change. And we will be more dependent on our families and each other to stay safe. “
I had a similar revelation this week trying to cut my own hair – it turned out that my regular $ 30 haircut is not as important as I thought it would be. When I was preparing a meal for my family later in the evening, I thought that going out to dinner or dinner is not as rewarding as home cooking. At the moment, the do-it-yourself version also feels a lot safer and will likely do it for a while.
Compared to the courage of medical professionals and other essential functions, and the devastation that the coronavirus has wrought on already vulnerable communities, many of us in the western world have it easy. We are asked to just stay at home. But between worrying about our work, our parents, and the way we entertain children or teach at home, we’re reassessing priorities. What will we do differently when this is over? What will we praise more and what will we give up?
As soon as the immediate struggle to protect employees and maintain solvency is over, the business world must face these questions.
Two issues stand out: Instead of visiting faraway places and looking for mass entertainment, there will certainly be a tendency for more humble local activities. And where the corona virus has uncovered dependencies or vulnerabilities, such as in the complex cross-border supply chains of the business world, we will look for more security and reliability.
Above all, there is a threat of the damage that the barriers inflict on people’s income. The longer the economic shutdown lasts, the less the world’s consumers hesitate to spend time. With over 10 million Americans filing new jobless claims in the past 14 days, the signs are not good.
In the hardest hit sectors, such as travel, hospitality and leisure, businesses are facing a bleak future. Consumers’ heightened awareness of the negative environmental and social impacts of mass tourism has been reinforced by the realization that people in airplanes and pleasure craft have spread the virus around the world. The head of Lufthansa AG, Carsten Spohr, believes that the German airline must shrink because the economy will be smaller than before. Easyjet Plc founder Stelios Haji-Ioannou said similarly this week when he asked the airline to cancel a major order from Airbus SE.
Carnival Corp. warned that even if travel restrictions were lifted, demand for cruises could remain weak for “significant amounts of time.” The afflicted company had to offer bond buyers an 11.5% interest rate to get them to support a $ 4 billion debt offering. That is a bad sign.
Fitness is another industry that relies on accommodating people in a confined space. It was booming until recently, but customers are discovering much cheaper ways to exercise. After choosing online courses and the time-saving benefit of training at home or near home, some memberships are not renewed. Good news for Peloton Interactive Inc.’s indoor cycling business, possibly not for Planet Fitness Inc. or The Gym Group Plc.
By the time the corona virus hit the market, the tech world seemed eager to deprive individuals of choice and hand over ownership of the trash can. Why learn to cook when you can have food delivered in 30 minutes? Why own a car when you can take an Uber? Why should you take care of your devices when these nice people at Apple repair them for you? But as my colleague Adam Minter emphasized this week, you will only discover the disadvantages in a crisis if you cannot fix your own phone.
There will also be winners of this realignment. Car sales in Europe are currently collapsing because you can’t go into an exhibition space and not have to drive far, but the freedom and security of owning a vehicle can make sales recover faster than other discretionary purchases (assuming) of course, that governments can curb unemployment). In China, cautious consumers return to auto dealers after the first wave of viruses.
There was a brisk trade in hardware stores who wanted to repair their homes, balconies, and allotments during the closure, and some hardware stores are still open. As soon as the housing market reopens, city dwellers can decide that they have had enough of crowded cities and tiny apartments. The landscape suddenly becomes more attractive – even more so if employers trust those who want to work from home.
Corona virus has uncovered our vulnerability and it will not be the last crisis. Our emissions to warm the planet mean that more pain is predetermined. Faced with uncertainties or disasters, people try to strengthen their communities. We will also seek more control over our lives. For societies, this means equipping our health services, paying key workers appropriately, and ensuring care. As an individual, this means outsourcing fewer decisions and doing things for ourselves.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Chris Bryant is a Bloomberg Opinion columnist dealing with industrial companies. Previously, he worked for the Financial Times.
You can find more articles like this at bloomberg.com/opinion
Subscribe now to stay up to date with the most trusted business news source.
© 2020 Bloomberg L.P.