How Covid-19 Changed Digital Purchasing Trends, Overall Buying Power, and Put Capitalism Under a Microscope
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We haven’t seen a healthcare crisis like Covid-19 since the Spanish Flu in 1918. It has touched every part of our lives. As a result, we’ve had to rethink the way we work, shop, go to school and socialize.
Even when we’ve mastered the virus, the world will likely never be the same again. And it shouldn’t be.
How purchasing trends have permanently changed.
Entire industries and customer bases have moved to online ordering and home delivery. The rise in online purchasing hasn’t slowed—the online markets for essential goods, over-the-counter medication, and home entertainment products continue to grow. Consumer surveys conducted by McKinsey & Company show that this trend is here to stay.
Covid-19 has also led consumers to shift preferred brands at an astonishingly quick pace. Most of this change has to do with the availability of products, with changes in brand loyalty occurring when a preferred product’s supply chain is interrupted. In the last six months, 36 percent of customers report trying new product brands, and 25 percent report adopting a new private-label brand. This shift seems to mostly benefit larger, trusted brands. Forty-five percent of consumers reported trying a new online retailer during the pandemic.
In one of the more astonishing developments, 28 percent of consumers who previously preferred Amazon reported choosing another company in recent months, as a result of Amazon’s delay in shipment of non-essential items.
Reassessing how we can change the market.
Crises of this magnitude (World War II, for example) almost always lead to a shift in cultural ideals and operating conditions. As recently as 2008, after an unforeseen economic crisis, we rethought the way the government interacts with big business. A slurry of financial regulation was introduced and the U.S. passed a Troubled Asset Relief Program (TARP). This program allowed the government to buy mortgage-backed securities and bank stocks. While there is still debate about TARP’s effectiveness (it invested $426.4 billion and recouped $441.7 billion), and whether or not it rewarded businesses for unethical actions, the program unarguably stabilized banks and prevented the auto industry from failing altogether.
We still need to decide how we’re going to change. Currently, our vision for the future of the workforce is murky at best. We’re pretty certain that the use of digital platforms will speed up exponentially, and that will create a skills problem in which we need to train old workers new tricks.
We’ll also likely need to rethink the way we plan for disasters in advance.
No one predicted Covid-19, at least in its current incarnation. This is partly due to the free-market principles we’ve embraced since the 1980s. We’ve treated businesses as our primary economic engine and acted as if the government should stay as hands-off as possible. Because of this dynamic, we lack programs to detect or predict major shocks to the economic system—instead of preparation, our public services are limited to reactionary plans.
This can all change. There are ways both businesses and policymakers can reinvent capitalism to better protect workers so that the next time this happens, we’re prepared.
Expanding access to capital.
One of the most important critiques we could make of modern capital, is the lack of access to capital afforded to many categories of the population. The most important drivers of access to capital are the labor markets and housing markets. These both are extremely important to defining facets of a person’s life, including:
- Living location
- Social circle
- Access to education
After the U.S. escapes it’s labor market crash, there are many ways to make the labor market more attainable for all categories of citizenry.
As of this moment, there’s no precise science—no proper technique—to enter the workforce. No one goes into a career 100 percent certain of the skills, classes, and experiences they will need to achieve their career goals. Carving out a profession is often an art of chance and luck as much as hard work.
As we reignite the flames of the workforce, we should put an emphasis on delineating a clear path for new workers. This would include:
- Education about which jobs will improve in the future.
- Education about which industries are currently in demand and growing.
- Education about what skills are needed to enter these fields.
Because certain minorities have more difficulty acquiring jobs, businesses need to find opportunities to more evenly distribute the labor market, especially for people of color, women, LGBTQIA+ individuals and older workers.
There is also room for policymakers to assess which skills and services are lacking in their regions so that they may be provided more thoroughly.
The social safety net is essential.
Because the government has been so hands off in regard to the labor market, there’s no safety net in place to protect minorities, gig workers, and those who face health crises.
For these people, an unpredicted economic cataclysm can mean anything from difficulty purchasing daily necessities to outright financial ruin. We need to not only be able to predict incoming economic collapses, but also to deploy safety nets to protect the most vulnerable members of the workforce.
Two Harvard Business School professors, Michael Porter and Edward Freeman, developed an outline for this concept called “shared value.” It asserts that in the past, publicly traded businesses have focused only on attaining capital for shareholders, sacrificing the wellbeing of the economy and workforce in the process.
Instead, recent research shows that acting with concern for material, social, and government issues brings greater financial returns in the end. By this metric, organizations should work on creating a shared value for a bubble of individuals expanded to include employees, customers and the communities in which they live.
But Covid-19 isn’t just threatening the financial lives of the workforce. It’s also threatening their health. This is an area in which the U.S. is particularly weak—and weaker still during economic downturns, especially when compared to European capitalist counterparts such as Germany. During the recession between 2007 and 2009, it was found that a single percentage point drop in unemployment resulted in a health coverage drop by 2.12 percent.
Healthcare in America simply isn’t sustainable. As Covid-19 has proven, when some among us lack access to healthcare, we’re all impacted.
For all of the damage the health crisis has caused, it has also created opportunity. If we're able to not only change our habits and practices but also rethink their value, we can build back up even better than we were before.