Will we learn to live with less? Some lessons were learned when the U.S. initially closed up shop and told everyone to stay home. For example, we can live without extra-soft, double-ply toilet paper and go a whole weekend without shopping at a store or eating at a restaurant — but we’d rather not.
Yet the question remains: Will the lessons of the pandemic be far reaching? For some American companies, yes. Stay-at-home orders hit many retailers in every direction: loss of foot traffic, loss of manufacturing and goods from China, workers who refused to go to work, less things consumers needed to buy and less money with which to buy them. The fallout has impacted brand-name retailers ranging from J. Crew and Neiman Marcus to Nordstrom and Victoria’s Secret.1
What about you? Are you living on less? Or did you spend your days sheltered-in-place shopping online and ordering take-out food? In some cases, people may have spent more than usual in their efforts to buy in bulk and support local restaurants. It’s a good time to calculate your retirement budget to see if it’s worth keeping any frugal habits you adopted for the long term. After all, if you can reduce your basic expenses in retirement, you don’t have to save as large a nest egg. If you’re looking for ideas to optimize your assets and secure reliable income for retirement, please give us a call.
Retail trends are expected to affect more than retailers themselves. While cashless transactions have been around for decades, they may become more prevalent as consumers try to reduce exposure to “dirty money.” Drones may become more predominant in those last few miles for deliveries to your home. Now that people know they can live with less, they may want the things they do buy to last longer, so sustainable goods may become an enduring trend.2
What about the country as a whole? With restaurants shuttered nationwide, farmers had to destroy millions of pounds of perishable food due to lack of demand.3 As the economy shuffles back into existence in a manner of fits and starts, will farmers and food manufacturers adjust their levels of production to avoid the potential for such waste in the future? If so, are we prepared to eat less, pay more or find alternate ways of producing our own food, like baking bread and cultivating backyard gardens?
How will the coronavirus impact where we meet, shop, eat, and how we travel? At least for a while, it’s reasonable to expect that some people will avoid crowded trains and buses, bars, restaurants, theaters and stadiums in an effort to be mindful of health risks.4 Will only the young and healthy venture out in full-fledged support of the economy, and will their relatively low salaries and net worth be enough to sustain it? Will urban dwellers flock to rural environs to avoid the masses and seek a simpler life?
How about global trends? The goodwill of globalization and cross-trade agreements had already soured in the face of nationalism long before the pandemic left every country to fend for itself. According to the World Trade Organization, global consumer trade is expected to fall between 13% and 32% in 2020.5 The wide discrepancy is largely based on how quickly the outbreak can be contained and whether trade will return to pre-crisis levels. The concern is that current populist trends will take advantage of the opportunity to lay blame on China (a major manufacturer and labor market for most developed countries) which could curb the path back to growth.4 Without intercontinental trade, travel and investment, experts say the recovery will be slow. Poor cooperation will likely result in low economic growth as each country tries to rebuild alone.6
Content prepared by Kara Stefan Communications.
1 Knowledge@Wharton. May 8, 2020. “How COVID-19 Will Change the Way We Shop.” https://knowledge.wharton.upenn.edu/article/covid-19-will-change-way-shop/. Accessed May 29, 2020.
2 Knowledge@Wharton. May 5, 2020. “From Apocalypse to Supernova: How the Pandemic Is Changing U.S. Retail.” https://knowledge.wharton.upenn.edu/article/apocalypse-supernova-pandemic-changing-u-s-retail/. Accessed May 29, 2020.
3 Knowledge@Wharton. May 19, 2020. “Will the Pandemic Cause Food Shortages?” https://knowledge.wharton.upenn.edu/article/will-the-pandemic-cause-food-shortages/. Accessed May 29, 2020.
4 Knowledge@Wharton. May 13, 2020. “The Post-COVID-19 World Will Be Less Global and Less Urban.” https://knowledge.wharton.upenn.edu/article/post-covid-19-world-will-less-global-less-urban/. Accessed May 29, 2020.
5 DG Azevêdo. World Trade Organization. April 8, 2020. “Trade set to plunge as COVID-19 pandemic upends global economy.” https://www.wto.org/english/news_e/pres20_e/pr855_e.htm. Accessed June 10, 2020.
6 Felix Richter. World Economic Forum. May 29, 2020. “The COVID-19 economy: does it mean the end of globalization?” https://www.weforum.org/agenda/2020/05/globalisation-covid19-gdp-drop-2008-financial-crisis. Accessed May 29, 2020.
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