If there’s one lesson from the pandemic of 2020, it may be this: We are biological beings in a digital age.   No matter how much technology we have, we’ve discovered we cannot escape nature’s grip. And yet, no matter how humbling this crisis has been, it reminds us that even a massive jolt to the planet cannot change the trajectory of the Fourth Industrial Revolution. If anything, we’re emerging from this crisis with an even greater desire to harness smart technologies, artificial intelligence, and vast pools of data to transform pretty much everything we do. COVID did not crush the future. It merely brought it forward. In the short term, the economic recovery won’t be as fast as the consumer and social changes that are hitting every business and community. The scar tissue will take time to heal. We estimate that even with a modest recovery, the Canadian economy will operate below pre-crisis levels until 2022, and the loss of economic output for Canada may exceed $1 trillion. But when the recovery takes form, and entrepreneurs head back in the water, they’ll find pearls of opportunity. Yes, the novel coronavirus that induced a massive global recession is also unleashing waves of innovation as we change the way we work, shop, eat and travel. And compa-nies, old and new, that are seizing on this sea change in human behaviour are starting to grow. In this report, we look at eight major trends underway in the world, and pinpoint the possibilities for savvy business operators, investors and innovators. As history likes to remind us, with unprecedented times come unprecedented opportunities.  

1. How we work

More home-offices, less paper, more productivity  

What we’re seeing

• Only 14% of employers plan to require employees to work remotely. Half of those now working from home expect to maintain at least a hybrid model, with higher percentages among tech and knowledge-based workers.
• 48% of Canadian businesses feel unprepared for the technological changes forced by COVID, including their ability to support remote work over the long-term.
• 57% of Canadians are unwilling to go to a business conference until there’s a vaccine.

What this means

• Distributed technologies, cloud computing and cybersecurity will become competitive differentiators, and essential for talent retention.
• Employers will need to develop new tools and systems to manage distributed workforces, and share costs and requirements for home-based work models.
• Office landlords and tenants will need to invest heavily in workplace PPE and office reconfigurations to accommodate more flexible work arrangements.

+Up

• Cloud security, video conferencing, chat platforms.
• Home speakers, laptops, fitness equipment.
• Neighbourhood childcare, home cleaning, food delivery.

 

-Down

• Conference centres, banquet services, business hotels.
• Food courts, public transit, fitness centres.
• Photocopiers, paper, A/V devices.

 

2. How we shop

More shipping, more local, more driving  

What we’re seeing

• North America’s top 2,000 ecommerce sites saw traffic grow 19% in March-June compared to the same period last year. Amazon’s global revenue grew 33.5%, while foot traffic at U.S. malls was down 15%.
• Nearly 3 in 10 Canadians have shopped online during the pandemic for things they normally bought in stores. Buy Online and Pickup In Store (BOPIS) accounted for 42% of orders in June, double what it was 2019.
• Canadians spent 3% more this July than a year earlier, with increases in food, home improvements, golf, lotteries and hobby stores, and gradual upticks in self-care. In-person entertainment, concerts and restaurants remain challenged.

What this means

• Traditional brick-and-mortar business models, including malls, will remain challenged. Consumers have adapted at-scale online purchasing of soft goods, including groceries, personal- care products and fitness.
• Consumer loyalty is in play. In the U.S., 36% of consumers have tried a new product brand during the crisis.
• A strong and streamlined online presence can improve efficiency, reach and retention, and prepare businesses for unexpected disruptions.

+Up

• E-commerce platforms and aggregators.
• Blended delivery and pick-up models.
• Online loyalty models.

 

-Down

• Department stores.
• Secondary and tertiary malls.
• High-density commercial property.

 

3. How we watch

More binging, more culture, more global  

What we’re seeing

• Massive shift to home entertainment. Amazon’s live platform Twitch streamed 60% more hours (198 billion) in Q2.
• Netflix added 26 million subscribers in the first half of the year. Disney+ reached 60 million subscribers in Q2, four years ahead of plan. Facebook’s active monthly users rose 12% in Q2, to 2.7 billion.
• Interactive is growing. Time spent on video gaming increased by 39% over 2019 during shelter-in-place periods.
• Culture has moved online; ticket sales haven’t. British Museum went from 2,000 daily online visits to 75,000. U.S. museum traffic up 20-50% when tickets are subsidized.

What this means

• With more people spending more time online, personalized content will become more important, along with recommendation engines and targeted advertising.
• Arts and culture providers will need to develop creative – and immersive — ways to deliver entertainment to consumers, rather than expect them to leave their homes. Sales of AR/VR headsets is projected to grow nearly 25% in 2020.
•  Professional leagues and teams will need to accelerate their “augmentation” strategies through gaming and streaming, including from fan-less venues.

+Up

• Global streaming platforms.
• Performers and athletes with global followings.
• Virtual and augmented performances, such as Travis Scott’s concert on a Fortnite video game that attracted 12.3 million viewers

 

-Down

• Museums, art galleries.
• Sports arenas.
•  Cinemas.

 

4. How we share

More bandwidth, more data, more hacks  

What we’re seeing

• Global internet traffic increased nearly 40% between February 1 and April 19. Data creation will grow to 175 zettabytes by 2025, 10 times the amount of data produced in 2017.
• Market cap of the Big Five U.S. tech companies – Apple, Amazon, Microsoft, Alphabet and Facebook – was roughly US$7 trillion in early September, up 50%+ in the crisis.
• Active phishing sites went up by 350% between January and March. Over 1,000 “malicious imitation” websites were taken down by the Communications Security Establishment, most of them claiming to be the CRA or CERB-related.

What this means

• Greater demand for data services, data strategy and connectivity (Internet of Things) strategies.
• Large investments in bandwidth, especially for smaller centres and older multi-tenant buildings.
•  More flexible approaches to privacy to balance safeguards against new and existing threats and the need for health security.

+Up

• Cloud security.
• Business continuity planning.
• Distributed software protection.

 

-Down

• Companies without flexibility and scalability to adapt to fast-changing markets.
• Businesses without the capability to transition quickly to remote work and sales/service.
• Firms without capabilities to analyze data for market advantage.

 

5. How we travel

More local, more modest, more active  

What we’re seeing

• Global flight frequency is down 47%, year-on-year, as of late August, and not projected to return to pre-crisis levels until at least 2023. Canadian tourism spending is projected to drop by nearly 60% (down $42 billion) in 2020.
•  Canadians spent heavily on recreation equipment. Pool retailers across Ontario reported increases of up to 50%. A national trampoline retailer sold out its inventory in March, and had more than 9,000 customers on a waitlist by June.
• Canadians say they are significantly less likely to travel to other provinces, with 63% preferring to drive than fly. Only 32% are willing to stay in a hotel or resort, and 10% to take a cruise. Hotel occupancy was 24% in June, down from 76% a year earlier.

What this means

• Strong growth in recreation product sales (trampolines, pools, bikes, snow equipment).
• Growth in real estate sales and rentals in small centres within driving distance of large cities. Rural bookings on AirBNB rose 25% in the U.S.
• More demand for localized adventures and experiences, and less demand for festivals, events, and major attractions.

+Up

• Home-based recreation equipment.
• Wilderness experiences and agro-tourism.
• Rural rentals.

-Down

• Large hotel complexes, cruise liners.
• High-volume destinations.
• Cross-border communities.

 

6. How we heal

More protection, more screening, more spending  

What we’re seeing

• Public health security remains a dominant concern. Three out of four Canadians said they won’t feel safe until a treatment or vaccine is available.
• Patients and professionals have come to accept, at scale, video consultations. Global telehealth spending expected to exceed U.S. $175 billion by 2026.

What this means

• Strong growth in recreation product sales (trampolines, pools, bikes, snow equipment).
• Growth in real estate sales and rentals in small centres within driving distance of large cities. Rural bookings on AirBNB rose 25% in the U.S.
• More demand for localized adventures and experiences, and less demand for festivals, events, and major attractions.
• Long-term care has become a focus for heath budgets. By 2030, Canadian government spending on elderly benefits will triple to$99 billion, from $35 billion spent in 2010.

+Up

• Smart-living technologies, home testing kits, virtual fitness.
• Facial recognition technology, infrared body scanners.
• Contact tracing technologies.

-Down

• Traditional seniors’ communities.
•  Healthcare providers without a digital-first culture and infrastructure.
• In-person consultations for minor or routine issues.

 

7. How we learn

More remote, more personal, more interactive  

What we’re seeing

• As many as five million international students could not return to campus globally. In Canada, they represent a quarter of student bodies and $22 billion in economic activity.
• Traffic for Massive Online Open Courses (MOOC) in June was 2.5 times greater than in January. Canada’s largest online-only school, Athabasca University, saw April enrollment grow by 12.3% for undergraduates and 10.7% for graduate studies.
• Digital spending is projected to double to 4.3% of all education spending by 2025. Ed tech investments surpassed U.S.$18.5 billion in 2019, with more than half of venture capital activity occurring in China over the last decade.

What this means

• Transformation of post-secondary education to a blended model, with more flexible online options for international students.
• Traditional course design and pedagogy will turn to alternative delivery methods.
• More pressure on companies to train and upskill employees, and work with colleges and universities to develop micro-credentials.

+Up

• Menu-based degrees, with greater student choice and sharing between schools.
• Corporate learning management systems.
• Digitally-augmented internships, coops and apprenticeships.

-Down

• Schools with weak digital teaching capabilities.
• In-person international student enrollment.
• In-person corporate training.

 

8. How we trade

More protectionism, fewer imports, higher prices  

What we’re seeing

• WTO says more than 100 protectionist measures are in place. The U.S. is increasingly restricting trade access, with bipartisan support for measures against Canadian aluminium and dairy exports.
• Governments are focusing on technology as a national strategic priority. Less air travel and international shipping could also constrict supply chains.
• Buy Local initiatives have emerged in Ontario, B.C., Quebec and Ontario. Nearly 80% of Canadians say they’re more likely to choose Canadian brands/products because of the crisis.

What this means

• Increased focus on economic nationalism. Japan is already offering incentives to repatriate factory production, while Korea and Taiwan are protecting IP rights in semi- conductors and other tech.
• Strategic stimulus may lead to more aggressive steps, including procurement restrictions.
• Consumers could eventually face higher prices and less selection.

+Up

• Strategic procurement.
• Bilateral and regional trade agreements.
• Higher-value exports, such as specialized food.

-Down

• Canadian firms relying on procurement from other countries.
• Low-margin producers that lack scale.
• Low-income and remote populations.

   

Learn more at rbc.com/8trends

 

Watch John present this report at the Chair’s Community Forum.

  By John Stackhouse John Stackhouse is a nationally bestselling author and one of Canada’s leading voices on innovation and economic disruption. He is senior vice-president in the office of the CEO at Royal Bank of Canada, leading the organization’s research and thought leadership on economic, technological and social change. Previously, he was editor-in-chief of the Globe and Mail and editor of Report on Business. He is a senior fellow at the C.D. Howe Institute and the Munk School of Global Affairs and Public Policy. His latest book is Planet Canada: How Our Expats Are Shaping the Future, which explores the untapped resource of the millions of Canadians who don’t live here but exert their influence from afar.