Market Watch

This is the COVID consumer trend most likely to stick beyond the pandemic

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COVID-19 forced significant and far-reaching changes as companies, worker, and consumers had to adapt, and quickly, to the sudden changes necessary to continue operating under virus-related constraints.

As vaccines enable more “normal” activities, at least in some countries, to what extent will these changes stick?

One major trend likely to stick: “home nesting.” Before the pandemic consumers were spending less time in their homes, and their spending on home goods and improvement was flat to declining. In the United States, overall spending had grown 18% more than spending on life at home since 1990, according our analysis.

When COVID-19 forced everyone indoors, people began creating “home nests,” making significant investments in furnishing, durables, and tools and equipment. Unit sales of large-screen TVs soared, and many “connected fitness bikes” from companies such as Peleton PTON, +0.28% were on back order for much of the latter half of 2020.

Companies invested to support these at-home behaviors — and realized profits from the changes they made. Film studios and musicians quickly adapted to providing entertainment via streaming services, and grocery stores beefed up their online ordering and delivery capabilities. Disney DIS, -1.28% restructured its media and entertainment divisions to focus more heavily on streaming distribution, and Ahold Delhaize AD, 0.61% ADRNY, -1.44% acquired online grocer Fresh Direct and sped up its deployment of click-and-collect services.

Some governments targeted stimulus money in ways that would support home improvement, like “MaPrimeRenov” in France, which offered 20,000 euros (about $24,250) per household for homeowners to improve the energy efficiency of their heating and cooling systems.

To determine how enduring pandemic-spurred shifts may be, we examined a wide array of behaviors across five countries – China, France, Germany, the United Kingdom, and the United States — using a “stickiness” test that takes into account the preferences of consumers and workers as well as the actions of companies, including the innovation unlocked by digital tools, and decisions made by governments.

Here’s what else may stick:

Online shopping. Many consumers who shopped for groceries online out of necessity during COVID-19 have found it convenient. Retailers stepped up investments in their online capabilities and created more options for consumers in product selection and delivery, including click-and-collect shopping for shoppers averse to delivery fees. Growth of the user base has mostly held.

Regulatory policy changes also supported online consumption. The U.S. government, for example, allowed reimbursement for use of food assistance payments online, a small adjustment that enhanced convenience and brought business benefits.

Hybrid remote work (for some). For those who could work from home, remote work met long-standing desires for greater flexibility and freedom from commuting. Our analysis of some 2,000 activities across more than 800 occupations suggests that as much as a quarter of workers in advanced economies could work remotely three to five days a week without losing effectiveness.

In some parts of the world, employers are now confronting the question of how much remote work they want. Chieftains of Wall Street firms who extolled the benefits of remote work during the pandemic now say they want most employees to return to the office, while technology companies like Twitter and Facebook have announced plans to let sizeable chunks of their workforces do their jobs remotely at least part of the time.

In the postpandemic future of work, nine out of 10 organizations will be combining remote and on-site working, according to a new McKinsey survey of 100 executives across industries and geographies.

Here’s what might revert to the old normal:

Leisure travel. We expect demand for leisure air travel to boomerang back to its pre-COVID-19 growth rates in the near term. Airfares and hotel rates have already begun to increase, as various locales have relaxed restrictions and consumers have upped their online searches related to vacation spots.

But leisure travel may change as increased remote work and digital collaboration tools reduce the need for business travel. McKinsey estimates a 20% drop in business travel compared to prepandemic levels, and since the higher prices paid for business travel effectively subsidize lower costs for leisure travelers and expand the network of destinations, fares paid for vacation travel may rise and flights to some destinations may be reduced.

Online education. Poor student, teacher, and parent experiences at the primary and secondary school levels, particularly among families that lacked digital tools or had poor connectivity, mean remote learning is likely to continue only selectively and mostly in higher education and job training.

This article first appeared in Market Watch.