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As businesses reopen, which ones will ultimately survive?

By Jill Schlesinger, Tribune Content Agency on

As some parts of the country reopen from the pandemic lockdown, there appear to be three phases that the economy and businesses will move through. I'm calling it T3, which stands for triage, transition and transformation.

During the preliminary phase of triage, companies learned how to operate in new ways, as workers were sheltering in residence. Zoom, Skype, Slack and other technological solutions became commonplace. There was no playbook for anything like this before, so it was trial by fire, with plenty of missteps along the way, which was to be expected.

The next phase will be transition, where corporations will take a conservative approach that will put worker safety before anything else. Companies are preparing for a slow transition, where only critical workers will physically be in their corporate facilities. For every firm, "critical" will mean something different, but for most larger service companies, the majority of staff members have been told to prepare to work from home at least through the summer and in some places, like New York, the period could extend through the end of the year.

The final phase of the post-pandemic economy will be transformation. Businesses, both large and small, are devoting much thought and analysis on how they will emerge and transform from the pandemic.

Scores are trying to answer hard questions: Can some employee functions be performed remotely on a permanent basis? Do we need as much office space? How can we reconfigure physical workspaces to ensure the health of our staff? Do we need to curtail business travel? Can we conduct effective meetings and conferences using telecommunications? Should we employ clusters of employees in geographically diverse locations? How should we diversify supply chains? Can we use robots and technology to do repetitive functions, which often put human workers at risk?

As they ask these questions, businesses are waiting for Americans to weigh in. Given that U.S. consumers account for more than two-thirds of the economy, they will be important drivers of the transition and transformation stages. Some states are relaxing their stay-at-home instructions, but that does not necessarily mean that large numbers of consumers will be ready to resume their previous patterns. In other words, if you open, will they come?

Some Americans may feel spooked, especially those who live in or near hotspots. Even with social distancing measures in place, the fact that your favorite restaurants will not be seating patrons shoulder to shoulder may not be enough for some people.

 

While we don't yet know how habits will change in the post-COVID-19 economy, NYU Professor Scott Galloway told me that the pandemic is likely to act as an "accelerant" of trends that were already emerging. For example, he predicts that department stores are likely in the "seventh inning of their lifecycles" and that online sales at places like Amazon, Wal-Mart and Target will continue to grow dramatically.

He does not believe that "retail is dead," rather that only those brands that can provide a unique customer experience will survive. Other trends that retailers are watching are more pronounced moves toward thrift shopping, which was already occurring for millennials, along with handmade products.

Other sectors like fitness could be transformed, as people turn to at-home solutions instead of going to physical gyms. The concept of staying in a stranger's home through Airbnb may take a long time to recover and there is likely to be a more pronounced emphasis on technology's ability to augment health care, which could mean a big boost in telemedicine. Additionally, there will be continued growth of e-sports and gaming, as virtual events replace in stadium ones.

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(Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com)

(c) 2020 TRIBUNE CONTENT AGENCY, LLC
 

 

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