As the world looks ahead, planning for life beyond lockdown, The Economist has published an outlook for the “90% Economy”. It points to inevitable difficulties – a 90% life is a long way from 100%. But, it also suggests opportunity.
Opportunity in the 90%
Recovery will inevitably be uneven. Some sections of the economy will recover faster than others, but the world has bounced back from disaster before.
After the Spanish flu came the Roaring 20s. American movie theatres moved from quarantine closures to a building boom as popular cinema took off. As author and columnist David Aaronovitch recently wrote (The Times, 22nd April):
“not only did the closest form of mass entertainment — cinema — survive, it thrived. Within a matter of months huge picture palaces seating 1,200 people were being constructed. By 1930, in a US population of 123 million, weekly movie attendance was 90 million.”
Similarly, the end of rationing after the Second World War, released a “thirst for glamour, independence and consumer goods that had developed alongside the collectivist mood during the war.”
Certainly, today is different. The economic impact may well be greater but there are signs of a similar thirst for glamour and fun. When Carnival Cruise Lines recently announced plans to recommence cruising from 1st August, it was inundated with bookings; up 200% over the same period last year.
“People are seeing the lockdown as being a re-set button … not a stop button.”
In film and entertainment, one of Centtrip’s core markets, we see similar pent-up demand and a desire to get going again. As has been widely reported, many broadcasters carry only a couple of months of content.
Simon Liddell, our Director of Music, Film and Entertainment, reports:
“people are seeing the lockdown as being a re-set button … not a stop button. Production companies are adapting their pre- and post-production processes for greater remote working, and they’re getting things ready so they can move quickly once they restart studio and on-location work. In the past week alone, we’ve signed up five new film or TV productions.”
The Economist anticipates a more cautious, less social world – greater numbers of people in China want their own car, as Germany opened its small shops, customers stayed at home. Those who can exercise choice may choose the precaution of continued distancing.
Again, we see signs of this at Centtrip. The superyacht sector, another of our core markets, is reporting a desire for longer bookings, up from the normal one or two weeks to three or four.
Our Head of Marine & Aviation, Edward Majdalany, notes that:
“[Yacht] Charter companies are expecting a big spike in activity. The biggest period for charter and buy/sell activity in the past 20-30 years came after the 2008 Financial Crisis and there’s an expectation of a similar rebound after the peak of the coronavirus crisis has passed.”
Adapting to the “next normal”
There are pockets of opportunity for agile firms, especially those that meet, or support, pent-up desire and demand.
McKinsey has published an interesting five-stage model to help organisations “find an economically and socially viable path to the next normal” – Resolve, Resilience, Return, Reimagination and Reform. Many businesses are currently contemplating the Return and Reimagination stages, just as we are at Centtrip.
Inevitably, some things will change. We can see them, already. When even your window cleaner asks to be paid by bank transfer, you know that no-one wants your filthy, dirty cash, anymore. Contactless is king, whether that’s tap-and-go payment in your favourite, soon-to-be-reopened-please, coffee shop, or the bigger contact-free picture of delivered-to-the-door e-commerce. Those pre-existing trends can only accelerate.
And, will businesses really abandon the leaner, greener convenience of Teams, Zoom and Hangouts for days wasted in travel to internal meetings and reviews? Sometimes there really is no alternative to a face-to-face, eye-to-eye, physical meeting. But often there is. Travel – for business or pleasure – will be subject to a new cost/benefit analysis and only undertaken when there is a clear, net benefit.
There are other changes, too: greater remote and flexible working, more diverse supply chains, perhaps even changes to employment models. But business will adapt and become stronger as a result.
A reduced, 90% economy looks likely. And, it may well feel more than 10% different. But there will be opportunities both for agile businesses and for those that enable agility in others – witness the recent strength of Microsoft and others riding high on the collaboration technologies they’ve been pushing for over a decade. Suddenly, the time was right, and the need was there.
At Centtrip, like so many other businesses, we’re already adapting to change and supporting clients as they re-engineer their own business models. Where people travel, we will reduce friction and cost from their payments and foreign exchange. And, where people choose not to travel, we ensure their money can travel quickly, securely and transparently on its own.
There is challenge, but also opportunity ahead. We aim to support our clients as they adapt to the new 90% world. If you'd like to discuss how we can support you, please get in touch today.