In January, McKinsey and Company outlined their ideas on trends that would define 2021 and beyond. We outline the basis of this work. Keywords, Digitisation, artificial intelligence (AI), machine learning, bio engineering, genetic sequencing, computing, data analytics, robotic process automation. The full reference is listed in the footnotes.
Consumer Spending: The return of confidence will unleash a consumer rebound ...
Consumer confidence will return, so too will spending. “Revenge Shopping” will sweep through sectors as pent-up demand is unleashed. That has been the experience of all previous economic downturns. One difference, however, is that services have been particularly hard hit this time. The bounce back will therefore likely emphasize those businesses, particularly restaurants and entertainment venues.
Leisure travel: will bounce back but business travel will lag ...
People who travel for pleasure will want to get back to doing so. That has been the pattern in China. The CEO of one major travel company told us that, beginning in the third quarter of 2020, business was “pretty much back to normal” when referring to growth. But it was a different normal. Domestic travel was surging, but international travel was still depressed given pandemic-related border restrictions and concerns about health and safety. In China as a whole, hotel occupancy and the number of travellers on domestic flights were more than 90 percent of their 2019 levels at the end of August, and over the October Golden Week holiday, more than 600 million Chinese hit the road, around 80 percent of last year’s figure.
Innovation: The crisis sparks a wave of innovation and a generation of entrepreneurs ...
During the COVID-19 crisis, one area that has seen tremendous growth is digitization, meaning everything from online customer service to remote working to supply-chain reinvention to the use of artificial intelligence (AI) and machine learning to improve operations. Healthcare, too, has changed substantially, with telehealth and biopharma coming into their own.
Disruption creates space for entrepreneur and that’s what is happening in the United States. In the third quarter of 2020 alone, there were more than 1.5 million new-business applications in the United States, almost double the figure for the same period in 2019.
Digitally enabled productivity gains will accelerate the Fourth Industrial Revolution
The great acceleration in the use of technology, digitization, and new forms of working will be sustained. Many executives reported they moved 20 to 25 times faster than they thought possible on things like building supply-chain redundancies, improving data security, and increasing the use of advanced technologies in operations. The COVID-19 crisis has sped up the transition in areas such as AI and digitization by several years. The pandemic has created an imperative for companies to reconfigure their operations an opportunity to transform them. To the extent that they do so, greater productivity will follow.
Online shopping is here to stay …
Pandemic-induced changes in shopping behavior have forever altered consumer businesses. In nine of 13 major countries surveyed by McKinsey, at least two-thirds of consumers say they have tried new kinds of shopping. In all countries, 65 percent or more say they intend to continue to do so. Brands that haven’t figured out how to reach consumers in new ways had better catch up, or they will be left behind.
The shift to online retail is real, and much of it will stick. In the United States, the penetration of e-commerce was forecast in 2019 to reach 24 percent by 2024; by July 2020, it had hit 33 percent of total retail sales. The first half of 2020 has seen an increase in e-commerce equivalent to that of the previous ten years.
[In the UK in January 2020, 19% of sales were made online. Online food sales were limited to just 5% of total sales. In March 2021, online sales accounted for 35% of all transactions. The proportion of food sales online had more than doubled to almost 12%].
Supply chains will rebalance and shift ....
Think of it as “just in time plus.” The “plus” stands for “just in case,” meaning more sophisticated risk management. The COVID-19 pandemic revealed vulnerabilities in the long, complicated supply chains of many companies. When a single country or even a single factory went dark, the lack of critical components shut down production. Never again, executives vowed. So the great rebalancing began. As much as a quarter of global goods exports, or $4.5 trillion, could shift by 2025.
Businesses realized disruptions are not unusual, cost differences are narrowing, supply chains are complicated. [The sight of the Ever Given container ship, stuck in the Suez Canal will live on in the memory for a while yet.]
None of those things means that multinationals are going to ship all or most of their production back to their home markets. There are good reasons to take advantage of regional expertise and to be in place to serve fast-growing consumer markets. But questions on security and resiliency suggest companies are likely to be more thoughtful about the business cases for such decisions.
The future of work arrives ahead of schedule ...
During the pandemic, tens of millions of people transitioned to working from home, essentially overnight, in a wide range of industries. The McKinsey Global Institute (MGI) estimates that more than 20 percent of the global workforce (most of them in high-skilled jobs in sectors such as finance, insurance, and IT) could work the majority of time away from the office and be just as effective.
It’s happening not just because of the COVID-19 crisis but also because advances in automation and digitization made it possible. the use of those technologies has accelerated during the pandemic.
Green, with a touch of brown, is the color of recovery ...
All over the world, the costs of pollution and the benefits of environmental sustainability are increasingly recognized. China, some of the Gulf States, and India are investing in green energy on a scale that would have been considered improbable even a decade ago. Europe, including the United Kingdom, is united on addressing climate change. The United States is transitioning away from coal and is innovating in a wide array of green technologies, such as batteries, carbon-capture methods, and electric vehicles.
The UK will host the 26th UN Climate Change Conference of the Parties (COP26) in 2021. The COP26 summit will bring parties together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change.
Green growth opportunities abound across massive sectors such as energy, mobility, and agriculture. Just as digital-economy companies have powered stock-market returns in the past couple of decades, so green-technology companies could play that role in the coming decades.
The biopharma revolution takes hold ...
The pandemic could be the launching point for a massive acceleration in the pace of medical innovation, with biology meeting technology in new ways. Not only was the COVID-19 genome sequenced in a matter of weeks, rather than months but the vaccine rolled out in less than a year. An astonishing accomplishment given that normal vaccine development has often taken a decade.
Urgency has created momentum, but the larger story is how a wide and diverse range of capabilities, among them, bioengineering, genetic sequencing, computing, data analytics, automation, machine learning, and AI have come together.
Regulators have also reacted with speed and creativity, establishing clear guidelines and encouraging thoughtful collaboration. Without relaxing safety and efficacy requirements, they have shown just how quickly they can collect and evaluate data. If those lessons are applied to other diseases, they could play a significant role in setting the foundation for the faster development of treatments.
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McKinsey and Company
This is an extract from the January 2021 post "Trends that will define 2021 and beyond", written by Kevin Sneader, Global Managing Partner Emeritus, Miami and Shubham Singha Senior Partner, Detroit. The full post can be located using the link ...
An update to the original article can be found here: