Coming Home to Big Changes

Note: This post is a preview of the Forces of Change research that will be presented at IIEX Forward, an online conference on June 16th 2020. Embee Mobile is part of a consortium of companies undertaking a deep look in understanding what the world might look like on “the other side” of this pandemic. The perspective is on shifts in culture and consumer behavior and the content is curated to give you the tools and data you need to successfully navigate COVID-19 and digital transformation.

Due to the COVID-19 pandemic, tens of millions of workers have left their office building and office parks to work from home. Many of these workers will still be working from home once the pandemic ends, resulting in far-reaching economic, behavioral, and cultural changes.

The migration of workers from central offices to home offices will have a large and lasting impact on the economy, consumer behavior, and culture.

Facebook and Twitter recently made headlines with major announcements of their plans to shift their workforces to home offices, but they appear to be just the tip of the spear. A survey conducted by Buzzback for Forces of Change indicates that four in ten workers in the U.S. and U.K. are now working from home. A recent MIT survey of 25,000 U.S. workers conducted April 1-5, 2020 showed that 34% of respondents reported working from home for the first time in the last four weeks, in addition to the 15% already working from home..

And to reinforce the expected permanence of this shift, a study conducted by Consensus Point for Forces of Change predicted that current COVID-era levels of working from home would stay the same or increase. The Consensus Point prediction market set the probability of this migration continuing at 78% in the U.S. and 89% in the U.K. This is not going away.

While this trend is starting to get the attention it deserves, few have yet grasped just how profound and far-reaching the impacts are likely to be:

• Real Estate – The most obvious impact is that shifting workers from office to home will blunt demand for commercial real estate, creating a glut of office space and an attendant drop in rents. Less obvious are the impacts on residential real estate as workers realize they need permanent, dedicated office space in their home. This realization will drive home renovation (beneficiaries: The Home Depot and Lowes) as well as trade-up to larger homes.
• Technology – Zoom’s meteoric rise has been well documented, and Microsoft Teams has benefited greatly as well. According to app usage data collected by Embee for Forces of Change, Zoom’s user base increase 12X from February to April, and MS Teams’ user base increased almost 3X. But other apps have benefited as well, like Docusign (+48%) and Adobe Fill & Sign (+26%) for executing documents and contracts remotely, and HP Print Service Plugin (+45%) for printing from mobile devices.
  While the infrastructure of the internet has generally held up well under the increased load of video streaming and gaming, the demands of the new work reality are likely to accelerate the buildout of 5G networks and adoption of the devices that run on them.
• Commuting Culture – So many aspects of daily life are built around the concept of getting from home to the office and back that the impacts are likely to be pervasive:
  • Convenience stores are basically built for commuters who need gasoline, coffee, cigarettes, and snacks, and so convenience store traffic is likely to suffer even after the recovery.
  • Radio, podcasts, and music streaming services like Spotify are all strongly associated with time in the car and benefited from dedicated time available for listening. With workers now at home, these media will now have to compete with other activities including visual media for listeners’ attention.
  • Automobiles – Less commuting means less miles, less demand for cars, auto service and gasoline. Auto insurers moves to credit customers’ accounts for lower miles will become a permanent drop in rates for those working at home.
  • Time – according to the U.S. Census, average one-way commute times in 2018 were 27 minutes each way, or about an hour a day total. What will consumers do with that extra time?
• Restaurants – As if restaurants weren’t already bearing the brunt of economic dislocation, many restaurants located near and dependent on office workers will see a permanent decline in demand. Those located close to residential areas will likely see an increase in demand, especially at lunch. A shift in daypart mix seems likely for most restaurants as more people will be close to home in the middle of the day, and not close to office towers and office parks. Marginal concepts and locations will close, which in time may lift the fortunes of the survivors.
• Support Services – with fewer people in office buildings, that means less cleaning, less bathroom supplies, and possibly less need for security services. Cleaning services will suffer – many of which are mom and pop operations – but office supply giants like Kimberly-Clark and Georgia-Pacific will as well. The toilet paper shortage has demonstrated that production and logistics for commercial accounts can’t be converted to consumer production easily.
• Environment – Fewer cars on the road driving fewer miles means lower greenhouse gas emissions and less litter. The big loser will be the petroleum industry, but as noted above, the auto industry could suffer as well.
• Retail will be impacted in a variety of ways. Office supply stores like Office Depot should benefit from the decentralized workforce, as will Amazon because, well, Amazon always benefits. If people renovate their home to accommodate a home office or just trade up to a more suitable home, home furnishings and technology shopping will benefit. But the fashion needs of people working from home will be far more casual than even business casual attire, which will put additional pressure on clothing retailers and hard-pressed department stores like JC Penney and Macy’s.
• Travel – one of the great unknowns is the degree to which business travel will bounce back post-COVID. Far more workers working remotely is not likely to help, as businesses realize they can function effectively without face-to-face interaction. The time and expense of business travel will start to look more like a luxury than a necessity.

This massive workplace shift will impact between 10% and 20% of the U.S. adult population, and because those making the shift are predominantly white-collar workers with above-average wages, the economic impact is likely to be large. For these tens of millions of workers, the whole context and rhythm of their lives will change.