It’s tempting to think that eventually things will be normal again – perhaps even by 2021. Most people will get vaccinated, stop wearing masks, and simply go back to their previous lifestyles in the areas of work, school, and leisure.
But that’s not necessarily the way it will be. We are going through a paradigm shift. Rather than returning to normal, we are in the process of creating a “new normal.”
The world won’t be the same as it was. The signs of how profoundly it has changed are all around us. Just look at a few recent headlines:
“Americans might never come back to the office…” Some will, of course. But many workers in many industries have found that they can be just as productive from home – and can save money on office space, commuting, and eating lunch downtown every day.
“These 37 retailers and restaurant companies have filed for bankruptcy or liquidation.” They include some of the biggest brands in the country, such as JC Penney, Earth Fare, J.Crew, Neiman Marcus, Brooks Brothers, and Ruby Tuesday. Brick-and-mortar retail has been declining for years, but more major retailers and restaurant chains filed for bankruptcy in the first nine months of 2020 than in all of 2019. And it’s not just bankruptcy: here in the Midlands, many of our iconic local restaurants have closed, from Yesterday’s to Solstice.
“Be prepared to say goodbye to movie theaters.” As we stay home to work, we also stay home to be entertained. And although this isn’t unique to 2020, the coronavirus has supercharged the trend, with formerly thriving theaters closing for extended periods.
Most people are used to seeing evolution in markets – steady change is the norm. But the observed changes in 2020 represent more of a revolution as normal assumptions are overthrown. Markets have been massively disrupted in South Carolina, across the nation, and around the world.
But change, even significant change, creates opportunities. We’re all aware of the businesses that have benefitted from the changes cited above, such as Zoom, Netflix, and Amazon.
So what are the opportunities that lie before us, right here in South Carolina?
First and foremost is the increase in demand for consumer goods generated through increases in population growth. The shift toward remote work is incentivizing workers in densely populated urban areas across the U.S. to consider relocating to regions with a relatively lower cost-of-living and affordable, larger homes. This benefits the Southeastern U.S. in general, and South Carolina in particular. Since the onset of the pandemic earlier this year, local home builders and real estate professionals have already started to experience an increase in out-of-state customers looking to relocate to the Palmetto State.
An increase in the demand for consumer goods, in turn, will likely generate significant industry growth in transportation, distribution, and warehousing. South Carolina not only offers easy access to the Port of Charleston, but its geography is also well-suited as a central hub for businesses looking to distribute consumer goods throughout the Southeast. Consider the recent announcement by Walmart to build a distribution center in the Lowcountry. It is likely that South Carolina will see more of these types of announcements in the coming years.
Within higher education, in-person instruction is likely to make a comeback. There is still a strong demand for the “college experience.” But individuals may begin to look at costs differently. In many fields of study, education costs are rising faster than the wage premiums for careers in those fields. As we see more students and parents engaging in a cost-benefit analysis, we may witness a shift in demand among competing majors – toward STEM, and toward more technical degrees. South Carolina is well-positioned to benefit from this trend, with one of the best technical college systems in the country.
Retail trade is also in for significant changes in the coming decade. Although retail has been migrating online for many years, the pandemic has accelerated this movement. Looking ahead, brick-and-mortar outlets that continue to thrive will be the ones that are able to add value in ways that online businesses can’t match. For example, consider stores that are able to provide product expertise or excellent customer service. There will also continue to be goods sold that customers simply don’t wish to buy sight-unseen.
Right here in Columbia, we can be proactive to take advantage of many of these changes. As we graduate students from college, we can work to provide them with opportunities to stay in the community and build our local economy. When you can live anywhere, South Carolina becomes a very attractive alternative.
The future will be different. But South Carolina is well-positioned for a post-pandemic world, and it is important for us to be prepared to take advantage of our opportunities.
Dr. Von Nessen is a research economist in the Division of Research at the Darla Moore School of Business. He specializes in regional economics, economic forecasting and housing economics.