As of the end of the first week of June 2020, it appears that the first wave of the COVID-19 pandemic is receding with economies opening across the globe.
Fears of a prolonged depression appear overdone, as signs of demand rebounding fuel optimism in financial markets. In the US, the labor market bounced back with the June 5thblowout jobs report showing 2.5 million new jobs being added in May, with total unemployed dropping to 13 million versus the consensus of 20 million unemployed. The financial markets have been roaring back from March lows, with the S&P 500 up over 40% and the NASDAQ notching a new all-time high on June 8th. Capital markets are extremely active, with record investment grade debt issuance in April and May followed by a robust IPO calendar in early June. It’s clear that the financial markets are anticipating a V-shaped recovery, but how does this translate given the changes we anticipate in the Newest Normal? One of most notable dynamics of the global pandemic of 2020 is that it has accelerated the trends toward Digital Transformation, and in particular Digital Industry.
A key dynamic reflected by the financial markets is that the value of digital and internet-based businesses has surged, in contrast to industries such as retail, hospitality and travel which have been severely impacted by social distancing. Retail is being hit particularly hard, with the pandemic accelerating the “Retail Apocalypse” that has been underway over the past several years. Nearly 4,000 stores have closed so far in 2020 with iconic chains such as J.C. Penney and Neiman Marcus declaring bankruptcy. In contrast, Amazon has been seeing explosive demand, hiring tens of thousands of workers as it beefs up its supply chain, investing nearly $4 billion in capital expenditures to scale the business and even building its own medical testing and immunology lab to keep employees safe.
Another critical dynamic is how the changing nature of working, the rise of remote Work from Home (WFH) practices has reduced the critical importance of large cities. Even with the civil unrest taking place in cities like LA, Chicago, New York and London, financial markets do not appear to be discounting much impact. Notably, there’s a large-scale migration under way out of the most densely populated cities in the US, as well-heeled buyers snatch up inventory in the suburbs that had languished as markets for higher-end real estate went soft. Expect the exodus from densely packed urban centers to continue, particularly among older residents seeking to distance themselves from the risks of pandemic and concerns over public safety.
This thinning out of urban density could cause a rethinking of Smart Cities projects in the near to medium term, particularly if declines in tax bases from residents and retail leaving cities creates financial challenges for local governments. Given the added pressures related to unemployment payments, public health programs and social distancing impact on retail/entertainment activity, it’s worth re-visiting assumptions around smart cities projects.
Are you looking to better understand digital industry impact in assets?
In this first edition of our Digital Industry Impact webinar series, we explore how digital is making all industrial assets smarter: more efficient, productive, reliable and resilient. We will be focusing on early learnings, key outcomes and best practices in time-to-value. Our panelists include leaders from Momenta Ventures portfolio companies: RevTwo, SightMachine and SmartEx.
During this 60-minute webinar we will be exploring:
Key trends in digital industry asset management
Real-world examples of impactful innovation
Best practices in developing and delivering digital solutions
The current and future opportunity landscape
Interactive Q&A session
This webinar is for industrial OEMs, asset managers and executives as well as entrepreneurs and investors!
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Edge Podcast
Featuring leading practitioners, innovators and thinkers across Digital Industry and the digital technology landscape.
Market leading practitioners, entrepreneurs, industry experts, authors, investors and thinkers of digital transformation share perspectives on their experience, successes, misses, lessons and outlook for the future.
