A lot of us just want to shop. The wave of would-be buyers that tried to storm Harrods in London over the weekend says something about how fed up people are with the Covid rules. Four were arrested.
We want to get back to normal. Or at least many of us do. Harrods is, of course, top end. A bit further down the scale we have the disasters at Debenhams and the various bits of Sir Philip Green’s empire. In New York, Bloomingdales is open, but is emphasising curbside pickup for goods ordered online. And in the US overall, Black Friday seems to have been a bit of a Bleak Friday for in-store shopping, while a boom for online.
So the evidence on shopping is mixed. We certainly want to buy stuff, but as yet many people are too worried to do so in person. However, this is very much what you would expect. We have not yet had the jab. We know that we will be able to get one of the vaccines probably by Easter, but until we do, it makes sense for many people – clearly not all – to want to hold back.
So the Harrods event is a clue to the future, one of a whole string of clues that will help us understand which effects of Covid-19 are temporary and which are permanent. Pubs reopening is another. Leave aside the jokes as to whether a scotch egg is a substantial meal and focus on the numbers. The pub takings will give us a feeling of whether things are really normal or whether there has been lasting destruction to an important bit of the hospitality industry. Anecdotally, in London at least, pub sales seem to be coming back quite strongly, but these are very early days.
So there are a few clues on the spending side. We will get more as the run-up to Christmas develops. There won’t be the crush of the office parties, or parties in general, so overall hospitality spending is bound to be sharply down on last year. However, retail spending will probably turn out to be well up.
If that is right, the message will be this: we want to spend. If we can’t spend on fun, we’ll spend on stuff. But when we are allowed again to spend on fun – after we have had the vaccine – we will switch back. As far as the spending side of the economy is concerned, the new normal will not be so very different from the old normal. Yes, there will be more online shopping, but that was an established trend before Covid struck. The high street will find ways of fighting back, probably with more housing (which we need) and less retail space (which we don’t). If the chains move out, that is an opportunity for others to move in.
What about the earnings side of the economy? Here we are still learning what works and what doesn’t. Companies are catching some feeling both for the opportunities and the costs of having their people working from home. Obviously there are many activities that require physical presence: you can’t assemble a car by tapping away on a laptop. But for those tasks that can be done on-screen, there is a short-term/long-term distinction: what can be made to work for a few months won’t work so well once the emergency is over.
However, there are hints of how the new work patterns will develop. For example, training new staff is a huge issue if it has to be done online. But if people can really work from home, the pool of labour a firm can draw from is much wider than the people within its commuter belt. So there are plusses and minuses. We cannot know until people are able to go back to their former work patterns whether they actually will. What will determine this, to be brutal, will be what is most efficient. If the task, whatever it is, can be done better and more cheaply by people working from home, then that will happen. But if the quality goes down and the costs go up, then it won’t.
Are there any clues about where this will settle? It is too early. There are lots of experiments going on and few clear results. For example, do online consultations with GPs give as positive medical outcomes as visits to a surgery? We don’t know. We do know that online schooling does not work well for all sorts of reasons, so that won’t change. Schools seem to be like Harrods. Physical presence is the thing.
There is a more general point here. The world has been forced into a huge – and hugely expensive – experiment. We are all, one way or another, part of that experiment. Out of it will come more efficient ways of providing the whole of services, public and private, that make up 70-90 per cent of a developed country’s economy. We won’t change much, as people and our needs won’t change much either. But the ways in which many of those needs will be supplied will change – and on balance, for the better.