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Throughout 2020—and into 2021—many businesses closed due to lockdowns established to curb the spread of COVID-19. Within that timeframe everything from work to school, and even socialization had to be conducted virtually. Survival is the goal of evolution; and to persevere, technology became the crutch on which humanity leaned, according to Murdo MacLean, client investment manager at Walter Scott.
“To survive, you need to be able to adopt and embrace technology. This period has advanced that adoption of technology in a way that would’ve taken about one or two decades for the older generations to feel comfortable,” he said.
Business leaders in retail said there has been 10 years of innovation over 10 months.1 According to a World Bank research paper, comprised of data from 100,000 businesses across 51 countries, 34% of firms increased or started the use of internet, social media and digital platforms, while 17% of firms invested in new equipment, software or digital solutions as a result of the pandemic.2 The pandemic led to an eye-opening moment for both businesses and consumers, according to MacLean.
Of course, many prefer a balance of in-person socialization and the convenience of using technology, but, that said, it’s hard to imagine things going back to how they used to be, said George Saffaye, global investment strategist at Mellon3.
“Home is the new data center and it has implications for just how organizations can source new resources if they don’t have an office in a specific city.” Saffaye said. “It opens up a whole new world of opportunities: everything from telehealth to work-from-home, to digital engagement—and I think it’s going to become exponential in the next decade.”
When things return to normal...
The pandemic may have accelerated a degree of technological adoption, but secular trends were in place before it and will certainly persist after, according to Yuko Takano, global equity manager at Newton.
“There are traditionally low-tech areas, which are at the cusp of seeing a lot of innovation,” Takano said. “For example, autonomous tractors, which reduce the field consumption of a tractor quite tremendously, use a lot of innovative technology like optical sensors and artificial intelligence (AI).”
In theory, this will allow farmers to do traditional agricultural tasks remotely and in a more efficient manner, running several machines simultaneously at all hours of the day.4 In a field dominated by start-ups, one such company is developing an online simulator to bring this dream to fruition and will use 50% of its budget to create cloud technology to service the data, and the other 50% to develop products that can be used in this environment.5
Agreeing with Takano, Saffaye said, “It’s pretty amazing what these companies are doing in terms of measuring their vehicles out in the field. They’re not autonomous quite yet but those big tractors are generating tons of data, in terms of their usage, their quality and their maintenance.”
Similar to agriculture, prominent technological changes using similar techniques are taking place in factory automation. The global industrial automation market is expected to grow at a compound annual growth rate (CAGR) of 9.3% from 2020 to 2027, according to a recent study.6
MacLean said changing demographics and other secular social factors are the driving forces:
“Whether its deurbanization or rising living standards, people want to do different things in life. They no longer want to do assembly work; they want more value-added jobs.” He added, “The demand for robots and other ways to improve automation in the assembly lines, like optical sensors, has accelerated over the last couple of years and that will continue.”
While some of these trends seem pandemic agnostic, and others pandemic dependent, there are those that straddle between both worlds and are expected to continue. E-commerce is one example of this, according to Takano. Before the pandemic, it was growing at a rate of 4.5% a year globally. To illustrate what took place during the pandemic, one of the biggest e-commerce companies saw its Q3 2020 sales rise 37% from the same period a year earlier.7
Likewise, food delivery and the gig economy saw a surge in growth over the past year. A US leader in the food delivery app industry saw 543 million total orders in the first nine months of 2020, triple the amount over the same period in 2019.8 While socially-restrictive measures led to a recent surge, Takano expects this trend is here to stay:
“I think there will be more flexible options available for a lot of people going forward, which is really interesting,” she said. “I think we saw eight years’ worth of increased penetration in an eight-week timeframe or something like that and so I think this trend is going to continue,” she concluded.
1 CNBC: There has been 10 years of innovation in 10 months, retail body says.: January 7, 2021.
2 World Bank Group: Unmasking the Impact of COVID-19 on Business. October 2020.
3 The equity and multi-asset capability, including managers and analysts, of Mellon Investments Corporation (Mellon) is moving to Newton. There will be no change to either Mellon or Newton’s investment processes, approach or philosophies during the transition period as a result of this change. There are also no plans at this time to merge or rationalise any BNY Mellon Investment management-branded Mellon and Newton-managed funds.
4 Techstartups: This self-driving, autonomous driverless tractor concept, could revolutionize agriculture. January 10, 2020.
5 Producer.com: Autonomous tractor capture imagination. March 4, 2021.
6 Nasdaq: Accelerating Industrial Automation and Companies to Watch. March 12, 2021.
7 WorldBank: How a pandemic-induced boom in e-commerce can reshape financial services. December 22, 2020.
8 MarketWatch: The Pandemic has more than doubled food-delivery apps’ business. Now what? November 27, 2020.
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