After what can only be described as an ‘interesting’ 2020, the start of the new year has kicked off in the same vein as the last one ended, with the news filled with stories of lockdowns, COVID statistics and political turmoil. However, there is much happening that indicates that 2021 might be a transitional year for a number of different reasons.  Here are six trends we can expect to see in 2021 that will have an impact outside the world of pandemics, geopolitics and presidents.

  1. Hybrid working becomes the norm

The pandemic shut non-essential businesses around the world, leaving office workers to adjust to a new world of home working. People have become used to spending the day on telepresence tools such as Zoom, becoming awfully familiar with the wall art and book collection of their colleagues. However, anyone who is expecting to see a return to the pre-pandemic working environment once the vaccine is rolled out is likely to be disappointed. The ability for businesses to continue to function efficiently without their workforce commuting to the office every daxy has opened their eyes to some significant cost-saving opportunities. Office real estate is expensive, especially in prestigious urban locations, so the realisation that its company can operate without their teams occupying these locations will cause them to reconsider their requirements. Many companies, including the consumer products giant Unilever, have already declared that there will be no ‘back to the office’. Alan Jope, Unilever’s CEO, stated that the company would continue to use a “hybrid mode” of working between homes and offices post-pandemic: “We anticipate never going back to five days a week in the office…that seems very old-fashioned now.”[i] This is music to ears of those workers who hated the daily experience of wasted, unproductive hours stuck in traffic or compressed into an overcrowded train, and who were dreading returning to that world.

However, it is dreadfully naive to believe that there won’t be a downside to this transition. Humans are social creatures, and while telepresence tools enable us to see our workers, it is a formal format that deprives people of the desk and watercooler conversations that create friendships and social bonds. This lack of personal interaction can have an impact on team cohesion, leaving people feeling disconnected socially. For many people, especially those not in relationships, their workplace was the only time they engaged in group interactions. We therefore cannot ignore the impact that having minimal human contact can bring, especially to younger people starting their careers. Even those who have families are seeing downsides, as the line has been blurred between work and home, meaning people are having difficulty switching off from work.

A hybrid model of office and home working is therefore likely to be established in 2021 which could give people the best of both worlds. However, there are ramifications from this shift that will affect the business models of travel companies, real estate vendors, office designers and outfitters, city centre gyms, energy and utility companies, business and formal clothing manufacturers and retailers, not to mention the bars, coffee shops and restaurants that made their money from providing food and drink to these daily commuting office workers.

  1. E-commerce continues to grow; physical retailers accept this new omnichannel reality

One of the areas that will obviously be greatly affected by the shift from office to home working will be e-commerce. 2020 saw a dramatic increase in the volume and value of e-commerce because people were literally forced to stay at home and denied the ability to shop at brick-and-mortar stores. This exposed late adopters to e-commerce while increasing the volume of trade from those people who were already well-versed in online shopping, and global e-commerce sales hit $4.28 trillion in 2020, up 27.6% from the previous year. It is expected to grow another 14.3% to $4.89 trillion this year. Ethan Cramer-Flood, author of eMarketer’s “Global E-Commerce Update 2021, states that “We anticipate that consumers will maintain many of their newfound digital behaviours in 2021.” 74% of these new e-commerce customers started their experience with Amazon, causing a massive increase in the online giant’s revenues and profit, with the company achieving $96.1 billion in sales in Q3 2020. There are signs that this growth will also be long-term, as over 150 million households now subscribe to Amazon Prime; 142 million of those in the US alone.[ii] Membership of Prime drives up the annual customer spend significantly, with members shopping more frequently and spending more per shop.

Other 2020 trends are also likely to continue, such as the rise in home entertainment offerings such as subscription television and gaming. Subscription media services from companies such as Amazon, Disney and Netflix exploded over the past year, and demand for next-gen gaming consoles was so great that it caused both Sony’s PlayStation 5 and Microsoft’s new Xbox Series X to go out-of-stock globally at launch, and consoles are still unavailable to the general public three months later. Something I’m reminded of daily by my youngest son who is still waiting for his birthday and Christmas presents. The demand for home entertainment, combined with the forced closure of cinemas, nightclubs and theatres, has also created a boom for new televisions capable of showing off the potential of the ultra-HD movies and 4K games, and other home entertainment kit such as soundbars. We should expect to see that continue through 2021, especially if foreign holidays are impacted by pandemic restrictions in the spring/summer.   

The continuation of home working will also force many companies to permanently adapt their business models to provide delivery and takeaway services to an increasingly static population. Physical retail will have to adapt to an omnichannel approach, so expect to see a number of companies close less profitable stores and convert larger outfits to mini-distribution centres able to handle both outbound deliveries and customer returns. Walmart, for example, is taking on Amazon by converting their stores to distributions centres, exploiting their advantage in store volume and positioning to offer consumers greater choice and faster service.

  1. March of the Robots

Servicing this demand for rapid home delivery for everything from takeaway food to TVs requires significant amounts of human labour. Amazon, for example, recruited over 400,000 new workers in 2020 to meet its exploding demand and increased its logistical footprint by 15%.[iii] This is expensive. The solution to this cost problem will come in the form of machines. Lots and lots of machines. 

While 2020 was the year of experimentation for many companies, 2021 will be the year of adoption, with implementations of everything from AI-based planning systems to delivery robots. The volume and velocity of e-commerce creates picking, packing and sorting requirements beyond the capabilities of mere humans, regardless of the number employed. As a result, the International Federation of Robotics predicts that the global warehouse automation market will grow to $5 billion at a CAGR of approximately 10% in the next three years, creating enormous demand to develop new warehouses, and retrofit existing ones, specifically to accommodate this new type of automation.[iv]

Last-mile delivery robots are also going to become a more familiar sight in 2021. Companies such as Starship Robotics have seen exponential growth over the last 12 months, performing over 500,000 deliveries and travelling over 1 million miles in total. Likewise, Amazon rolled out its scout road robot in California, Atlanta, Georgia and Franklin, Tennessee in 2020. We will therefore almost certainly see widespread adoption of both Scout and Starship robots across numerous cities in Europe and the US in 2021.

Drone deliveries, something discussed for years now, is also likely to break into the mainstream this year. The last week of 2020 saw the FAA in the US allow small commercial drones to fly short distances over people and at night without a waiver. Small drones will also be permitted to fly over moving vehicles under limited conditions. FAA Administrator Steve Dickson states that “the new rules make way for the further integration of drones into our airspace by addressing safety and security concerns…getting us closer to the day when we will more routinely see drone operations such as the delivery of packages.” Europe and Asia – especially China – will also see more experimentation with drone deliveries.

 

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  1. Autonomous Vehicles finally hit the road (but maybe not cars just yet)

One area which will dramatically revolutionise not just the last mile but also freight delivery and personnel movement is the emergence of autonomous self-driving vehicles. Amazon paid $1 billion in June 2020 to acquire Zoox, an autonomous delivery company, and plans to use its newly acquired capabilities to develop a fleet of autonomous, electric vehicles to reduce its massive freight costs. While reaching Level 4 autonomation in personal vehicles is still proving problematic, the ability to automate the variety of logistics vehicles that move between (and within) fulfilment centres is almost certainly going to be a feature of 2021.

This year will see massive investment in the development of robo-taxis and level 4 automation in cars. Personal car ownership will decline in 2021, for as people increasingly work from home their need to own multiple cars will decrease, resulting in many households returning to being a one-car family. To cover the situations where they do need two vehicles, on-demand rental of transportation services such as Uber and Lyft will be used, especially in urban environments. The cost benefits of removing the human from the front of the car will make autonomous cars the cheapest form of transportation available, further accelerating the move away from car ownership and towards the servitisation of transport. In late 2020 Amazon displayed the first output from Zoox since acquiring it, a purpose-built robo-taxi capable of operating up to 75 miles per hour, and while Elon Musk was somewhat premature in his prediction that there would be 1 million robo-taxis by the end of 2020, he remains convinced that 2021 will be the year these finally hit the road. The demand will certainly be there.

  1. Electric goes mainstream

The creation of an army of autonomous robot vehicles that drive down highways, scuttle across warehouses and deliver to doorsteps will place significant demand on developing advanced battery capabilities. 2021 will therefore be a tipping point for electric vehicles. The signs were there in 2020, which despite a global slump in the sale of overall cars, saw sales of electric vehicles grow 169% in just the first ten months.[v] While fully electric cars still only represent under 2% of the market, plug-in hybrids take that number to 7%. However, government pressure to meet carbon reduction initiatives, combined with the launch of the World Economic Forum’s ‘The Great Reset’ global agenda at the 2021 Davos meeting in spring, will see an enormous move away from internal combustion engine vehicles. In the UK, for example, from 2030 all new cars will have to either be electric models or hybrids, and hybrids will be phased out in 2035. The demise of the petrolhead is nigh.

One of the primary barriers preventing the sale of electric-powered vehicles is cost and range anxiety. The cost has plummeted over the last few years, with companies such as MG already offering fully electric SUVs that start under £16K. The range of electric vehicles is now the remaining barrier to their mass adoption, but four developments are likely to alleviate these concerns in 2021:

  • The aforementioned reduction in the need to commute long distances for work
  • Advancements in battery storage capabilities
  • Extensive expansion of charging networks
  • Dramatic reduction in battery recharging time.

Doron Myersdorf, CEO of StoreDot, a company that has built super-fast chargers for electric vehicles such as drones, demonstrated its ultra-fast charging capability for cars earlier this month that could fully charge a vehicle in five minutes. He stated that “the number one barrier to the adoption of electric vehicles is no longer cost, it is range anxiety. But if the experience of the driver is exactly like fuelling [a petrol car], this whole anxiety goes away. The bottleneck to extra-fast charging is no longer the battery.”[vi]

The rise of the electric and hybrid cars in 2021 will also carry over to demands for greater capability in energy storage and distribution in real estate. There will be pressure to include renewable energy capture and storage capabilities in offices and fulfilment centres to power not only the buildings but also the aforementioned plethora of electric charging points for vehicles, ranging from the robots inside the warehouse that store and pick the goods, to the trucks, drones and robots that deliver the goods and the cars that carry the workers.

  1. 2021 will be the year of 5G

Telepresence working, rise in online gaming and movie streaming, e-commerce, warehouse robotics, road robots, autonomous cars - all of these will need constant, uninterrupted connection to the internet. Bandwidth is increasingly becoming an issue, leading to a massive increase in investment in data centres and edge computing, but the explosion in connected devices that 5G will enable will see that demand for high bandwidth, ultra-low latency connectivity skyrocket. The launch of 5G in 2020 was relatively muted due to limited content and capability. However, 2021 will see the rollout of 5G infrastructure globally, combined with a much greater number of compatible mobile devices, allowing many more people to experience 5G wireless connectivity. In the UK, the Government has already dedicated £28 million aside to simply explore the ways that 5G can be used to improve people’s lives, kicking off with a holographic David Attenborough showing off the wonders of the natural world.

The expansion of 5G will enable everything from improved telepresence capabilities through to the ultra-fast streaming of 4K movies, faster online gaming, creation of whole new virtual worlds in VR, and mixed reality capabilities using AR, the enablement of the Internet of Things, plus the connection and control of the aforementioned army of autonomous vehicles. It will result in 2021 being the year where the world gets connected.

2021: The Start of a Digital Golden Age?

The real impact of these trends is seen when we step back, for each one affects and drives demand for the other, creating a virtuous cycle of progress.

 

While the world will no doubt still be battling with the COVID pandemic throughout the year, behind the scenes, these trends will become mainstream, meaning that the post-pandemic world will look and operate very differently to the one before it.

Article published on behalf of P3 by futurologist:

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