By Wolf Richter, editor of Wolf Street. Originally published at Wolf Street.
One of the biggest permanent changes coming out of the Pandemic is that businesses have invested in technologies that have long been available, but that hadn’t been deployed because there was no visible need to deploy them, and because businesses were stuck in a rut, and change is hard and costly – and the rules of inertia had taken over.
But now the Pandemic has forced businesses to change. There is no going back to the old normal. And these technologies impact employment in both directions.
We encountered precisely that when we went cross-country skiing last week at Royal Gorge in the Sierra Nevada, which we do every year. What is said to be the largest cross-country ski resort in the US with 120 miles of groomed trails (if they’re groomed) had fallen on hard times years ago, filed for bankruptcy, and was acquired out of bankruptcy in 2011/2012. It is now operated by Sugar Bowl Resort, the downhill ski area nearby. There have been some improvements since then, such as new warming huts. But the resort remained largely low tech, or no tech. And even there, things changed massively and permanently with the Pandemic.
The way it used to work: You stood in line every morning to buy old-fashioned trail passes that you then stuck on your poles and that you then tried to scrape off at night. If you rented equipment, you spent more time standing in line. There was a website, but you couldn’t buy anything on it. There were quite a few employees involved in dealing with the skiers that wanted to buy trail passes and rent equipment. The place could get crowded, and customers wasted time standing in line and dealing with logistics.
Now, the requirements of social distancing and contactless commerce forced the resort to invest in an ecommerce website. You have to use the website to buy trail passes and pay for and make reservations for the rental equipment (actually fitting the rental equipment is still done in person at the lodge).
Trail passes are now rechargeable cards, similar to prepaid debit cards with a radio chip. You get them at an ATM-type machine outside the lodge by holding the QR code — that black-and-white square-shaped maze — of your reservation (paper or smartphone) under the scanner. And it spits out the card. You can recharge the trail pass online and reuse next year….
This should have been done 10 or 15 years ago. It’s superfast and convenient, and you don’t have to stand in line anywhere. You can park, scan, and ski.
And the resort has gone entirely cashless. You can buy some corn bread, but you have to use your card. Credit card transactions are automated. No one needs to balance the cash drawer or count cash.
And some of the staff that used to deal with the trail passes and other stuff are now either doing other things at the resort or are no longer needed at all.
But there are people who manufacture, install, and maintain the equipment, build and maintain the ecommerce site, and deal with the other issues that tech produces. They’re different jobs and only have a small local component.
This is a permanent change. And it’s an improvement for users of the resort. It may have also reduced employment at the resort, while supporting employment at companies that provide and service the technology.
I chatted with one of the employees at the resort. Trail pass sales were doing pretty good, he said, but equipment rentals were down by about half compared to last year. He figured that a lot of people have bought their own equipment.
This would be in line with a surge in sporting goods purchases that right off the bat last spring led to a shortage of bicycles and spiraled out from there, and led to the biggest-ever and ongoing spike in spending on durable goods.
It would make sense: quite a few people have apparently left San Francisco and other high-cost Bay Area cities, and some of them have moved into the Sierra Nevada, including the Lake Tahoe area and the whole strip along I-80, including Truckee, now that they’re “working from home” and can take a daily ski break between Zoom calls.
The healthcare industry has done a similar thing: Using technology to avoid contact, thereby making a lot of basic stuff simpler and cheaper. At our healthcare provider, we could always make a phone-appointment with a doctor. This was free and quick, and often all that’s needed for minor things, and avoided the time and cost of “going to the doctor.” This was an option.
Now telemedicine – or “virtual care” – has turned into a thing. Making video appointments is now encouraged. Prescriptions are filled online and delivered. When that’s all that is needed, it saves time for the patient and the healthcare provider.
Obviously, telemedicine still doesn’t work for many medical issues, but the routine issues that doctors spend much of their time on can be handled that way.
Only some of these technologies are visible to patients. For the healthcare providers, it meant investing in video tools and other technologies and in the infrastructure needed to support this on a large scale.
The Pandemic has also pushed even reluctant consumers and businesses into ecommerce. In Q4 last year, when brick-and-mortar stores were open nearly everywhere, ecommerce sales soared by 32% from a year earlier.
Package deliveries by UPS nearly doubled to 34 million packages a day, UPS chief information and engineering officer Juan Perez said at a Wall Street Journal event. And the company had to adapt and scale its digital technologies to deal with it. The Pandemic drove some of the most significant changes in the company’s history, he said.
The entire ecommerce sector, likely the biggest beneficiary of the Pandemic, has invested vast sums in technologies and infrastructure to deal with the surge in demand.
This now includes ski resorts and grocery stores and other previously unlikely suspects for ecommerce. They will not go back to the old normal, nor will their customers.
While lots of office employees who now work at home will eventually return to the office, the old times of nine-to-five every day at a desk farm are gone for many employees. Companies have invested in technologies to succeed with their hybrid work-from-home models, and they are cutting costs where possible by reducing the real estate footprint and related costs.
People who like working in an office can gravitate to employers that encourage or require it. People who like working at home can gravitate to employers with hybrid models. Companies will make one or the other a selling point when recruiting talent. That’s how that will wash out.
It will take years to sort through the issues that these sudden and often massive shifts leave behind. But from what I have seen, many of the shifts are positives and should have happened a long time ago – and only inertia prevented them from happening.