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REAL ESTATE SECTOR INSIGHTS 2020

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Even before the global pandemic hit, our world was already undergoing various disruptions. Our lifestyles, along with working practices were evolving, with the retail sector experiencing a significant structural transformation, offices breaking conventional barriers towards more collaborative working and mass-digitisation altering methods of customer engagement and purchase.

The spaces in which we live, work and play were developing into an interconnected, sophisticated infrastructure, which now is challenged and complexified by the pandemic.

Real estate was evolving by increasingly combining multiple sectors and services within one space. From a retailer with café areas, to a co-working office space with a gym and restaurant to a mall with a theme park…. Real estate was being re-imagined, as consumers expectation raised the bar for brick and mortar experiences, blurring the boundaries of different sectors and subsequently, creating the catalyst for urban disruption.

The pandemic has affected the various real estate sectors in different ways. Here we explore what those are.

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Offices & Co-working Spaces

Corona disrupted workplaces heavily from a cultural, structural and design perspective.  It is affecting corporate hub location strategies, office design and organisation as well as new employee practices.

A report by MIT in April 2020 confirmed that 34% of Americans who previously commuted to work were staying home. Before COVID-19, the number of remote employees remained at 4%.

Moreover, according to the Savills Global Sentiment Survey of research heads in 31 countries around the world, 84% of respondents expected home working to somewhat increase, the remaining 16% expect it to greatly increase. Supporting this, is Cushman & Wakefield research that has captured more than 2.5 million data points from workers all over the globe in the pre-COVID-19 era and a further 1.7 million data points from more than 50,000 respondents in the current work from home environment – based on this, 73% of the workforce believes companies should embrace some level of working from home.

It is fair to say that office working will come back but not completely; the rise of digital adoption has played a significant role in transforming the way people work, given the flexibility it allows. Moreover, numerous employees have been liberated from time-consuming and expensive commutes, finding more productive ways to use that time. As for organisations, working from home and digitisation has made them realise that they can access new pools of talent without location constraints, embrace innovative workflows and significantly reduce real-estate costs.

Whilst it seems, many have enjoyed ‘working from home’, it is not the case for all. Every company and culture is different, and the ‘WFH’ set up has been propelled by an unprecedented pandemic, thus it is hard to say whether – corporate cultures and communities will dissolve over time without physical communication, and whether the current success of ‘WFH’  has been because people have considered it as temporary. However, the key aspect to note is the role of the office, which caters to human connection, culture and community; these aspects have gained greater importance after the emotional and mental impact of the pandemic.

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Brick and Mortar & Retail Spaces 

Before the pandemic, retail and high streets in the UK were suffering due to  e-commerce flourishing, lessening the demand for physical retailers. Technology and elevated expectations of digitisation was also permeating across the shopping experience. Due to the lockdown restrictions, online shopping significantly accelerated and forced the on-boarding of more traditional consumers. As Keith Weed, Unilever’s RMCO expresses in Campaign Magazine: “In the first 2 weeks of UK lockdown the number of people shopping online rose to levels not anticipated for 15 years.”

UK retail e-commerce sales will account for 27.5% of total retail sales this year, and that proportion will approach one-third by 2024. The post-pandemic hit to physical retail will be felt far into the future. E-Marketer, 2020

However, following the emotional impact of the pandemic, consumers will continue to seek out convenience and community-led retail concepts and offerings. Consumers had already shown interest in more engaging retail experiences. Therefore, the surge in online shopping will result in reimagining retail spaces and the value of brick-and-mortar stores. According to the Retail Expo Report,  73% of customers will spend more money and time in-store offering experiences.

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Hotels 

The hotel market and hospitality sector were quickly the hardest hit by corona. The main issue remains the demand amid the constraints of international lockdown rules. Whilst the interest in travel for leisure persists, global government restrictions are likely to drive consumer demand towards local holidays and domestic travel over international.

According to global hotel consultancy HVS, 60% of UK hotel demand comes from domestic sources and, as many UK residents are likely unwilling to holiday abroad, domestic hoteliers are benefiting and this may even help some stay in business until international tourism picks up again.

However, in the long term, travel for business has inevitably decreased with the shift to video conferencing, a trend we believe is likely to continue even post-corona, with the business travel sector predicted to lose $810.7 billion in revenue this year. Hotel Tech Report, 2020

Although hotel sector performance currently depends on travel restrictions and rulings, we believe that the psychological impact of the virus has only intensified the interest in wellness  – an area for hotels to tap into through the likes of outdoor-led activities, and nature-focused wellbeing retreats that also adhere to corona restrictions.

While “billions will be lost in the wellness industry in 2020 because of months of shuttered brick-and-mortar businesses,” said Beth McGroarty, vice president of research for the Global Wellness Institute, “at the big-picture, long-term level, the case for the wellness concept and wellness markets post-pandemic looks very bullish.”

 

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Healthcare Centres & Clinics

Health and healthcare have never been more front of mind, preceding the pandemic, the worlds overall demographics made the likes of senior housing a critical market. The increasing ageing population has propelled the growth of health clinics, independent hospitals, elderly care homes and primary care centres. Real estate portfolios are becoming progressively complex, diversifying to cater more and more to outpatient care; for instance, in the US, outpatient visitation increased by 25% throughout the past decade and will continue to do so. Med City News, 2020

With wellness intrinsically linked to health, a new emerging trend is the new types of health spaces that are taking inspiration from the retail industry.  Especially with regard of viewing patients as consumers and making sure the centres are positioned in key locations whilst providing a mix range of services that suits the customers’ lifestyle. According to Savills, 43% of countries expect to see a positive impact on investor appetite for the healthcare sector.

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Residential (Co-living spaces, Single-family housing…)

 The residential sector is currently resilient, yet sub-sectors can differ, i.e. family housing vs co-living spaces. On one side, the pandemic has caused a mini-exodus out of dense cities and city-centres – with the forced lockdown measures; people aimed to stay with their families and move to locations with more outdoor space. Subsequently, benefiting the single-family housing market and casting a fresh light on areas outside of key cities.

The digital adoption during the pandemic has led to a more fluid work-from-home experience, which has the potential of exacerbating the level of urban flight on the long-term due to the quality of life outside of cities. Although it does not mean that people who had fled denser cities aren’t to return, yet peoples’ mindset has evolved.

A core feature for residential real estate is their investment in digital-sales and leverage of digitisation – using VR, AR and various omnichannel strategies to help potential buyers and renters find their desired spaces. Virtual viewings and such has taken a front seat during the pandemic and is likely mature and play a key role in commercial real estate sales on the longer term.

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The global impact of coronavirus has affected somewhat differently each sector within the real estate market. Nevertheless, the meteoric shift to online, the rise of technology along with the significant emotional impact of this health crisis, are key features that have affected every sector.

 

The pandemic has accelerated digital adoption, which subsequently:

  • Created new ways of working (virtual meetings, sourcing talent etc.)
  • Increased expectations regarding convenience, especially across retail. (online shopping, delivery etc)
  • Amplified the use of innovative technology for digital sales (VR, AR etc.)

The emotional impact of the pandemic has:

  • Further intensified the interest in wellbeing
  • Boosted the need for social interactions and positive corporate culture
  • Accelerated the focus on community-led experiences and benefits
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EATING EXPERIENCES WEBINAR : Life Led Eating Experiences takeouts

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If you missed our latest food & beverage and restaurant webinar, Life-Led Eating Experiences, exploring the future role of dining, and the trends that are forming a radically different picture for tomorrows customer  –  check out some of the key takeouts here!

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It’s evident Covid-19 has had a major impact on all sectors and especially in the restaurant and hospitality environment. However, many restaurants were already broken models long before 2020. It’s not only about about the Covid impact, this presentation considers what other deeper changes in consumer behaviour and lifestyle demand a fresh look at what, where and when we eat?

BEFORE WE LEAP FORWARD,
LET’S TAKE AT LOOK AT THE CURRENT MARKET.

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Interested in more Food & Beverage and Restaurant trends & insight? Check out our Wellness in Food & Beverage insight piece.

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WHAT CONSUMERS WANT FROM TELCO PROVIDERS

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Today’s technological advancements have had an impact on all sectors and it is inevitably shaking up the telecoms industry – from the way customer engage, interact and connect with their telco providers. Below you will find a series of insights that aims to shed some light on consumer behaviour in regard to telco providers as well as the industry overall.

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Over 60% of us view being connected and reachable as the most important experience associated with telcoservices.

Telco 2025 insights, Oliver Wyman (2019)

Covid-lense:  

45% of people working at home due to COVID-19 finding it difficult to connect to meetings due to poor internet connection

Moneyexpert.com, 2020

53% of people who attempted to make contact with ISP in last month faced difficulties: A new poll of UK adults has revealed poor levels of customer service from Internet Service Providers (ISP) in the last month (April 2020), due to the impact of COVID-19.

Djs research, 2020

Nutshell: The fundamentals remain largely the same, accessibility and connectivity are a priority, providers should not lose sight of this as technology continues to improve and providers diversify their offering. And let’s not forget, how customer service experience and the approach in managing user issues are vital to customer-retention in this competitive landscape.

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49% of respondents nowadays would rather grab a smartphone than a wallet.

Telco 2025 insights, Oliver Wyman (2019)

Covid-lense:

The COVID-19 pandemic has also dramatically accelerated the use of contactless payments, accounting for a whopping 90 per cent of all ‘face to face’ transactions since April 1.

Barclaycard, 2020

Nutshell: This shows the importance of digital wallets and how the integration of zero-touch is becoming a standard in consumer’s lifestyles. Therefore, considering partnerships and collaborations with payment platforms and integration of biometric and security measures are essential.

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61% would rather use Google maps than ask a pedestrian for directions

Telco 2025 insights, Oliver Wyman (2019)

Covid-lense:

Since Covid began in March, smartphone & mobile is device that has seen the largest increase in usage, up 70% worldwide (compared to laptop up 40%).

Statista, 2020

Nutshell: Consumers are increasingly leading digitally led lives, creating new habits and comforts that are embedded in connected devices. It is important to acknowledge behavioural insights as they allow telco providers to build successful solutions that are led by consumer lifestyles.

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“The telecommunications industry and related verticals will continue to evolve dynamically over the next five years. Boundaries will blur among product categories as a range of industry actors shape customer demand scenarios” – EY, Global telecommunications study: navigating the road to 2020

Disruptors: Consumer Ownership

With the rise of tech companies becoming more than just manufacturers of hardware, customer ownership could be at risk. Especially with millennials and a younger generation that have engaged and become loyal to certain brands – they are likely to see the equipment manufacturers/ tech-led brands as legitimate options for telecom services. (i.e. Apple, Samsung, Google etc.)

Diversification: Decentralized communications

With the availability of new technologies across communication platforms and software, telco providers are seeing the market decentralize and move away from one single provider. In other words, the lines between telecom companies and technology vendors are blurring.

Transparency: Data Security & Privacy

New technology comes with great opportunities as well as emerging security threats. Consumers are fast to learn about hacks and are becoming increasingly aware of the value of their personal data. Setting up the operational and technical innovations are needed to meet customer expectations, but also being able to show the ways in which users are protected will be key to reassure, retain and sign on new customers.

What this means:

Telco providers need to raise their game to retain customer ownership.

Whilst virtual customer relationship is on the rise, telcos may need to start to reconsider their customer experience and journey and their branding – so as to build stronger emotional connections with their customers, the way many leading-tech brands already have. This can be achieved in various ways – through creating a new and improved customer journey, rethinking the brands’ image and USP as well as restructuring its offering to become more agile.

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Exploring global macro trends affecting all sectors

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Here we explore the 4 key macro trends that affect every sector and any industry that might be consumer facing. It doesn’t matter whether you are a retailer, bank or hospitality brand, consumers are more self and socially aware, seeking solutions that genuinely benefit their lives and those within the community. From technology, wellbeing to accountability and social reconnection, these macro trends in peoples’  behaviours are affecting how consumers engage, chose and purchase from brands. These trends were already present before the pandemic, but they have since accelerated and become genuine consumer expe

ctations. These leading trends will help forge strong connections with consumers thus, representing the pillars of successful brands.

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Tech-solutions and digital integration has permeated across all sectors and industries – as consumers increasingly expect convenience and real time control of their purchases, transactions and various lifestyle needs.

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Brands should take note of this change and make it a priority to support healthy lifestyles for consumers, shoppers and employees. Having a “wellbeing strategy” will be a critical differentiator for the foreseeable future.

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Consumers are more mindful of what and how they’re buying. They are aiming to reduce food waste, shop more cost consciously and purchase more sustainable options. Brands will need to take this under serious consideration and make this a key part of their offer.

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The desire to shop local and support the community is reflected in both the products consumers buy (e.g. locally sourced, artisanal) and the way they shop (e.g. supporting community stores). Brands will need to find ways to connect locally – whether by highlighting local provenance, customising for local needs/ interests or engaging in locally relevant ways.

 

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After reviewing these trends, here are some points to get you started 

 Questions to ask yourself about your brand:

  1. Are you effectively using your digital touchpoints to enhance your customer experience?
  2. How does wellbeing feature in your brand? How do you authentically integrate it within your brand experience?
  3. What are your brand values? Is your company holding itself accountable – what is your stance towards sustainability and social issues?
  4. How are you connecting with your consumers on a local level? Are you connecting and supporting your communities in relevant ways?
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Moments of Change: Restaurant Trends Highlights Post Covid

In this report, we started to map out the trends that have risen or accelerated during Covid, and analysed how they may impact the future of  restaurant experiences and the food and beverage industry.

What might the new dining experience look like post-Corona?

What are the trends and behaviours that restaurants should consider once lockdown is over ?

How has the pandemic affected consumer habits and what does that mean for restaurants and the F&B market?

You can check out the highlights below, and should you want to view the full PDF report, you can get in touch with Lindsay Tarkian at [email protected]

MOMENTS OF CHANGE : Has Covid-19 accelerated trends in the restaurant world that already existed?

This unprecedented crisis, has transformed the way we approach our daily lives – changing our eating habits with the closures of restaurants. Many restaurant models were already broken. Covid-19 will act as an amplifier for themes driving change previously. It is also bringing some specific new challenges and a long-term legacy.

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We’ve gathered these insights in the hope of shedding some light on what the future of restaurants and dining experiences might entail. We hope these various points can support and inspire you amidst this difficult time. Whilst during this period, delivery and online touchpoints are key, we strongly believe that physical restaurant experiences will still have a great role to play. “Moment of Change – Has Covid-19 accelerated trends in the restaurant world that already existed?” report introduces considerations for the future, on how you might adapt your physical experience and customer touchpoints efficiently.

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FINANCE WEBINAR : Life Led banking takeouts

FINANCE WEBINAR : Life Led banking takeouts

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If you missed our latest finance webinar, Life-Led Banking, exploring how the role of branches have changed within the new model for retail banking –  check out some of the key takeouts here!

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The need to re-think and re-design retail bank customer experience is exemplified by the transformation of branches within the mix of channels… This transformation goes across their purpose, their nature, their locations, what customers expect from them and their very raison d’etre in the post-covid landscape

‘Traditional’ banks, due to the impact of digitisation, well before covid-19 were facing two alteratives… Banks can either reduce costs, by shutting stores and concentrate on digital or embrace change and revise the fundamental role of physical spaces.

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THE COVID-19 EFFECT: ACCELERATION AND AMPLIFICATION OF THESE OVERARCHING CONSUMER TRENDS AS A RESULT OF THE PANDEMIC

Technology:

IN THE FIRST 2 WEEKS OF UK LOCKDOWN, THE NUMBER OF PEOPLE SHOPPING ONLINE ROSE TO LEVELS NOT ANTICIPATED FOR 15 YEARS

KEITH WEED, UNILEVER’S CMCO FORCAMPAIGN MAGAZINE, 2020

Wellbeing:

CONSIDERATION FOR CONSUMERS’ PHYSICAL, MENTAL AND EMOTIONAL WELLBEING HAS NEVER BEEN MORE IMPORTANT:

64% OF PEOPLE ARE WORRIED ABOUT JOB SECURITY

ACCENTURE COVID-19 CONSUMER RESEARCH, 2020

Accountability:

CONSUMERS ARE LOOKING TO BRANDS TO HELP:

62% BELIEVE BRANDS WILL PLAY A CRITICAL ROLE IN HELPING TO SOLVE THE CRISIS

EDELMAN 2020 TRUST BAROMETER SPECIAL REPORT: BRANDS AND THE CORONAVIRUS

Social Reconnection:

THE PANDEMIC HAS REQUIRED PEOPLE TO PULL TOGETHER AND AS A RESULT:

80% OF CONSUMERS FEEL MORE OR AS CONNECTED TO THEIR COMMUNITIES

88% EXPECT THESE CONNECTIONS TO STAY INTACT LONG AFTER THE VIRUS IS CONTAINED

ACCENTURE, COVID-19 CONSUMER RESEARCH, 2020

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WHAT DO THESE TRENDS & INSIGHT LEAD US TO?

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The Coming Revolution of Life-Led Banking

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Interested in more banking and finance trends & insight? Check out our Wellness in Finance insight piece.