COVID-19 & THE FUTURE OF CITIES

Covid-19 and the future of ci es: 6

trends that will change urban
economies
By Alba Soler & Albert Tapia | 2020

This ar cle is part of the series ‘Covid-19 & The Future of Ci es’ – by antever

The present economic and social crisis emerge today as a bilateral and
drama c consequence of the health crisis caused by Covid-19. However,
ci es are s ll recovering from the major economic crisis of
2008, demanding even more resilience to advance towards the future.

Unlike the previous crisis, with its origin within the system itself, the
current one is originated by an outside shock – the pandemic.This implies
not only a demand shock, but also a major supply shock. Quaran ne
measures have brought disrup ons to produc on and supply chains to
the majority of businesses. On the demand side, and with the looming
prospect of economic distress, consumers show lower confidence and
prefer to save when possible.
The impact of the crisis in urban environments is even greater, as there is a
higher risk of transmission of the virus due to a high-density popula on
and the massive use of public transport. Nowadays, ci es represent
around 80% of the world GDP, and are home to more than half of the
planet’s popula on. The well-being and the capacity to generate more
opportuni es for the society of the future will depend on how ci es are
able to respond to social and economic needs about to come.

In this uncertain context, what are the trends that will dominate the
future evolu on of urban economy? Here is our analysis.

1 | E-Commerce:
The Only Way to Survive

With stores temporarily closed, e-commerce has emerged

as the only way to survive for local business. However, for
those with no op on to adapt to the digital world, the
chances of surviving the crisis in the short term are
significantly low. Some es ma ons state
that between 10% to 60% of local retail stores in the city
of Barcelona may not be able to reopen again a er
confinement. It is to be expected a similar impact on
many other ci es,accentua ng what is known as the
urban paradox: an increase in unemployment rates and in
inequality in ci es, usually more able to generate jobs and
opportuni es for people.
2 | Telecommu ng:
The New Normal

Confinement measures have accelerated telecommu ng,

the new normal opera on in many businesses. Although
the adop on of households as workplaces is not the same
for everyone (house it’s not equal to home), working
remotely has become an effec ve tool for many
companies, especially in the service sector. Now, en re
staffs – from SME’s to large corpora ons – telecommute
from their homes with no horizon of return to their office
in the short term. This paradigm shi is bringing posi ve
externali es with a reduc on in traffic conges on and
pollu on. Nonetheless, it also reveals inequali es
between workers: those reducing their exposure to the
virus and those obliged to face health risks.

3 | Customers Demand Instant and

Last-Mile Delivery

From the point of view of demand, mobile phones and

internet-based pla orms have allowed, a change in
consump on habits. Ci es allow scale
advantages, favouring the prolifera on of logis c
pla orms such as last-mile food delivery.Confinement
represents a turning point for mul -genera onal
consumer habits, encouraging online shopping from
home. Moreover, the expecta on of long-las ng effects of
the coronavirus pandemic on ci zens’ finances, will make
them more demanding when buying a product or a
service. People will priori ze local businesses able to
offer instant delivery and KM0-fresh products at a good
price. For instance, local markets are star ng to sell online
by collabora ng with already exis ng retail pla orms.

4 | New Applica ons for Products and

Services

The crisis has also brought a change in the classic

produc on-consump on model, allowing a more
op mis c perspec ve, by promo ng many innova ve
business ini a ves. For instance, the shortage of personal
protec ve equipment for health workers has led the
automobile industry to adapt their produc on chain in
order to produce respirators using engines’ windscreen
wiper. Food companies are manufacturing masks by using
transparent food packaging. Hotels are becoming the new
hospitals and carsharing companies are providing cars to
healthcare ins tu ons and workers. Hence, demonstra ng
how circular economy can translate into rethinking,
redesigning and reusing exis ng procedures, intellectual
proper es and components for completely new purposes.

5 | Virtual Experience Economy is Here

 | p y
to Stay

Social distancing is preven ng ci zens to a end urban

leisure ac vi es. This is accelera ng the race towards the
era of virtual experiences mainly through Augmented
Reality (AR) and Virtual Reality (VR). Virtual experience
economy is here to stay, bringing new opportuni es to
well stablished economic sectors such as tourism, one of
the most nega vely affected by the pandemic. Travel
companies are launching curated virtual city guides,while
cultural ins tu ons are promo ng their own free virtual
tours during the confinement. Virtual experiences are also
key for the retail industry, improving customer
engagement by personalizing their experience in a digital
space for instance bringing the opportunity to go virtual
fashion shopping.

6 | Towards Covid-19 Free Cer ficates

The hospitality industry is facing a devasta ng economic

downturn in ci es. However, if they want to re-establish
consumer confidence and safe feeling within their
premises, significant measures will have to be undertaken.
In this direc on, many are poin ng towards a Covid-19
Free Cer ficate, a sanitary cer fica on, acquired only by
fulfilling strict requirements such as personnel training in
safe and health proceedings, cleaning protocols and
informing clients on protec on measures against
coronavirus. In order to adapt to these new requirements,
the sector will have to invest in technologies to advance
towards low-touch experiences, take advice from health
specialists and above all protect their employees.

WHAT COMES NEXT?

THE TIME FOR DIGITAL INNOVATION AT THE
LOCAL LEVEL
The economic urban ecosystem will only be able to overcome the current
downturn by applying innova ve approaches, sharing knowledge and
crea ng new synergies and alliances. The race
towards technology and digital transforma on will become key to
survival.

Moreover, governments (at all levels) should play and are playing a key
role by establishing economic mi ga on measures such as promo ng
access to loans and financial support to local companies. A er all, the
present health crisis, will only accelerate changes already taking
place, nothing started from scratch.