Digitization Acceleration: The Covid Effect
Hopefully Covid-19 is nearing its end. What it has accelerated in the business world, though, is here to stay and gaining strong momentum. The sudden shift to staying home brought dramatic changes in how businesses run and consumers live. But the trend isn’t expected to ease up as as the economy reopens. In fact, a massive new digital wave is underway. Globally, companies are aggressively doing business digitally. Analysts are calling for a “digital transformation” that will be the greatest in decades. The digitization acceleration should be a positive long-term driver for tech stocks.
The New Norm…
The pandemic shattered old company ways. It accelerated the digitization of most business models, creating a new normal that is likely here to stay. All industries everywhere are making the shift. Health care has sped into telehealth, retail pushed more into e-commerce and banking is quickly morphing into fintech. Businesses now focus on digitizing every aspect of their business as fast as possible. Technologies making this move possible include cloud computing, e-commerce, digital payments, artificial intelligence, 5G wireless and videoconferencing. Consumers also changed how they work, shop and entertain. Researchers see a historic, global shift in deploying digital communications across every domain and platform well underway. Spending is expected to reach into the trillions. It could hit that mark by 2023. So, what is it? Digitization is the conversion of text, pictures, or sound into a digital format that can be processed by a computer. Think of scanning a photograph onto your computer. You then have a digital copy. Digital technology for a business can be as basic as dropping “snail mail” for email and other forms of “digital marketing”. Most analysts believe the digital transformation across the enterprise and consumer world is just in its first few innings. More and more transactions are going digital. This is boosting companies sales online, a timely development when we were forced to stay home. Last week’s quarterly earnings announcement from Nike, Inc. is a good example. “NIKE’s strong results this quarter and full fiscal year demonstrate NIKE’s unique competitive advantage and deep connection with consumers all over the world,” said John Donahoe, President & CEO, NIKE, Inc. “FY21 was a pivotal year for NIKE as we brought our Consumer Direct Acceleration strategy to life across the marketplace. Fueled by our momentum, we continue to invest in innovation and our digital leadership to set the foundation for NIKE’s long-term growth.” Digital. The digital adoption by companies, like Nike, shine bright in e-commerce. When the pandemic struck a year ago, Nike closed all its retail stores and switched to 100% online sales. Research shows the first half of 2020 saw an increase in e-commerce equivalent to that of the previous 10 years.
“Over the last few months,” an industry report noted, “we’ve seen years-long digital transformation roadmaps compressed into days and weeks in order to adapt to the new normal as a result of Covid-19.” The Covid effect: Companies forever changed by the crisis.
As a Certified Financial Planner, John formed a vision of a complete investment management and wealth advisory structure. This resulted in a wide-ranging, “big picture” focused and multi-generational capital advisory firm.
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John J. Gardner, CFP®, CPM®
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