Declan Jordan: Shoppers may value their local stores more highly after Covid crisis ends

Covid-19 will cause the Irish economy to contract to a greater extent than the economic crisis of just over a decade ago.

The speed at which the current crisis has done its damage means it difficult to know how long it will take the economy to recover.

Taoiseach Leo Varadkar has referred to the economy being put into hibernation.

This is a very benign image and it is unlikely that the economy will simply emerge from its sleep, stretch, and carry on as normal.

The scale of the medium and long-term damage to the economy will only become apparent after the crisis passes.

The wide range of forecasts for the decline in economic activity, from 7% and 15%, illustrates that there isn’t a consensus on just how bad things will be.

At this stage, we can only be sure that the impact will be substantial.

At the far side, a recovery may be relatively quick as pent-up consumer demand drives growth.

More likely the economy will come back slowly and nervous consumers avoid the urge to spend big.

The threat of a return of Covid-19 next winter will also weigh heavily.

The crisis, of course, is affecting more than just the economy.

The way we work, the way we play, the way we learn, and even the way we engage with each other have all changed during the pandemic.

It is difficult at this stage to see how the world can go back to the way it was.

Our worlds are getting smaller and simultaneously becoming more virtual

We have seen that many large retailers have their own online offerings but few have matched the scale of the large online stores like Amazon, which already runs grocery outlets in the US.

The UK has the highest proportion of online retail sales in major economies, with one-fifth of retailing. In the US, the corresponding figure is 9%, and in Germany, it is 10%.

While we can expect some consumers that have tried online shopping for the first time during the Covid-19 shutdown to stay with it, most consumers may now value their local stores more highly.

It is to be hoped that small independent retailers, if they can survive the months of shutdown, will be appreciated and supported more.

The key strength of bricks and mortar stores against online alternatives will persist. Similarly, how we are unlikely to see sustained change in how most of us work.

The office is not about to go online. It is remarkable what technology has allowed us to achieve in terms of remote working.

However, it is also just as obvious that people need the social contact that comes as part of the work experience.

The exchange of technical information and knowledge can be done without face to face contact.

However, more and more work in an economy increasingly dominated by services is coordinated and requires collaboration.

We are social creatures. The warnings about protecting our mental health while isolated demonstrates that.

- Declan Jordan is senior lecturer in economics at Cork University Business School, UCC