Big-City, Pandemic Problems:
Conference Board Survey (8/26/20): “only 27% of workplaces in the top 20 US cities will be reopened by the end of September”.
- Density stats: 3% of US counties have 50% of the population generating 61% of the GDP. (NYC metro-plex is almost 11% of the total)
- Complexity Challenges: the bigger the city, the bigger the – public unions and their under-funded pensions; political bureaucracy machines; and socio-economic challenges.
- Top 20-city, hub airports feed into: convention business ecosystems; mass transit options to center-city elite offerings for: legal, financial, education, research, medical, theater, fashion, media, pro sports, concerts, museums, tourist attractions, etc.
- This rich stew is enabled by swarms of small businesses that are now dropping like flies along with many jobs that will not return.
- Big city tax revenues are dropping, because: a) enough people fear – flying, mass transit usage and big-crowd events; and b) big-income citizens (who can zoom remotely) are moving out.
- Solutions? a) Raise taxes to accelerate the declines. B) Get bailed out by the federal government with the debt burden shared out to all kids and grandkids across the US. Or: c) Go bankrupt.
- Regardless: all city assets and labor must be re-priced downward.
When and How Will Cities Recover?
Who knows? Cities will reach a bottoming-out, equilibrium post vaccinations. But, recoveries will be diminished. The debt/pension/bureaucracy problems will remain. And, both Zoomification and booming – bandwidth; eCommerce; and Amazon fulfillment capacity – will all have permanent, downsizing, shifting effects.
We now know from experience that: business – travel, meetings, conventions, buying-selling, skyboxes for sporting events, etc. – activities will be permanently reduced and re-balanced. And, eCommerce will continue to bankrupt retailers and encroach into B2B distribution channels.
Your Big-City Location Plans?
Metro-centric businesses – like distributor locations – must have 3 sets of plans (best, likely and worst cases) for simultaneously: Downsizing cost structure while Upgrading Value innovation by Refocusing on the Profit Core customers and Reinventing digitally enabled – selling, business and channel – models (DURR).
Few will choose the DURR path to win. Most will: cut costs across the board; hope for the old ways to come back; and fade.