It was not supposed to happen like this. Seven months after a handful of new COVID vaccines were given the governmental go-ahead, the U.S. and the world were expecting to be on the cusp of closing this ugly chapter once and for all by now.
Of course, as everyone is fully aware, that is not the case, and we have now found ourselves careening toward another fall and winter flu season fraught with deja vu fears of mask mandates, remote work and more.
As much as we are vastly more prepared, digitally speaking, to cope with these lifestyle restrictions than we were 17 months ago, public tolerance for them, and the retreat that they represent, has actually declined.
For front-line public-facing businesses, this balancing act is nothing short of torture, and could unwind many of the hard-fought adaptations and digital advances that kept commerce moving and entire industries afloat.
The tendency is something of an inversion of what we saw last spring, with the firms hit hardest by lockdown and quarantine seeing customers come back and their profitability return, while firms that won biggest when the world shut down found they had some trouble staying quite as competitive in a world with outside options.
The Winners Circle And The Changes Within It
Coming out of earnings season, airlines ended up the big winners, with Delta Air Lines snapping a five-quarter losing streak and United and American predicting returns to full profitability, although both still posted losses.
A similar message was heard from all the major airline CEOs going into their earnings reports, touting surging consumer desire to travel by air as a sign that the industry, while not fully recovered, is on its way back from what has been a long and difficult period. United CEO Scott Kirby was particularly buoyant in his optimism.
“And so while we expect case counts to rise, given the vaccination rates, they will still remain well below the peak, and hospitalizations and deaths will not rise nearly as much,” he said. “That leads to the logical outcome that the reopening continues on track.”
To be sure, airlines are still facing plenty of issues as they rebuild staff and restore routes after pandemic cuts, as well as the ongoing slow return of business and international travel. All airlines reported that domestic travel has recovered to near pre-pandemic levels, uneven distribution in vaccines around the world and the rise of more aggressive coronavirus variants have left international demand still highly stalled. Airlines remain optimistic, with Delta CEO Ed Bastian noting, “We see clear signs of business in international demand recovery heading into the fall.”
The Restaurant Rebound
Also showing strong signs of recovery are restaurants. As vaccination rates rose and health requirements fell, diners and restaurant workers alike were able to relax as bars and dining rooms filled back up and friends met to celebrate some form of normalcy. Doing exactly what PYMNTS data predicted they would in the early days of vaccination — more than two-thirds reported they wanted to spend time with their friends and family, 52 percent stated intentions to travel domestically while more than half named participating in public leisure activities like going to the movies and dining out with friends as their top post-pandemic activities.
As we look at the firms that have come out of Q2 with the strongest growth, the outcomes align with the intentions stated earlier this spring. When AMC reported earnings a few weeks back, the nation’s largest theater chain noted for the second time in three weekends, and third time since Memorial Day weekend, it recorded its busiest weekend attendance numbers in the last 16 months, as 3.2 million people watched movies at its U.S. and international theater locations the weekend of July 9-12.
And yet even for the winners, the comeback has meant adjusting to change. AMC’s biggest return weekend was, for example, led by Disney’s summer super-hero blockbuster “Black Widow,” which opened to an estimated $80 million for its opening weekend in the U.S. and Canada. That was a big opening, but might have been much bigger had consumers not also had the option to stream it at home care of Disney+. And though consumers are coming back to dining locations, looking for food, fellowship and someone else to clear the dishes, they’ve far from abandoned their digital dining habits, PYMNTS data demonstrates.
The latest edition of PYMNTS’ Restaurant Readiness Index showed remote orders placed digitally via an app, aggregator or online have become the bread and butter of restaurants’ bottom line as some 69 percent of the average restaurant’s sales are now generated either digitally or over the phone. That is next to just 31 percent of sales that are generated by orders eaten on-site.
The Tougher Side Of The Race — Social Media’s Sag
The recovery, on the flipside of the coin, was less good to the firms that became staples of consumers lives on lockdown. Twitter and Facebook both came in below analyst estimates for new users to their platforms in Q2, while Pinterest actively lost monthly active users in the U.S. The only social media firm that managed to escape the gravity of the real world pulling on its users was Snapchat, which saw its user count pick up more than expected in Q2 — a fact explained by CEO Evan Spiegel as Snap’s focus on picture-taking, which tends to follow users on their real-world adventures more easily.
Social media wasn’t the only vertical that took a hit: Amazon was also reporting decelerating sales as consumers were heading back out to stores.
“I think the impact of people getting vaccinated and getting out in the world — not only shopping offline but also living life and getting out — it takes away from shopping time,” Amazon CFO Brian Olsavsky said on an earnings call.
And yet, it seems, shopping time is exactly what these various social media players are doubling down on as the pandemic period passes. If users will be flocking to their sites less, the universal takeaway from earnings season is that social media platforms are determined to give them more to do and more opportunities to transact while they are there.
“While we’re still early in the journey to fully monetize our shopping engagement, we believe that we have the right sales coverage model, and we’re delivering conversions to advertisers, advertisers who are seeking sales on the platform,” Pinterest CEO Ben Silbermann told analysts.
Because in a world where consumers can get back out there — a world somewhat endangered of late by the emergence of the Delta variant of COVID-19 and the resumption of mask rules — it seems everyone is rethinking their strategies around reemergence for a new context where advantages have once again reversed themselves.
