There’s no question that the role of place has shifted in the business landscape over the last several years for both employers and consumers. Statistics Canada reports an uptick in hybrid or work-from-home environments that peaked in 2021, and retail e-commerce rising 1.5 times in its percentage of total retail sales from 2019 to 2022.
But now that the restrictions from the pandemic have lifted, are those changes permanent? We asked experts from the School of Business to share their thoughts.
The future of hybrid work
Hybrid work environments are likely here to stay, says Dr. Bruce Thomson, even though there has been a significant shift back into offices since the end of the pandemic.
“Employers found that hybrid work reduces costs, as they didn’t need as much office space. This has been a trend since 2021. However, we're seeing that trend reverse, and employers are asking their employees to be back at work,” says the assistant professor in the Department of Management and Organizations. “In late 2020, McKinsey did a survey and found that 60 per cent of employees were happy working at home. They did the survey again in late ’22 to early ’23, and those numbers dropped to 30 per cent.”
So what caused the change? In Dr. Thomson’s opinion, it all has to do with the basic human need for social interaction.
“When I think about space, where we choose to work and why we choose to work there, it's often not the space itself but the people that we interact with,” he says. “I believe very strongly in the concept that we are social beings, and therefore we need that interaction with others within our lives.”
Even with decreased interest in purely remote work, Dr. Thomson believes that hybrid options will persist. Prior to COVID, he says, hybrid work accounted for only about seven per cent of work environments. Now, post-pandemic, it’s sitting at around 30 per cent.
There are, of course, environments where hybrid work isn’t an option. But even when hybrid technically works, it doesn’t always make sense.
“We're seeing a lot more companies that rely on innovation – like Apple and Google, for example – telling their employees to come back to work. They're finding that innovation actually is stifled online. They need that interaction to be innovative,” he says.
There’s still room for employers to save costs without going fully remote, though, he says, suggesting that implementing a hybrid model with staggered days in-office can allow employees to share workspaces, resulting in smaller office spaces and lower overhead expenses.
Has online shopping replaced the mall?
Place is critical in the marketing mix – so critical that the “4P’s” (product, place, price and promotion) are some of the first things that Dr. Quian (Claire) Deng’s students ever learn.
“Place is usually in reference to distribution channels. And a very important part related to the distribution channel is retail space,” says the assistant professor in the Department of International Business, Marketing, Strategy and Law.
“The traditional role of the retail space needs some change. People used to go to stores to place their orders – that's the very basic function of retail space. But nowadays, since people can easily place orders online, that utilitarian function cannot be the major reason for customers to go to the store,” she says.
As was the case with employers, the pandemic changed the needs and habits of consumers. Online shopping has been popular for quite some time, but COVID restrictions forced in-person operations of many retail stores to cease. Dr. Deng notes that, though online shopping is certainly not going away, the experience of in-person shopping is not disappearing, either.
One tactic for getting people in stores is through returns and exchanges, says Dr. Deng. Online purchases can be brought back in-store, allowing customers to avoid seeking out a post office and paying postage for returns. Requiring in-person repairs or replacements, like Apple’s Genius Bars, also drives customers to brick-and-mortar locations. Dr. Deng adds that cost-conscious consumers might also choose to shop in-person if websites require minimum purchases in order to qualify for free shipping.
There are other reasons why people still choose to go to malls and shopping centres.
“Consumers go to stores for social reasons. For example, they want to meet with their friends or family members in the store. If all your friends hang out at the mall, you probably want to join them. Some people really enjoy the feeling of being helped by others, and having casual conversation with the salesperson,” she says.
Once consumers are in spaces like malls, Dr. Deng explains that “gravity of retailing” will help to drive those customers to explore more stores and spend more money. “If there are a lot of retail stores grouped together, the gravity will become bigger and bigger. It creates a one-stop shopping experience, and I can pick the most important space for me to satisfy the majority of my shopping needs.”
Are these conclusions the same globally?
The short answer is no. At least, not for the foreseeable future.
Dr. Thomson says that the rise of hybrid work is region-dependent, as developing nations simply don’t have the technology to accommodate those types of operational models.
“We're still seeing a lot of in-work activity in the developing world. However in Europe and North America, this kind of remote work is being accepted into the workplace. So it's far more prevalent in developed countries than it is in any others,” he says.
Dr. Deng notes that some Asian markets might still shop in-person, but have integrated online shopping even more deeply into consumers’ lives than we have in Canada.
“In subway stations, companies have set up online interfaces with different products and QR codes. People can shop while they're waiting for the train. So it's kind of tapping into all of the leisure time consumers have,” she says. She notes that this concept is unlikely to work as well here, as most commuters opt to drive personal vehicles rather than take public transit.
In Canada, it seems, the role of place for both employers and consumers has changed over the past few years. But even with those changes, traditional place is still important. Our tried-and-true work and shopping habits aren’t disappearing anytime soon.