2021, The Year of Opportunity – Rebuilding Anew


Though the challenges that emerged in 2020 are far from over, 2021 is nevertheless a year of tremendous opportunities—for companies, whole industries, individuals, supply chains, and governments. Here we lay out some of these historic opportunities of the current moment—chances to seize the moment and make some dramatic changes that would not be possible in normal times.


Out of adversity comes opportunity” — “Never let a good crisis go to waste” — Take your pick of aphorisms appropriate for the current moment. 2020 certainly tested the mettle of supply chains and as a whole, they did remarkably well. We believe 2021 will be a year of tremendous opportunities to reshape industries, infrastructures, careers, supply chains, and governments.

Industry Market Share and Growth Opportunities

The industries hit hardest by the pandemic are also the ones with the most opportunity for the reshuffling of the players and their relative positions. In sectors battered by the pandemic — think airlines/travel, hospitality, automotive, oil & gas, brick & mortar retailers, sports, etc. — there will be more serious ‘thinning of the herd.’ Companies that entered the pandemic with weak balance sheets and/or did not innovate and deftly navigate the pandemic are at high risk of insolvency. The imminent vaccination of most people during 2021 (at least in the developed world) is likely to create a V-shaped recovery for these battered sectors. This means the companies left standing will have opportunities for massive market share gains.

Consider the retail sector. A lot of press attention has rightfully been paid to the shift of consumer’s spending from in-person shopping to ecommerce (more on that below). Outside of grocery, many store-based retailers got hammered. Clearly, bricks and mortar retailers that had their ecommerce act together did better than those that did not. But some non-grocery store-based retailers nevertheless had strong increases in same-store sales.

For example, in the first nine months of 2020 (i.e., through the period of strictest lockdowns), Dollar General’s same-store sales increased 17.5% YoY,1 not just due to people favoring discount stores during uncertain times, but also because of their curbside pickup and ‘Dollar General Go,’ where the shopper scans products on their phone and bypasses the checkout line (avoiding standing next to others). Similarly, in Q3 2020 Big Lots had a 17.8% YoY for comparable sales. Costco’s net sales increased 17% and comp sales increased 15% in their F2021 Q1 (period ending Nov 22, 2020) and would have been even higher if not for the drag of lower gasoline sales.

And it wasn’t only discount stores that have done well. Best Buy had a comparable sales YoY increase of 8.1% for the first 9 months of 2020 and an impressive 23.0% comp sales increase for Q3, due both to people buying more home gadgets, but also innovative adaptions like opening stores early for consultations only, implementing ship-from-store capabilities, increasing home delivery capabilities, extending curb-side pickup hours, and so forth. Lululemon Athletica’s third-quarter same-store sales were up 19% and net sales rose 22%, driven by growth in pandemic-driven changes in apparel buying (more at-home athleisure) as well as sales of interactive workout mirrors from their acquisition of Mirror. Opportunities for rapid growth are not just due to pared-back competition, but also because some companies have positioned themselves well to take advantage of the new normal, both during and after the pandemic.

The Long Overdue Renewal of Infrastructure

The pandemic has provided an opportunity, an excuse if you will, to kickstart the economy, to finally spend a decent amount on infrastructure. There is broad consensus that the United States has for decades chronically underinvested in its infrastructure. The American Society of Civil Engineers (ASCE) gave the U.S. an overall grade of D+ in its latest Infrastructure Report Card (as of 2017). Over a 10-year period, they estimate the investment in transportation, power, water, and schools was $2 trillion short of what is needed. They calculated the impact of this chronic underinvestment as a loss of $4T in GDP, $7T in sales, and 2.5M jobs. The ascendance of China as a key competitor challenging American dominance with their new, modern, efficient infrastructure, provides added urgency to make these investments.

There seems to be potential for bi-partisan support for spending a significant amount on infrastructure. President-elect Biden has put forth a plan proposing to spend $2T in his first term to “Build a Modern, Sustainable Infrastructure and an Equitable Clean Energy Future.” The plan identifies several areas of investment2 including roads, bridges, water systems, clean power, universal broadband, electric vehicles and charging infrastructure, worker training, transit systems, building upgrades, net zero homes, carbon neutral building materials, and cleaning up abandoned oil & gas wells and coal mines.

With Democrats gaining narrow control of the Senate, there is a chance that some portion of this plan will become reality. A poll conducted by the Pew Charitable Trusts just before the pandemic found that 68% of U.S. residents support an increase in federal infrastructure spending. President-elect Biden has demonstrated the ability to reach across the aisle in the past. The right kind of infrastructure spending is something some Republicans can get behind, so there are some grounds for a little optimism that progress in fixing our infrastructure can be made.

Career Opportunities and Talent Shortages, Reversing Income Inequality

For some segments of the workforce, 2021 could be the right year to make a career change. If a substantial portion of the proposed infrastructure agenda comes to pass, it will create millions of new good-paying skilled jobs. Even without that, there has been a chronic shortage of skilled labor for the past couple of decades, exacerbated by the retirement of boomers. This is true across sectors and skills in manufacturing, engineering, transportation and logistics, software and high tech/digital, construction and skilled trade workers — the list goes on.

Laid off service workers have the opportunity to retrain for higher paying and potentially more rewarding jobs. This may be the best time for many to try and make the transition. In addition to the extension of federal unemployment benefits, some states3 offer additional unemployment benefits (6 months or more) when people participate in training programs. Some states have started offering tuition-free associate degree programs. In June last year, Microsoft launched a program to help 25 million people acquire digital skills. In April, Google launched free digital skills training for those impacted by COVID-19. If congress passes the Jumpstart Our Business Starts (JOBS) Act (identical bills, S. 839 and H.R. 3497) it will extend Pell Grant eligibility to support short-term high-quality education programs, providing further assistance for training.

Within businesses, champions of training programs could jump on this opportunity to show the payback of investments in education and training towards building up a competitive workforce. Workforce talent is increasingly becoming a key competitive differentiator. Taking the most optimistic view (indulge me for a moment), if all of these opportunities are leveraged, and things like a resurgence in unions and collective bargaining actually come to pass, it could help reverse the longstanding trend to a hollowed-out middle class and income and wealth inequalities.

Source: Pew Research Center: Trends in income and wealth inequality
Figure 1 – Rising Income Inequality — Can We Reverse This Trend?

Working from Home, Starting a Business

2020 also showed that work-from-home is possible for many jobs. This should be a boon for those looking for more flexible working situations, such as working parents or those caring for elders. This article lists ‘50 Work-From-Home Jobs Paying as Much or a Lot More Than the Average American Salary.

2021 might turn out to be a great year to start a business as well. 2020 was a really tough year for small business owners, especially those just starting out. That might leave gaps and openings for new small businesses to start up. There is likely to be more assistance than usual for small business. And the labor market is not as tight as it has been in recent years. There will be a lot of service workers looking for jobs. For those who have considered starting a business, 2021 could be the year to give it a go.

Environment and Sustainable Supply Chains

The Global Carbon Project estimates that CO2 emissions fell by 7% in 2020, the largest absolute drop ever and the largest percentage drop since World War II. While this could end up being just a one-time event, due to the pandemic disrupting travel and commerce, it also could be used as a catalyst for accelerated action on climate change. Certainly, there is an appetite by the new administration to get serious on this. The stimulus investments (outlined in the infrastructure section above) could be used to help the U.S. become more competitive in green technologies such as clean power, vehicle charging infrastructure, transit systems, net zero buildings, and (longer term) hydrogen fueling infrastructure.

Source: Carbon Brief
Annual CO2 emissions from fossil fuels and industry by major country and rest of the world from 1959-2020,
in billions of tons of CO2 per year (GtCO2). Note that 2020 numbers are preliminary estimates.
Data from the Global Carbon Project; chart by Carbon Brief using Highcharts.
Figure 2 – CO2 Emissions 1960-2020

Beyond CO2 reduction, there is an opportunity to increase socially responsible supply chains. Supply chain relationships have been disrupted and companies are rethinking their sourcing strategies. If they are changing suppliers and locations anyway, it could be an opportune time to introduce more robust supplier codes of conducts and auditing into new relationships.

There may also be a legislative push for increased transparency and responsibility in supply chains. In September, the House passed the Uyghur Forced Labor Prevention Act, whose stated purpose is “to ensure that goods made with forced labor in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China do not enter the United States market.” If that act becomes law, it will require companies to prove that “any significant goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China — shall not be entitled to entry at any of the ports of the United States — unless there is clear and convincing evidence, that the good was not produced wholly or in part with convict labor, forced labor, or indentured labor under penal sanction.” This will likely require companies to trace all the ingredients that go into their products, if those ingredients may have come from that region of China. It could provide a boost to responsible supply chain initiatives, particularly for product and industries that incorporate some of the agricultural commodities (such as cotton) that commonly flow through that region.

The Digital Age Takes Off — Ecommerce, Robotics, Digitization, Remote Work

2020 provided a huge push for companies to up their ecommerce game, as well as an impetus to invest in automation and digitalization. If there was ever a good time for businesses to justify spending on ecommerce capabilities, it is now. While there was already a relentless shift of retail purchases to ecommerce, by some estimates the pandemic accelerated that trend and moved the adoption of ecommerce ahead by five years — i.e. the level of ecommerce sales in 2020 grew to levels predicted for 2025. For many retailers, their ecommerce sales doubled, tripled, or even quadrupled.4

Robotics has also seen the spotlight recently. The theory is that the pandemic drives the need for decreased human contact and thereby encourages the use of robots. There certainly have been high-visibility experiments with robots in hospitality and retail sectors, but most robots in use are still in the industrial and material handling sectors. 2020 was not a good year for industrial robot sales (down 17% YoY as of September) and that was coming off a 12% YoY decline in 2019. However, most people are predicting a strong rebound in 2021 for industrial robots as the economy turns around and pent-up demand is unleashed. We expect the growing use of robotics in distribution centers to help them serve the rapid growth in ecommerce.

Prior to the pandemic, many companies focused primarily on efficiency, with resilience and agility as an afterthought. For many, that priority has now flipped. Digitization of companies and their supply chains is an important element for risk management and Agile Demand-Supply Alignment. Digitization is needed to achieve granular and accurate visibility of what is happening across the supply chain — a ‘digital twin’ of the supply chain. The pandemic highlighted the importance of digitized, harmonized, shared data, and the underlying intelligence and AI/ML engines to interpret, predict, and prescribe from that data. Deloitte’s post Increase resilience through digitization lays out three stages of response to the pandemic: 1) Respond, 2) Recover, 3) Thrive. One of their key recommendations for the Thriving phase is “implement a digitization strategy.” For those who have been advocating digitization for many years, 2021 could be a good year to make the case for investments.

The impact of increased remote work goes beyond lifestyle changes for employees. It also ushers in the need for digital tools for workers to collaborate, share data, and get visibility. It may also give a boost to robotic process automation.

Changing Corporate Culture

Many companies made dramatic pivots to survive the pandemic, requiring ‘all-hands-on-deck’ for weeks at a time. That is stressful and is no way to run a company over a sustained period. However, the shared experience of overcoming tremendous challenges together can build a strong sense of camaraderie, not unlike soldiers that have fought in wars together. That sentiment should not be wasted. It may be harnessed to make real changes to corporate culture and an ongoing sense of pride and belonging.

Rethinking Supply Chains and Trading Partner Relationships

Sourcing strategies, network structures, and supply chain relationships are being revisited by many companies. This has been driven not just because the pandemic exposed geographic concentration risks and other dependencies, but also because of other disrupting events, such as the slew of tariffs implemented by the Trump administration and Brexit in Europe. This creates the opportunity not only to rethink where suppliers should be located, but what kinds of suppliers and relationships a company should have. 2021 holds the promise for more frank and decisive conversations between trading partners, which could help push through long-sought reforms in companies’ supply chain strategies and trading partner relationships.

Glass Half Full — or Maybe Even Three Quarters Full — for 2021

There is no doubt we had a tough 2020. We lost many good people, suffered one of the steepest drops in economic output in recent times, endured isolation from loved ones and friends, and witnessed bitter divides in society. The approval and distribution of vaccines provide a path to getting things back to some kind of normal — and hopes for a brighter future. 2021 will be a year of challenges, but also of tremendous opportunities for those who are willing to be bold and decisive. Will you be the one to seize the day?

Wishing you all a safe, happy, and prosperous New Year!


1 YoY = Year-over-YearReturn to article text above
2The Build Back Better plan describes nine areas of innovation:

  1. Infrastructure (roads, bridges, water systems, electricity, universal broadband)
  2. Auto Industry (domestic supply chains, electric vehicles, charging infrastructure, worker training)
  3. Transit (zero-emissions light rail, bus, cycling)Power (carbon pollution-free by 2035)Power (carbon pollution-free by 2035
  4. >Power (carbon pollution-free by 2035)
  5. Buildings (upgrade 4M buildings and 2M homes)
  6. Housing (build 1.5M sustainable units)
  7. Agriculture and conservation (plug abandoned oil and gas wells, reclaim coal mines)
  8. Environmental justice (consideration in where, how, and with whom the investments are made) — Return to article text above

3 For example, Massachusetts offers 26 weeks of extra unemployment for workers in the DUA’s Training Opportunities Program. — Return to article text above
4 One apparel brand that we interviewed for our Agile Demand-Supply Alignment research told us that their ecommerce sales grew by over 20 times (i.e. over 1,900% growth) in volume during the pandemic. While that is an outlier, driven primarily by cancellation of store-based orders, it demonstrates how dramatic the impact has been for some. — Return to article text above

To view other articles from this issue of the brief, click here.

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