Canada’s largest pension fund says some of the “radical changes” in consumer behaviors enforced during the pandemic lockdown are here to stay.

The Canada Pension Plan Investment Board’s thought leadership lab sees permanent changes to consumer behavior as a result of the global pandemic. The era after COVID-19 will be defined by wider adoption of e-commerce among older consumers, as well as by long-term impacts on health-care and privacy policy, all of which will impact investment portfolios, it says.

“The world will be different after COVID-19. For long-term investors, this will mean both new risks and new opportunities as we transition to recovery,” CPPIB portfolio managers Caitlin Walsh and Ruby Grewal wrote in the report.

Gains in adoption of e-commerce have been patchy, according to the report. While the U.S. and Europe appear to be rapidly catching up to China, not all merchants are reaping the benefits with big players like Amazon.com Inc. and Walmart Inc. having enormous advantages over smaller retailers with more limited selections and unscalable infrastructure, Walsh and Grewal said.

The pandemic’s impact on different demographic groups will change how older and younger consumers approach the use e-commerce,

“Older consumers, anxious to avoid crowded public spaces for health reasons, now say they plan to increase e-commerce adoption across all categories, while younger consumers, restless after months of lockdown, indicated a building desire to return to stores for more discretionary categories,” they wrote.

Telehealth was also another notable pandemic-driven trend. A third of users in countries reviewed by CPPIB tried telehealth services for the first time during the pandemic. Longer-term uptake will depend, in part, on whether providers are able to improve the experience, the report said.

Work-from-home

Remote work, a slow-building trend before Covid-19, accelerated dramatically during the crisis, with roughly 50 per cent of workers in China, the U.K. and the U.S. working from home, up from five per cent or fewer before, according to the report.

CPPIB expects a long-term uptick in remote work, mostly in the form of flexible schedules that allow for a few days per week at home, rather than a wholesale abandonment of the office. In that sense, companies enabling remote work, for example collaboration and productivity tools, cybersecurity, cloud, automation, and sectors that focus on office sanitation are likely to gain a tailwind from the crisis.

A potential shift of populations away from the largest urban centers and changing mobility trends are also likely to have an effect. With greater geographic flexibility in employment, employees looking for more space should migrate further from city centers, which will likely accelerate the ongoing growth of so-called tier two cities in the U.S. and Europe.

Shifts in global supply chains should benefit providers of supply chain software and automation. CPPIB expects global supply chains will grow more complex, as the pandemic and chronic geopolitical tensions lead companies to diversify by turning to other countries or multi-sourcing. India, Southeast Asia, Mexico and Poland are best positioned to benefit from gradual, incremental supply chain diversification, according to the report.

CPPIB returned 5.6 per cent in the quarter ended June 30 as stock markets rebounded from a pandemic-induced selloff in March. The fund’s growth to $434 billion (US$330 billion) was attributed to gains in a broad range of asset classes, though a stronger Canadian dollar offset some gains. CPPIB holds $241 billion in public and private equities and 97 per cent are in the U.S. and overseas markets.