We are working, learning, entertaining, exercising and more, all in one place – our home - connected by a virtual and digital infrastructure. While this trend was accelerated by the COVID-19 pandemic, we believe there will be a lasting, structural shift to an at-home lifestyle. This shift, along with the growth of a home-based lifestyle, is supported by 5 underlying trends.
1. Adoption of home lifestyle categories has exploded
As we spend more time at home, healthy, enjoyable, and convenient lifestyle options have gained in popularity and demand. Industries such as “at-home fitness” and “athleisure” have witnessed a material lift in sales. Among the largest beneficiaries of this secular shift are Peloton (PTON) and Lululemon (LULU). For example, PTON’s Connected Fitness Subscription Workouts grew 333% in their latest reported quarter, averaging 24.7 Monthly Workouts per Connected Fitness Subscription versus 12.0 in the same period last year.1
As consumers become increasingly comfortable with an online lifestyle, they are also adopting telehealth options. Visits to the doctor’s office can now take place from our smartphones or tablets, which are facilitating consumers appetite for telehealth and patient portals. As an example, in Q2 2020, Teladoc Health (TDOC) saw US paid membership rise 92% and revenues increase 85%2, “as patients discovered the dual advantages of faster diagnosis and convenience of virtual visits with a physician.”3
2. Home entertainment is considered an essential utility
Given social distancing requirements, streaming has become a source of culture and communal experiences. With attendance at live performances no longer an option – the large libraries of Netflix, Amazon, and Disney+ are currently the nexus of artistic consumption. Recent events worldwide have only intensified the ‘Streaming Entertainment’ phenomena as this secular trend is now considered more like an essential utility versus a luxury.
Similarly, gaming is exhibiting increased adoption and this growth is set to accelerate further given the shift to mobile. Live streaming video platforms, that enable gamers globally to stream their games for others to watch, are becoming “standard practice” for gamers. For example, Twitch - a video live streaming service that is an Amazon subsidiary – is experiencing blockbuster growth with 771 billion minutes watched this year, up 59%.4 As such, consumers are increasingly reaching for video games as an entertainment option, as higher-quality and more engaging games continue to come to market and video-gamers look to connect real-time around the globe.
3. Companies are implementing robust technology to increase remote productivity
While companies were gradually adopting work-from-home cultures, the pandemic has forced employers and a large portion of the workforce to quickly adapt to working remotely. Companies have become significantly more receptive to remote work arrangements and are implementing new technology to facilitate productivity and collaboration amongst teams. For example, Microsoft (MSFT) reported 75 million users on their Teams app in a single day in April 2020 versus 20 million in late 2019 (+200% growth).5 In addition, employers have quickly realized the extent and number of jobs that can be performed effectively on a remote basis. In fact, 30% of Fortune 500 CEOs recently surveyed confirmed they don’t see their staff returning to an office setting and believe the crisis will force their companies to accelerate their technological transformation.6Post-pandemic, we believe companies will continue to offer flexibility to employees to work wherever they can be most productive.
4. E-commerce has experienced accelerated growth
Consumers across all demographics have been spending more time shopping online. The U.S. Department of Commerce recently reported that overall e-commerce activity has grown as much in the first half of 2020 as it did in the past 10 years combined.7 This type of acceleration is expected to reshape the retail landscape. As consumers continue to migrate away from brick-and-mortar shopping, digital and mobile payment platforms stand to potentially benefit from already strong e-commerce activity.
5. Education is set to radically change with remote learning
Pre-COVID, online education was already prevalent with over 2.7 million students across the U.S. enrolled in online or blended learning.8 Increased ease and access to digital tools has enabled interconnected classrooms across all levels. Once again, the pandemic has expedited a steady movement toward online education. We believe that with advancements in remote learning, education is poised to radically change with many students getting a high-quality education through online schooling.
Seek to capitalize on the home-lifestyle shift with LIV
While expedited by the pandemic, we believe there is a long term, structural shift taking place towards the at-home lifestyle. Companies that focus on home activities may stand to benefit from increased consumption and adoption, in turn providing investors opportunities to benefit their growth potential. The Emles @Home ETF (LIV) is a differentiated solution that provides investors access to high quality companies that potentially stand to benefit most from this structural shift towards home-based lifestyle. LIV may act as a core complement to diversify existing equity positions and also augment growth potential. Or, consider it as a tactical allocation as markets change.