How the Sharing Economy Affects Macroeconomic Trends
The sharing economy has enjoyed a rapid rise, particularly over the last decade. It has penetrated most industries, facilitated by improvements in the performance of digital platforms and consumers’ increasing willingness to use mobile apps that support peer-to-peer business models.
Listed below are the macroeconomic trends impacting the sharing economy theme, as identified by GlobalData.
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Covid-19
The Covid-19 pandemic has caused significant problems for companies worldwide. With extended lockdowns in many countries and the global economy entering a deep recession in 2020, companies like Uber, Lyft, Grab, and Airbnb saw bookings drop sharply.
The gradual reopening of cities and the easing of travel restrictions have resulted in steady growth across sectors in 2021. To navigate the ongoing crisis, sharing economy companies must examine their existing business models and capabilities to ensure they are still relevant. For example, companies like Uber and Grab have been working to offset challenges to their core taxi business by increasing their on-demand delivery operations, including food and grocery deliveries.
China
The sharing economy in China has developed rapidly in recent years and is expected to rebound post-Covid-19, according to a report published by the State Information Center of China. The report forecasts that the Chinese sharing economy will maintain an annual growth rate of 10% between 2020 and 2025, having registered total transactions of CNY3.4 trillion ($522bn) in 2020. The Chinese sharing economy had a total workforce of 84 million people in 2020.
China has adopted a general regulatory framework for all sharing economy activities, and the government has created policies to encourage growth. Currently, the regulatory environment of China’s sharing economy is fragmented. The regulations around the sharing economy are largely industry-specific and are implemented by local governments and departments.
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By GlobalDataThe sheer scale of China’s economy and the Chinese government’s focus on standardising sharing economy activities to drive GDP will continue to provide growth opportunities companies. The State Information Center expects the sharing economy to contribute 20% to China’s GDP by 2025.
Urbanisation
By 2050, 68% of the world’s population will live in cities, up from 56% in 2020, according to the UN Conference on Trade and Development (UNCTAD). Increasing urbanisation presents issues for the automotive industry. Owning personal transport in concentrated urban environments is increasingly complicated due to factors such as parking, usage restrictions, and insurance costs. Consequently, there will be continued growth in demand for shared vehicles while the volume of privately-owned vehicles will decline.
Similarly, rapid urbanisation coupled with limited housing options has driven the need for shared accommodation in urban areas. In cities with a demographic of younger people, there has been a surge in demand for professionally managed co-living or student accommodation. According to a student accommodation survey conducted by Knight Frank and the Universities and Colleges Admissions Service (UCAS) in 2020, 50% of students prefer to move directly into the private rented sector immediately after graduation.
Strategic partnerships
Old economy companies across a range of sectors have forged strategic partnerships with sharing economy companies to sell sharing economy services. For example, in June 2020, Volvo partnered with Waymo to develop an autonomous electric vehicle for ride-hailing services.
For their part, sharing economy companies use strategic partnerships to expand their service lines, increase their geographical presence, and acquire new customers. For example, in September 2020, Uber Freight partnered with KeepTruckin, a fleet management technology company. BlaBlaCar has partnered with Voi, a European e-scooter service, to launch BlaBla Ride in France.
The number of strategic partnerships will continue to grow in the next few years, allowing traditional and sharing economy companies to enter new markets and service segments, improve operational efficiency, and offer more services to consumers.
Environmental, social, and governance (ESG)
The sharing economy is based on the principle of sharing or renting assets. This leads to a reduced need for goods, which results in reduced production. A decrease in production should mean less pollution, supporting environmental sustainability.
Sustainability is important to consumers. A 2020 report from IBM found that 57% of consumers were willing to change their shopping habits to reduce environmental impact, and 72% of people were willing to pay a premium price for the brands that support recycling, practice sustainability, or are environmentally responsible.
Sharing economy companies can invest in sustainable business practices to produce environmental benefits while being cost-efficient in the long run. For example, Uber has launched Uber Green in 1,400 cities in North America and incentivised its drivers to use all-electric and hybrid vehicles.
Increasing consumer awareness of sustainable lifestyles, growing consumer participation in the sharing economy, and the long-term economic benefits of sustainability for enterprises will drive sharing economy companies’ investments over the coming years.
This is an edited extract from the Sharing Economy – Thematic Research report produced by GlobalData Thematic Research.
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