Technology has kept societies moving through the crisis, with ‘millennial’ modes of life — such as work from home, play at home and deliver to home — driving major acceleration in real demand and adoption rates for tech-enabled innovations. Baby boomers and children alike have been forced to embrace technology and quickly adapt to new processes and platforms that they might otherwise have been hesitant to adopt. Remote working has boosted use of collaborative technologies, patient care has pivoted toward telemedicine, while e-learning has been given an unprecedented boost, bringing millennial trends to all cohorts of society. 
Yet, while the pandemic persists as a continuous present, not all of the trends accelerated by the crisis will necessarily evolve into long-term investment themes. As such, it is important for investors to scrutinise trends dominating the current moment and distinguish secular, enduring themes from opportunities that may well erode as societies and economies recover and settle on new norms.
We would categorise investment opportunities related to the ‘millennial mindset’ and broader demographic shift online into three categories.
Optimistic on cyclically boosted and secularly strong investments
First, we remain optimistic on cyclically boosted and secularly strong investment opportunities. These include companies benefiting from increased e-commerce penetration such as retailers and digital payment processers, alongside e-learning, and online entertainment providers. In terms of the growth potential in e-commerce and prospects for continued growth and value creation, most people have ordered some kind of product via e-commerce at some point, but global e-commerce penetration is still only 11 per cent, so the potential for continued growth is immense. Of course, the infrastructure supporting e-commerce and e-payment ecosystems also underpin a longer-term, secular opportunity. As an example, cloud providers are likely to be a very big beneficiary of growth in data usage, which is up multiples, as all parts of our lives become more connected.
Conviction in companies that are cyclically challenged
Second, we retain conviction in companies that are cyclically challenged but remain exposed to long-term secular growth trends, including those involved in facilitating life experiences such as dining out and travel. Stay-at-home orders have led us to seek alternatives for all daily activities, but we do not expect to emerge from the pandemic as SIMS characters, with our entire lives resembling an online simulation.
That said, we recognise the potential for greater divergence in consumer preferences going forward. For example, one individual; may be willing to eat in a restaurant and go to sporting events but unwilling to fly, while another may be willing to fly but unwilling to live in a city. Many consumer firms will need to reshape themselves to fit varying consumer profiles or choose to specialise, and investors will need to accurately determine which are best placed to do so.
Bearish on companies that are both cyclically and secularly challenged
Finally, we remain bearish on companies that are both cyclically and secularly challenged, notably traditional bricks-and-mortar retailers that have failed to build a digital footprint. There will be those that can survive by offering some in-store ‘experience’, for example home improvement stores where customers benefit from insight and knowledge of staff, as well as being buoyed by the working from home trend inspiring more home improvement projects. But these may be few and far between in a digitalised consumer world. Longer term, we also expect to see knock-on impacts across the value chain and new relative value opportunities - in real estate, for example, with data centres and e-commerce warehouses presenting new attractions versus shopping malls and central business district offices.
The spending power of millennials is the largest of any generational group in the world. This cohort is prepared to align their spending habits with their values and expect the companies — and the products and services delivered by those companies — to step up and respond accordingly. Interestingly this mindset has been adopted by a much broader range of consumers and investors in the current climate, at a time some may have anticipated investors’ focus to shift away from issues of environmental sustainability and more on returns, but we are seeing investors scrutinising sustainability in the broadest sense — environmental, commercial, and social — to an ever-greater degree. Heightened societal awareness across a broad demographic will likely continue to drive consumer decisions and behaviour. As a result, we are optimistic that companies will be part of the solutions to global challenges including racial injustice, structural inequity and the climate transition.
Fundamentally, adoption of millennial habits has migrated meaningfully higher through the crisis. As lockdowns continue to be lifted, the equilibria will shift once again, but the new steady state for secularly strong themes will likely remain above pre-crisis levels. Importantly, the crisis has enhanced our long-held belief in the value of investing on the right side of secular growth. The pandemic has been compared to war but in this battle we are all on the same side and innovation — a common thread of enduring secular themes that we identify as ‘fit for the future’ — can support investors and economies overcome this very challenging adversary.
Luke Barrs is head of fundamental equity client portfolio management EMEA at Goldman Sachs Asset Management. The views expressed above are his own and should not be taken as investment advice.