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What is the ‘shut-in economy’ and why is it important?

The shut-in economy is a term that I had never heard of until recently. And probably for good reason- no I was not living under a rock- it just wasn’t a phrase that was thrown about very often. However, 2020 dawned and we were all told to shut ourselves away at home… this was when the term really began to gain gravitas.

Whilst many of us did not realise that the shut-in economy existed last decade, it has, in fact, been growing and evolving for some time. From the growth of online deliveries to the development of on-demand television, parts of the shut-in economy have been weaving their way into our lives without us even realising.

But what does the term ‘shut-in economy’ actually mean? And how does this impact our lives? I will explain all in this article.

What is the shut-in economy?

The shut-in economy is an economic model that is based on the principles of home-based consumerism.

In essence, the shut-in economy revolves around the concept of staying at home. This includes eating at home, socialising at home, working at home etc.

How has the shut-in economy developed?

There are several factors that have contributed to the growth and development of the shut-in economy throughout the years.

Whilst it is difficult to pinpoint exact milestones or historical events that have contributed to the development of the shut-in economy, there are specific technological developments and changes in consumer demand that have had a clear contribution over time. I have attempted to outline these in the infographic below.

shut-in economy

The advent of Web 2.0

Internet usage has grown exponentially in the past two decades. Back in the 1990’s many of us did not have a computer and if we did it was basic in its capabilities. Fast forward twenty years and the world couldn’t function without computers.

Nowadays we rely on a whole range of user-generated applications and programmes in our everyday lives, from Google Maps to Wikipedia.

Internet capabilities that are now available to the average person have given consumers increased power in the marketplace. We can bid on items on Ebay. We can create our own holidays on Expedia. We can host a meeting with colleagues around the world using Zoom. We can order take-out food and a driver to bring it to us using Grab.

Without the growth in Internet capabilities, the shut-in economy would not function in its current capacity.

The growth of social media

In parallel to the growth and development of the Internet, we have seen the growth of social media.

When I was teenager I played in the park with my friends after school. By the time my younger sisters reached the same age a decade later, they would return home and connect with their friends on social media.

The advent of social media platforms such as Facebook, Twitter, Instagram, Snapchat, WeChat, TikTok and others have changed the way that we socialise. We no longer need to leave the house to be with our friends.

The growth of social media has played a significant role in contributing to the development of the shut-in economy.

The development of new technologies

The shut-in economy has also grown as a result of technological advancements around the world.

This includes the development of on-demand apps and the Internet capabilities that keep these running, such at Netflix and Disney+.

It also includes innovative examples of technological usage, such as the use of drones to deliver Amazon packages.

I expect that we will continue to see more innovations in this regard in the coming years to further support and enhance the shut-in economy.

Consumer desire for ‘on-demand’

The modern consumer knows what they want and when they want it.

Cinemas are still in business. But many people are shying away from having to leave the house to see a show that is played at a particular time in a particular place. Yes, the sound effects are great, but you can’t even pause if you need to pop to the lavatory!

Instead, on-demand apps, such as Netflix, are becoming increasingly popular- we choose what show we want to watch and we watch it when we want to.

The principles of on-demand don’t only apply to entertainment.

We want our food delivered to our door within a certain period of time. Amazon Prime membership means that we can order products online and have them delivered within hours. Why fly across the world for a work conference when you can connect right here right now online?

We now live in a world where consumers want on-demand products and services, and this has contributed heavily towards the growth and development of the shut-in economy.

The Coronavirus pandemic

Whilst the points I have discussed are true and valid, none have been so influential as the Coronavirus pandemic.

2020 saw the world turned upside down. Countries went into lockdown around the world, to varying degrees. People swapped supermarket trips for online grocery shopping. Conferences and events were cancelled and were instead undertaken online. Schools were closed in exchange for virtual classrooms and people turned to virtual tourism as a means of escapism.

It was during this time that we were unable to maintain our traditional ways of life that we had to adapt to a ‘new normal’.

We were physically confined to our homes or quarantine facilities.

THIS was when the shut-in economy began to boom.

Impacts of the shut-in economy

There are both advantages and disadvantages of the shut-in economy. I have outlined some of these below for you.

Advantages of the shut-in economy

Below are three of the most notable positive impacts of the shut-in economy.

Less environmental impacts

If we are staying home more there is an inevitable reduction in CO2 emissions caused by travelling.

Staying home also means less congestion on roads and public transport networks and less adverse effects on the surrounding wildlife.

There are some companies, such as Deliveroo, that have been heralded for their environmental consciousness. This organisation organises the delivery of food to people’s homes (food delivery is a significant part of the shut-in economy) using bicycles as its main mode of transportation, which is environmentally-friendly.

Instant access to people and information online

As I explained earlier, social interaction via the Internet is an important component of the shut-in economy.

Apps and Internet programmes such as Zoom or Teams enables people to communicate instantly without leaving the comforts of their home.

This can help the worker, and by default the organisation and its system, to operate more efficiently, by reducing the need for travel times.

This can also be said for informal occasions too. People can socialise and ‘attend’ events without ever leaving their sofa.

Since the shut-in economy rests upon Internet-technology foundations, many organisations who operate in this sector have large databases that contain the contact details of their customers. This enables them to distribute news, such as special offers and promotions, quickly and effectively- another positive impact of the shut-in economy.

Overcomes the barrier of distance

The shut-in economy enables us to overcome the barriers of distance.

This means that it is no longer such an issue for families to live on opposite sides of the world or for businesses to have staff in different geographical locations.

Thanks to the technological advancements of the last two decades, we can now communicate with each other quickly and effectively, regardless of location (though, of course- we do need an Internet connection to do this…)

When distance no longer becomes a barrier it has the potential to change other parts of how we operate in society too.

Take recruitment, for example- A company based in Cambridge will no longer be restricted by the a talent pool in the east of England, as they traditionally would be. Instead, if remote work is possible, they can recruit their staff from anywhere in the world.

This means that the company has the potential to hire better quality staff members, who then yield higher returns, which inevitably benefits the organisation. It also produces the possibility that wages will rise as competition for the ‘best’ employees increases (this could be seen as an advantage for the employee but a disadvantage for the employer).

Due to the Coronavirus pandemic Zoom had a larger market share than the world’s 5 biggest airlines in May 2020….

Disadvantages of the shut-in economy

Whilst there are some merits to the shut-in economy, there are also disadvantages. I have highlighted some of these below.

Discourages social interaction

The way that we communicate with each other has changed forever.

As I pointed out earlier, children frequently communicate via the likes of Snapchat and WhatsApp, rather than physically meeting up with their friends.

Businesses have been gradually turning towards video conferencing for the past few years. However, enforced lockdowns as a result of the Coronavirus pandemic forced many more companies to turn to electronic means of communication.

It is predicted that many of these businesses will not return to the traditional business travel model.

Conferences have been exchanged for webinars too. Whilst the networking opportunities that are on offer at traditional conferences can never be as good via an online streaming service or video conference, many organisations do now see this as a cheaper alternative that is available to a wider pool of participants.

Negatively impacts many businesses

Yes, some businesses are profiting significantly from the shut-in economy (e.g. Amazon, Delieroo, Netflix). There are, however, many businesses who cannot compete in this changing marketplace.

Restaurants now have empty tables, where customers would previously have eaten. Now they eat in their own home. Cinemas rarely manage to fill their theatres these days because people are watching on-demand TV at home. Many shops around the world are closing because they can’t compete with online giants such as Amazon.

The organisations that are especially at risk are the small, independents. Sadly, many organisations have been forced to close as a result of the shut-in economy.

Requires strong and reliable Internet connection

Accessibility is a key issue in the operation of the shut-in economy.

Because the shut-in economy relies so heavily on Internet connections, those who do not have adequate wifi/4G/5G signals cannot actively participate in many of the economic activities that are associated with the shut-in economy.

This is particularly prevalent in countries or areas where Internet connectivity is unavailable or weak.

Increases in waste

Whilst the shut-in economy might be good for the environment in that it helps to reduce the need for transportation, it does often involve an increased use of packaging.

Having food and other products delivered to your door requires the relevant packaging. Sometimes this is done with the environmental impacts in mind, but other times it is not… I remember once ordering a small packet of spices in a paper bag and it arriving in a huge layer of bubblewrap plastic and two cardboard boxes.

Likewise, food deliveries will usually come with a significant amount of packaging, which would not be used if the person ate their meal in the restaurant or food outlet in which it was prepared.

I would like to think that said packaging is largely recyclable, and in some places it is. But sadly, this is not the case in much of the world.

Impacts of the shut-in economy on the tourism industry

Of course, I could not write an article without paying reference to the tourism industry!

So how does the growth and presence of the shut-in economy impact the tourism industry? In short- not very well.

The tourism industry relies on human interaction is so many ways. Whether it is the restaurant that tourists choose to eat at, the cabaret show that they watch, the temple that they visit or the theme park that they spend the day at.

In reality, there isn’t much room for the shut-in economy in the structure of the tourism industry. Yes, we can rent an Airbnb and order dinner in from a local food outlet. But tourists generally do not want to stay in on holiday- tourists want to lie on the beach, experience the entertainment on offer and see the local sights!

Of course, there has been a huge detrimental impact on the tourism industry as a result of the Coronavirus pandemic. Businesses closed down, people lost their jobs.

shut-in economy

This demonstrates that the shut-in economy is not compatible with the tourism industry. I do not believe that there is much room for the shut-in economy in tourism and that it will never be a prominent part of the industry.

In conclusion: The ‘shut-in economy’

In this article I have explained the concept of the shut-in economy and what this means for consumerism in today’s capitalist marketplace.

The shut-in economy has grown significantly in recent years and it is here to stay. Whilst we may not always experience the extremes of the shut-in economy that were brought on by the Coronavirus pandemic, there will always be a demand for shut-in products and services. This brings both positive and negative impacts.