The ‘shut-in economy’ is a term that was rarely used until 2020, when people around the world were told to stay at home during the COVID-19 pandemic. It was then that the term really began to gain attention.
However, the shut-in economy had been growing and evolving for some time before the pandemic. 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 everyday life for years.
So what does the term ‘shut-in economy’ actually mean, how has it developed, and what does it mean for the tourism industry? This article explains all.
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. These are outlined in the infographic below.
The advent of Web 2.0
Internet usage has grown exponentially in the past two decades. Back in the 1990s, many households did not have a computer, and those that did had very basic capabilities. Today, according to the International Telecommunication Union, around two-thirds of the world’s population uses the internet.
Nowadays people 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. Consumers can bid on items on Ebay, create their own holidays on Expedia, host a meeting with colleagues around the world using Zoom and order takeaway food for delivery using Grab.
Without the growth in Internet capabilities, the shut-in economy would not function in its current capacity.
Want to learn more? Here are some other posts that you may be interested in-
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–What is a staycation?
–Airbnb explained: What, how and why
–Virtual tourism: All you need to know
–Economic leakage in tourism- what really happens to your money?
–Authenticity in tourism explained
The growth of social media
In parallel to the growth and development of the Internet, social media has grown rapidly.
Within a decade or so, the way young people socialise changed dramatically – where teenagers once met up in parks and town centres after school, many now return home and connect with their friends online.
The advent of social media and messaging platforms such as Facebook, Instagram, Snapchat, WhatsApp, WeChat and TikTok has changed the way that people socialise, making it possible to stay in touch with friends without leaving the house.
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 as Netflix and Disney+.
It also includes innovative examples of technological usage, such as the use of drones to deliver Amazon packages.
Further innovations in areas such as artificial intelligence, smart home devices and automated delivery are likely to continue to support the shut-in economy in the coming years.
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. The cinema experience still has its appeal, but streaming at home offers greater flexibility and convenience.
Instead, on-demand apps, such as Netflix, are becoming increasingly popular- viewers choose what they want to watch and when they want to watch it.
The principles of on-demand don’t only apply to entertainment.
Consumers increasingly expect food to be delivered to their door within a set time, and services such as Amazon Prime mean that products ordered online can arrive within a day or even hours. Similarly, many businesses now question whether it is necessary to fly across the world for a meeting when it can be held 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
None of these factors has been as influential as the COVID-19 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.
During this time, people were unable to maintain their usual ways of life and had to adapt to a ‘new normal’.
Many people were physically confined to our homes or quarantine facilities.
This was when the shut-in economy really began to boom.
Impacts of the shut-in economy
There are both advantages and disadvantages of the shut-in economy. These are outlined below.
Advantages of the shut-in economy
Below are three of the most notable positive impacts of the shut-in economy.
Fewer environmental impacts
If people stay at home more, there is a 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) with many of its riders using bicycles or e-bikes, which is environmentally-friendly.
Instant access to people and information online
As 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 enable 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 helps people and businesses 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, people can now communicate 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 to 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).
Disadvantages of the shut-in economy
Whilst there are some merits to the shut-in economy, there are also disadvantages. Some of these are highlighted below.
Discourages social interaction
The way that people communicate with each other has changed significantly.
As noted earlier, young people 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.
During the pandemic, many predicted that businesses would never return to the traditional business travel model. In practice, business travel has largely recovered – the Global Business Travel Association reported record global business travel spending of around $1.48 trillion in 2024 – although many internal meetings now take place online.
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
Some businesses have profited significantly from the shut-in economy (for example, Amazon, Deliveroo and Netflix). There are, however, many businesses who cannot compete in this changing marketplace.
Restaurants can lose customers who choose to eat at home instead, cinemas have struggled to fill their screens as people watch on-demand TV, and many shops around the world have closed 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 often it is not, and small items can arrive wrapped in excessive plastic and cardboard.
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.
Some of this packaging is recyclable, and some countries have introduced rules to reduce packaging waste, but in many parts of the world it is not recycled.
Impacts of the shut-in economy on the tourism industry
The shut-in economy also has important implications for the tourism industry.
So how does the shut-in economy affect tourism? In many ways, the two are at odds with each other.
The tourism industry relies on human interaction in 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. Tourists can rent an Airbnb and order dinner in from a local food outlet. But tourists generally do not want to stay in on holiday- they want to lie on the beach, experience the entertainment on offer and see the local sights!
The COVID-19 pandemic had a hugely detrimental impact on the tourism industry: according to UN Tourism, international tourist arrivals fell by around 72% in 2020, and millions of tourism jobs were lost.
However, tourism has since recovered strongly – there were around 1.4 billion international tourist arrivals in 2024, almost back to pre-pandemic levels – demonstrating that people still value in-person travel experiences. At the same time, elements of the shut-in economy have shaped tourism, from contactless check-in and app-based room service to virtual tourism, staycations and workations. The shut-in economy is therefore unlikely to replace tourism, but it continues to influence how tourism products and services are delivered.
In conclusion: The ‘shut-in economy’
This article has explained the concept of the shut-in economy and what it means for consumerism in today’s marketplace.
The shut-in economy has grown significantly in recent years and it is here to stay. Whilst the extremes of the shut-in economy brought on by the COVID-19 pandemic have passed, there will continue to be a demand for shut-in products and services. This brings both positive and negative impacts.
Shut-in economy: FAQs
Below are answers to some of the most common questions about the shut-in economy.
What is the shut-in economy?
The shut-in economy is an economic model based on home-based consumption – people eating, shopping, working, socialising and being entertained at home, often through online and on-demand services.
What are examples of the shut-in economy?
Examples include food delivery apps, online grocery shopping, streaming services such as Netflix, video conferencing tools such as Zoom, online fitness classes and next-day home delivery services such as Amazon Prime.
How did COVID-19 affect the shut-in economy?
The COVID-19 pandemic and its lockdowns rapidly accelerated the shut-in economy, as people were forced to work, shop, learn and socialise from home.
What are the disadvantages of the shut-in economy?
Disadvantages include reduced face-to-face social interaction, pressure on high street and independent businesses, reliance on fast and reliable internet access, and increased packaging waste.
How does the shut-in economy affect tourism?
Tourism depends on people leaving home, so the two are largely at odds. However, shut-in trends have influenced tourism through virtual tourism, contactless services, staycations and workations.
The shut-in economy: Further reading
If you found this article on the shut-in economy useful, these articles may also be of interest:
- What is the sharing economy and how does it work?
- Virtual tourism: All you need to know
- What is a staycation?
- Workation – the newest trend in travel?
- Business tourism explained
