Is the COVID-19 pandemic accelerating the platformisation of the urban economy?

This paper shows that, while the pandemic lockdown decelerated everyday life, it has also potentiated further acceleration of the platformisation of urban economic sectors. We show this through an empirical qualitative study of the restaurant sector in Lisbon, in which we found that: (i) the digitalisation of three management tasks during the COVID-19 lockdown - namely marketing, customer relationship management, and delivery tasks - was the trigger for the acceleration of the platformisation of the restaurant sector in Lisbon and (ii) restaurant firms had different departure points in terms of the use of digital technologies - which are linked to their location within the city - and these led to different rhythms in the platformisation of restaurants. We conclude that, as the lockdown measures led to a deceleration of social and economic activities, they also promoted further acceleration of economic change, especially under the logic of the platform economy. Additionally, we show that firms unable to engage with digital platforms have been trying to mimic online dynamics through the implementation of non-platformised digital processes, which leads us to consider that the effects of the process of platformisation extend beyond the platform itself. The information, practices and views in this article are those of the author(s) and do not necessarily reflect the opinion of the Royal Geographical Society (with IBG).

INTRODUCTION

The COVID‐19 pandemic had a profound impact on the urban economy as the lockdown measures to prevent the spread of the SARS‐CoV‐2 virus required closing down businesses and enforcing social distancing. The successive lockdown periods that have been implemented in cities across the world have been described as moments of interruption, pause, or slowing down of human activities, in what has become known as the “anthro‐pause” (Searle et al., 2021). In this sense, it seems that the lockdown has halted the wider process of acceleration that social scientists have been describing in the last decades (Rosa, 2013). However, while it is evident that the lockdown decelerated everyday life, it is becoming noticeable that it might have accelerated processes of economic change. The lockdown‐induced “anthro‐pause” affected urban activities differently, being especially troublesome for businesses related to tourism, consumption, and social life given that these activities came to almost a complete stop in several moments since the onset of the pandemic (Brito‐Henriques, 2020; Paes Mamede et al., 2020). In response to the restrictive measures of the lockdown, various businesses have attempted to re‐invent their business models in innovative and creative ways to find new connections with consumers. Often, this entailed a greater engagement with digital technologies, including, but not limited to, the introduction of digital marketing, online customer relationship management, or digital payment and delivery methods (Dannenberg et al., 2020; Dvorak et al., 2021). A specific phenomenon in this context is a greater engagement with digital platforms, which is expanding the pre‐existing process of platformisation of the urban economy (Richardson, 2020, 2021).

With this in mind, we draw on Rosa's (2013) understanding of acceleration as consisting of three different but inter‐related processes – technological acceleration, the acceleration of social change, and the acceleration of everyday life – to argue that while the pandemic lockdown decelerated everyday life, it has also potentiated further acceleration of platformisation. To substantiate our argument, we present an empirical qualitative study of the restaurant sector in Lisbon, in which we found that: (i) the digitalisation of three management tasks during the COVID‐19 lockdown – namely marketing, customer relationship management, and delivery tasks – was the trigger for the acceleration of the platformisation of the restaurant sector in Lisbon and (ii) restaurant firms had different departure points in terms of the use of digital technologies – which are linked to their location within the city – and these led to different rhythms in the platformisation of restaurants. With this in mind, we discuss the importance of looking at the geographies of platformisation.

PLATFORMISATION BEFORE AND AFTER THE COVID‐19 PANDEMIC

The active online participation of users and the emergence of digital platforms have sparked new discussions regarding the economic context in which we operate and the role of economic agents (Srnicek, 2017). Recognising the importance of digital platforms for firms, it has been argued that we are facing a new phase of capitalism, which has been referred to as the platform economy or platform capitalism (Kenney & Zysman, 2016; Langley & Leyshon, 2017; Srnicek, 2017).

In this new economic paradigm, platforms, as digital infrastructures, enhance networked connectivity and take on the role of intermediaries between different actors, including firms, consumers, advertisers, producers, suppliers, among others (Rochet & Tirole, 2006; Srnicek, 2017). The purpose of platforms is to promote involvement and participation by developing an engagement system that generates specific assemblages of people, institutions, technologies, processes, interfaces, and goods. For this reason, some authors prefer the term platforms of engagement (Ramaswamy & Ozcan, 2014). However, platforms of engagement are more than a set of multiple points of contact, as platforms also play the role of a multi‐sided intermediary between the different actors (Storbacka et al., 2016). In this sense, digital platforms are structuring the constitution of new economic ecosystems. An ecosystem consists of a set of different types of actors that establish direct and indirect interactions and exchanges for mutual benefits (Acuto et al., 2019; Yoo et al., 2016). Participation in ecosystems increases the availability of resources and services, which motivates more actors to participate, given the varied benefits that they can acquire (Barns, 2020; Kenney & Zysman, 2016). Under this logic based on service exchanges and interactions between actors, ecosystems generate the necessary conditions for the co‐creation of value (Ramaswamy & Ozcan, 2014; Storbacka et al., 2016). Moreover, digital platforms are becoming increasingly important due to their power to reach different types of actors across the world and the increase in technological pervasiveness in everyday life (Davies et al., 2017; Kenney & Zysman, 2016; Langley & Leyshon, 2017). Bonchek and Choudary (2013) argue that the principles of connection, attraction, and flow form the basis for the expansion of a platform. Platforms that allow more direct connections between actors generate greater flows, and thus become more attractive.

Despite this, the emergence of the platform economy is a process of transformation that unfolds differently across space. Platformisation has taken specific trajectories in different cities, and these trajectories depend on the assemblages of firms, institutions, and social interests that participate in each platform, as well as the infrastructural organisation, spatial formation, and governance of the platform (Stehlin et al., 2020). In this sense, while platforms do not have fixed territories, they draw on territorialised urban elements (Richardson, 2020). By doing so, platforms also generate a rearrangement of spatial relations, although not in a physical sense. Rather, platforms allow new ways to coordinate activities in urban space by providing new connections between actors. As platforms allow new processes of co‐creation of value in the urban economy, those that do not adhere to platforms are left out of these rearrangements of the urban economy. Indeed, the platformisation of the urban economy has generated new spatial disparities in several industries, such as transportation, tourism, or food delivery (Casilli & Posada, 2019; Lehdonvirta et al., 2020; Rae, 2019). Often, this is related to the inability of several actors to engage in platforms. The spatial reorganisation of activities that platformisation processes demand require profound changes from workers and entrepreneurs, as they challenge traditional arrangements of work (Richardson, 2021).

The process of platformisation of the urban economy has been deeply affected by the onset of the COVID‐19 pandemic, as the lockdown measures implemented in response to the pandemic had profound effects on the urban economy (Rose‐Redwood et al., 2020). Several types of economic activity came to almost a complete halt, most evidently those linked with tourism, retail, and social life (Brito‐Henriques, 2020), highlighting and exacerbating pre‐existing inequalities (Mendes, 2020). Simultaneously, narratives of mutual aid and nature reclaiming standstill urban space captured the attention of scientists and popular culture alike (Searle & Turnbull, 2020; Springer, 2020). This realisation led scientists to conceptualise the pandemic lockdown as a slowing down or an “anthro‐pause” (Searle et al., 2021).

In this context, digital technologies have been construed as the solution to mitigate the economic effects of the lockdown‐induced social distancing (Mendes & Carvalho, 2020). Dannenberg et al. (2020) proposed the hypothesis that the epidemiological context might lead to a pandemic‐led digital transition. The authors noted the widely noticed increase in online trade since the beginning of the lockdown and argued that the pandemic might open a window of opportunity for entrepreneurs to transition from physical to online sales. Despite this, Dannenberg et al. (2020) find little digital transition in their study on online grocery retail in Germany. One explanation for this is that the pandemic crisis led to a greater interest in online shopping among consumers, but not as much for retailers as they face several challenges to adapt their business to the online world (Dvorak et al., 2021). For this reason, there have been different strategies among retail and service providers; while some enter a process of digitalisation, others resist that process and intend to “bounce back” to a pre‐crisis state (Appel & Hardaker, 2021).

In this sense, while the lockdown measures have widely been understood as an interruption, pause, or slowing down of the pace of everyday life, they have also accelerated specific processes of social and economic change, namely the ongoing process of platformisation of the urban economy (Rosa, 2013). Taking into account that platformisation is an uneven process (Ferreira et al., 2021), we are concerned with the way in which this acceleration of the platformisation of the urban economy has generated new or aggravated pre‐existing disparities between actors in the urban economy. With this in mind, the remainder of this paper will explore the impact of the acceleration of platformisation in the restaurant sector in Lisbon, namely in terms of changes in management strategies and disparities in the rhythms of platformisation. Restaurants have been especially affected by the lockdown measures and it has been noted that the digitalisation of marketing, payment, and delivery methods has been a common strategy among restaurant owners (Brizek et al., 2021; Madeira et al., 2020; Vig & Agarwal, 2021). For this reason, the restaurant sector provides a strategic case study to understand the acceleration of platformisation under the pandemic context.

ACCELERATING PLATFORMISATION IN THE RESTAURANT SECTOR

The restaurant sector has been one of the most affected by the pandemic situation in Portugal. The first cases of COVID‐19 were identified in Portugal in early March 2020, and by the end of March the country entered a state of emergency which required enforcing social distancing measures. The restaurant sector was closed for three months, during which firms could only operate through takeaway or home delivery services. With physical contact with customers greatly reduced, digital platforms played, for some, a crucial role in the survival of this sector. To understand the strategies adopted by restaurants to face the pandemic context, we conducted 27 semi‐structured interviews with restaurant owners in Lisbon between October and November 2020. The sample was structured according to location and use of digital platforms. In terms of location, 13 restaurants were located in the historical city centre of Lisbon, 10 were located in the modern city and eastern waterfront, and 5 were located in peripheral areas. In terms of platform use, 14 restaurants were inserted onto digital platforms by the owners, and 13 were registered by users of the platforms. The latter 13 include both owners who know that the restaurant was inserted onto platforms by users and owners who do not know that the restaurant is on digital platforms. This structure allowed us to explore in greater detail the significance of location context and previous use of digital platforms in the adherence to platformisation. The interview script focused on three topics: the intensity of the impact of COVID‐19 on the restaurant's business; the usage level of digital platforms before and after the pandemic; and the digital and non‐digital strategies adopted to face the pandemic.

The management of accelerated platformisation

Restaurants in Lisbon have resorted to digital platforms during the COVID‐19 pandemic mainly for three management tasks: marketing, customer relationship management, and delivery. These three tasks imply the simultaneous use of different online tools, especially social networks and digital platforms, including food and delivery platforms.

Firm owners in Lisbon have more often engaged in marketing and customer relationship management tasks during the COVID‐19 pandemic through social networks. Given the absence of the consumer, firm owners see social networks as a means to compensate for this lack of contact. In this sense, there is an intensification of the frequency of content posting, as a restaurant owner told us:

We have greatly increased our digital presence at this time. It is not so much about investment, but mainly about frequency. I had a Facebook post or instastories every two days from time to time. Since the pandemic started, I post every day, stories every day, with content. Of course, it has meant more work, but I feel that it is really important to create a connection with the people at home. It is the way we have to communicate with them. (Interviewee 1)

Several firm owners mention the use of social networks for creating proximity with the customer, but also for promoting their products and services. In this sense, the platformisation of the restaurant sector entails more than just the digitalisation of previously analogue processes, as Vig and Agarwal (2021) proposed; it implies a profound change in firm–customer relations.

Engaging with customers through social media often entailed knowledge that firms do not possess. Some entrepreneurs consider that the pandemic was an opportunity to learn how to use social networks such as Facebook. Many also realised that their lack of use of digital platforms did not imply that they did not have an online audience, as many platforms had pages and reviews dedicated to their restaurant. Other firms started using Google Ads and Facebook Ads, or hiring Instagram ads to generate more attraction, or hired graphic designers to improve the visual quality of their marketing actions through Facebook and Instagram. In this sense, the increasing use of platforms does not merely refer to a quantitative increase, but also to a qualitative intensification of the efforts that firms are making. In general, firm owners report that in addition to marketing, social networks also allowed them to expand the management of their customer relationship by allowing them to interact more often with customers.

In addition, digital platforms have been especially important for restaurant owners in Lisbon to undertake marketing and delivery tasks during the COVID‐19 pandemic. The engagement with digital platforms was done with the purpose of integrating the restaurant in digital ecosystems that allowed access to better marketing and delivery services (Davies et al., 2017; Langley & Leyshon, 2017; Ramaswamy & Ozcan, 2014). Firm owners report that the number of delivery orders increased not only during the lockdown, during which the restaurant was closed, but also after their reopening. Although the lifting of the restrictions during the summer of 2020 allowed consumers to return to these establishments, many firm owners state that there was a feeling of insecurity and discomfort among the consumers. The delivery platforms were able to balance the desire to visit a restaurant and the security and comfort of home. Most of the firm owners who already used digital platforms report that they saw an increase in orders made when compared to the previous year (2019):

I already used delivery services. However, these went from 4 to 5% to 15 to 20% of the business. (Interviewee 1)

By April and May, it was undoubtedly a big slice of the turnover. In these months, there was a big increase. Now, there are more orders in general. (Interviewee 15)

However, digital platforms were also important for marketising promotional services during the pandemic. Platforms such as Zomato or The Fork provided discounts of up to 50% for online customers, often at the expense of restaurants' profits. For this reason, firm owners have conflicting views on these promotions. Nevertheless, this shows the importance of the platform as an intermediary between firms and their clients (Acuto et al., 2019; Kenney & Zysman, 2016; Yoo et al., 2016).

For some interviewees, the promotions were the main way of subsistence, especially during the lockdown, even if the promotions did not offer the same margin of earnings that they could previously achieve. Although promotional campaigns do not generate significant revenue, some interviewees prefer to maintain this type of campaign for other reasons, as one interviewee explained:

The 50% discount is huge, but the truth is that we are working and otherwise we would not. These campaigns help us because The Fork is a well‐known platform at least in Europe. It has brought customers. Our employees are emotionally unbalanced because work has stopped. They are sad. If you have clients, even if you don't make a profit, it motivates you. Besides that, it ends up attracting more customers as well. People attract people. If you have an empty restaurant, no one comes. If you have a restaurant with 5 tables from The Fork, I can get more 3 or 4 tables. (Interviewee 9)

Other owners state that they suspended this service because they do not see promotional campaigns as beneficial, as they do not achieve the desired financial return.

In short, most interviewees believe that digital platforms are increasingly significant for the restaurant business. This idea has intensified after the lockdown, thus confirming the notion that the pandemic is inducing, or accelerating, a digital transition (Dannenberg et al., 2020). These entrepreneurs see the digital as one of the possible solutions to mitigate the effects of the pandemic, but also as something crucial for the survival of the business for the future. Nevertheless, as hinted in this section, firm owners have very different approaches to and perspectives on the process of platformisation in the restaurant sector. In the following sections, we will look at these differences in greater detail, showing that it is important not only to look at how platformisation unfolds differently across cities, but also within them (Stehlin et al., 2020).

Accelerated platformisation is not the same for everyone

The emergence of the pandemic led several entrepreneurs to accelerate the platformisation of their business, but this process unfolded differently in each firm. Among our interviewees, we identified different departure points in terms of platform use that led to different rhythms in the platformisation of restaurants. In this sense, our findings shed more light on why firm owners have been less eager to platformise their business than their clients (Dvorak et al., 2021).

First, some restaurants already had an active presence on digital platforms. These restaurants are mainly located in the historical city centre, where tourism is very relevant for the urban economy, or the modern city centre, where patronage mainly comes from local workers (Paiva & Sánchez, 2020). These, in addition to a greater use of the platforms on which they were already inserted, also joined other platforms and social networks. While the majority were using the most popular tools, such as TripAdvisor, UberEats, or Facebook, they also started using additional platforms such as Zomato, Glovo, or Instagram. This choice is related to the desire to use new services, especially order and delivery services. These entrepreneurs also considered that these additional platforms and social networks intensified the proximity with the customer and attracted new clients. Reaching new clientele has been fundamental for restaurants previously marketed for tourists, especially in the city centre. The intensification of the use of platforms also leveraged entrepreneurial initiatives aimed at local customers, including the creation of products exclusively for online sale. This is the case of one restaurant owner who told us:

During the quarantine, we started making our own cheeses due to the delays in supply. Now a lot of people come for our cheese and we started selling the cheese online and we created our own brand. (Interviewee 18)

Other restaurants had a passive presence on digital platforms but switched to a more active stance after the onset of the pandemic. These were mainly restaurants located in residential neighbourhoods in the periphery of the city. These restaurants had mostly long‐term clients who know the restaurant because they live in the vicinity or because it was recommended by friends. After the onset of the pandemic, these restaurants had no options to stay in touch with their clientele. These divergences between restaurants in central and peripheral areas highlight the fact that platformisation always draws on territorialised urban elements (Barns, 2020; Richardson, 2020).

These entrepreneurs mention that they are open to learn more about new platforms. However, most also note that they have scarce knowledge of digital tools and low capacity for investment. Such restaurants lack time for engagement in online activities and financial resources to hire social media managers. Therefore, not all restaurants are able to join as many platforms as they wish, because the logic of the platform defies the traditional arrangements of their labour (Richardson, 2021). A common strategy among these restaurants has been creating their own website to promote the restaurant. However, the most important engagement during the pandemic has been the use of delivery platforms, especially for restaurants in peripheral residential neighbourhoods. As one interviewee told us:

It is something that we have been thinking about, mainly due to the context in which we are. There are limitations related to the prices they impose, but we decided to move forward because we were already doing takeaway and it has grown a lot. We know that people may not like it because the prices will get higher but, even if people don't buy, it's advertising. (Interviewee 16)

Lastly, some firm owners have stated that they have no interest in joining platforms, as they either do not possess the necessary resources to do so or they do not believe that digital platforms could improve their business. These restaurants state that they were strongly affected by the lockdown measures:

There was a very sharp drop. We had an average of around 300 meals a day between lunch and dinner and now we do around 50. Now there are 40 to 50 lunches and dinners sometimes don't even reach three. (Interviewee 4)

The drop in customers was 90–95%. Even during the pandemic, we have tourists. But we used to do 60 or so meals and now we do 10 to 12. Our prices are a bit high for the Portuguese. We are in a tourist area. (Interviewee 20)

For these restaurants, the impact of the lockdown made it financially impossible for them to undertake recovery measures. Accelerated platformisation, in this sense, seems to exacerbate the inequalities created by previous platformisation (Casilli & Posada, 2019; Lehdonvirta et al., 2020; Rae, 2019). In addition to this, some restaurants have tried to platformise their business, but ceased using platforms after negative outcomes. Nevertheless, the strategies that these restaurants apply often mimic the services that platforms provide. To avoid the fees of delivery platforms, some restaurants decided to hire their own courier to deliver their products. Aware of the need to get closer to customers, who spend more time at home or are working remotely, these entrepreneurs develop non‐digital approaches to solve the imposed challenges:

We are thinking about getting a motorbike and an employee to make deliveries. It would be more rewarding than using UberEats or Glovo. The rates are very high and there is a monthly fee. It does not seem very fair to be raising prices like that. The price for the customer is not very fair. That is why we never made progress towards that. (Interviewee 24)

In this sense, our findings show that not all firms that are unable to platformise their business are simply waiting to “bounce back” to a pre‐crisis state, as suggested by Appel and Hardaker (2021). Indeed, an interesting number of firms are engendering alternative strategies to adjust to the context of the platform economy.

In sum, firms had different departure points in terms of platform use that led to different rhythms in the platformisation of restaurants. Those in central urban areas had invested more in digital platforms before the pandemic and so they rapidly adjusted to a digital business model. Restaurants in peripheral areas were less engaged with the platform economy, and their adaptation during the pandemic was not as fast and successful. In this sense, these findings show that the spatial context is relevant to understand why some sectors of the economy are not platformising as fast as others (Dannenberg et al., 2020; Dvorak et al., 2021).

CONCLUSION

This study highlights the importance of understanding the geographies of platformisation. Restaurants in Lisbon were faced with the challenge of turning digital quickly to face lack of in‐store patronage due to the lockdown measures implemented by the Portuguese government to prevent the spread of COVID‐19. While the lockdown measures led to a deceleration of social and economic activities, they promoted further acceleration of economic change, especially under the logic of the platform economy. Three management tasks, namely marketing, customer relationship management, and delivery tasks, were the main trigger of the acceleration of the platformisation of the restaurant sector in Lisbon. However, the different levels of digital engagement among restaurant firms meant that firms had different departure points in this process of accelerated platformisation. As we have seen, these different departure points led to different rhythms in the platformisation of restaurants, as less engaged firms had greater difficulties in turning digital. Interestingly, some firms that were unable to engage with digital platforms have been trying to mimic online dynamics through the implementation of non‐platformised digital processes, which leads us to consider that the effects of the process of platformisation extend beyond the platform itself. This study has shown that the inequalities of this accelerated platformisation have a territorial basis, in line with what other geographers have recently found in relation to other economic sectors (Capineri & Romano, 2021; Richardson, 2020). While there is significant geographic scholarship on the impact of the platform logic in different sectors (Barns, 2020; Capineri & Romano, 2021; Langley & Leyshon, 2017), geographers must give greater attention to the distinct rhythms and spatialities in the ongoing process of platformisation.