Trying to work out future implications in business is never easy (think 35 years managing NamNews, for those out there with longer memories…). However, given almost five months of home-confinement, in unprecedented circumstances, this has enabled the crystallisation of some views and pointers that may help NAMs and business owners to optimise what remains of their customer and brand portfolios.
Incidentally, it can help to declutter the mind by leaving the analysis of coronavirus ‘cause & effect’ to others.
Instead, as a business manager, it can be more pragmatic and productive to focus on the impact of lockdown on the ‘here & now’ and evolve ways of doing business in circumstances none of us have ever experienced. In other words, survival and growth now depend upon a fundamental and realistic evaluation of lockdown impact, in terms of the imminent recession, how our trade channels will respond, and decide what to do about it.
In practice, this means keeping in mind our basic offering and fundamentally rediscovering consumer need, the relative competitive appeal of available alternatives, as if we were entering the market for the first time…(albeit with the benefit of some prior knowledge)
In terms of lockdown, we are experiencing some of the most catastrophic impacts on business in the UK and elsewhere. Specifically, travel, and with it travel-retail, have suffered over 50% reductions in demand that may prove ‘permanent’. A combination of reduced commute/business travel, coupled with tourists’ unwillingness/inability to risk rail or journeys by air and employers’ banning of business travel in favour of digital communication, means there is severe overcapacity in these means of transport that government exhortations will not easily reverse…
A key driver has been the realisation that tech-supported home working can result in increased productivity, with the added bonus of improved work/life balance and extra benefits in terms of elimination/reduction of commute cost and the expense of childcare. Meanwhile, employers are discovering the advantages of being able to reduce space and rental costs of their commercial office buildings.
The combination of benefits for employers and their teams will drive down rents and/or cause commercial buildings to be repurposed as domestic accommodation, hopefully fast enough to revive demand for local hospitality in terms of pubs, restaurants and convenience outlets.
Lockdown has set the stage for one of the deepest and all-pervading recessions in working memory (think 1980, 1990, and 2007+ for reminders of what can happen). Essentially, radically reduced demand will result in a tipping over the edge of companies that have been struggling for years ‘in the good times’. Survivors will cut-to-fit and focus on meeting consumer need for value.
Clear indicators are already evident in how routes to the consumer are responding. Capacity-surpluses of retail estates are being cut ruthlessly by a combination of negotiated rent reductions and/or store closure within traditional channels, while discounting and online channels are flourishing but not to a degree necessary to compensate for losses in traditional retail and wholesale channels.
At the heart of these changes has been the emergence of the super-savvy consumer from an enforced lockdown that has heightened their appetite for demonstrable value for money, aided by all the comparison-tools they need in making an informed purchase, and the social media means of telling their friends the outcome (‘please me and I tell one friend, disappoint me and ten friends will hear of my displeasure’). Add social media to multiply this impact by a hundred or even a thousand-fold…
Lockdown and enforced home-confinement have caused consumers to fundamentally re-examine all of their relationships, but especially their relationships with third parties and brands, both supplier and retail. They are now operating with a re-engineered value-system, honed by months of home-working. They are unwilling to revert to type in that a genie has been released from a bottle… They have in effect become new, super-savvy consumers and now need to be won over afresh by suppliers and retailers acting from first principles, as if entering a market for the first time with the possible benefit of a little knowledge of the category.
At long last, there is an opportunity for those providing goods and services to succeed on merit in dealings with consumers/customers that can appreciate quality and value for money.
All we have to do is deliver more than it says on the tin, every time…
NAM Implications going forward with the benefit of hindsight:
- A key learning in 3.5 years has been to ‘leaving the analysis of Coronavirus cause & effect to others, likewise the culpability of politicians, scientists and bankers’
- There is no benefit in going down the cause & blame rabbit hole…
- Above all, survival and growth now depends upon a fundamental and realistic evaluation of lockdown impact, in terms of the imminent recession, how our trade channels will respond, and decide what to do about it…
- This means fundamentally rediscovering consumer need, the relative competitive appeal of available alternatives, as if we were entering the market for the first time… (albeit with the benefit of some prior knowledge)
- Tech-supported home working is now part of our working future, and will settle at 25% of the working population, minimum.
- All will have to accommodate that new reality
- Despite politician’s assertions, we are in one of the greatest recessions in working history and need to accept its implications.
- Lockdown and enforced home confinement have caused consumers to fundamentally re-examine all of their relationships, so we need to win them over anew.
- Finally, the greatest breakthrough has been the realisation that success will come from Thinking for yourself, despite all the official ‘encouragement’ to trust the experts…
