Don\’t Let a Crisis Go to Waste

Written by:

Share

Facebook
Twitter
LinkedIn
Pinterest
Email
Print

Like so many of our readers, I too am operating and running The Robin Report remotely, as are my team members. We are fortunate in that respect.

Also, being cooped up with no meetings, lunches or events to go to, I have more time to think, which for me, is a dangerous thing. However, one of the things I think is that the bad news (actually horrific) coming out of this mess is obsessively upfront and in our faces every minute of every day. But as with all historic crises, wars and such, there is some good news. Essentially, we learn.

[callout]For many of the legacy brands and retailers who were evolving their models pre-crisis to be competitive and survive these consumer and business model shifts, my advice is to bite whatever financial bullet you must to go from evolution to revolution — tomorrow is now!![/callout]

Lessons Learned

So, in my dangerous thinking time, and lots of it, I\’m learning a lot. And we hope you are as well. The most important lesson coming out of this crisis should be that we never allow this crisis to happen again. What we should also learn is how the crisis has impacted our lives, the negative and horrible, but also how it can positively instruct our future. In many ways, the disruption and actual destruction of old and waning institutions, systems, structures — and in our case the retail ecosystem — can force transformative thinking, imagination, innovation, which can guide us to a positive future.

We pondered this \”light at the end of the tunnel\” notion and said, what the heck, let\’s find out what our brilliant readers think of the impact of this nuclear destruction and how they envision a reshaped future, a new \”new,\” and when.

Mindthink

So, we crafted a survey and sent it to our readers consisting of senior and C-level retail and brand executives, related financial and consulting communities and other related industries. We received hundreds of responses to seven questions along with commentary on our question: \”What do you think the overall impact will be on U.S. retail after the coronavirus crisis ends?\”

The results are interesting in the sense that a large majority (65%) of our respondents believe that online shopping will moderately increase, and practically equal numbers feel consumers will buy more groceries online (42%) and will be more selective (38%) in demand for quality and sustainability. Surprisingly, only 20% believe consumers will demand more in-store service and experiences.

\"\"

When we asked about the short-term survival decisions that need to be made due to the impact of the coronavirus, a slight majority (45%) feel a need to rethink short-term strategies for some value-chain functions and will change long-term strategies for their business model (36%).

\"\"

Time is of the essence and 61% of respondents feel the short-term (3-6 months) impact will be extreme and the long-term effects will be moderate (44%). Sadly, virtually no one feels there will be a positive impact short-term (2%) or long-term (12%). Innovation is the mother of necessity, so they may be missing an important boat powering to the future!

\"\"

When asked about the most pressing strategic and operational issues of the moment, not surprisingly, revenues were followed by managing the supply chain and inventory. Workforce issues followed with issues concerning ongoing communication and worker health and safety.

\"\"

And finally, nearly half (48%) feel that the economy will go into a mild recession and nearly a third (32%) believe it will go into a deep recession. I can tell you; they are more optimistic than I am.

\"\"

What\’s Next?

Our readers\’ commentary on the post-Covid-19 future is fascinating and I have added my own insights and perspectives. Additionally, I have analyzed the major issues and opportunities that we should plan for following the crisis. Essentially, this industry overview reveals how the creative destruction of the \”old world\” will give way to a brighter, more enlightened future.

An understatement is that this crisis is a global \”game-changer.\” The length of its duration and the depth of its impact both societally and economically is totally unknown, and when it is over, we can examine the wreckage and the seismic shifts that have taken place. That being said, we can anticipate many of the outcomes and plan for them now.

The bad news for those who are not now learning and planning for the obvious shifts that are occurring is that there will be no place for them on the other side. The good news for those who are not wasting this crisis, who are learning, planning for, and in some cases, already beginning their transformations (or accelerating those already begun pre-virus), they will survive and thrive. Let\’s take a deeper dive.

  • Debt Death – From an economic perspective (recessionary or worse) and regardless of the trillions of dollars of \”bridge\” support some companies that are struggling and deeply in debt will likely not survive, even those that had a \”plan.\”
  • Too Much Stuff – On a macro level, and what I\’ve been hammering away on for 40 years about the imbalance of too much supply chasing too little demand, driving deflationary pricing across all consumer-facing businesses is a bit of good news. Massive retail square footage and the stuff in it may be decimated, bringing supply/demand back into a reasonable balance.
  • Frugality – The bad news of a supply/demand reset is that consumer behavior post-virus, accelerated by behavior already shifting among millennials and Gen Z\’s pre-virus, will be much more frugal. Saving for another \”rainy day\” and spending more on needs and less on \”wants\” will become the norm. Furthermore, no one really knows how financially broken these consumers will ultimately be. So, even with a more balanced marketplace, it will still be a battle for share of a virus-reduced consumer wallet.
  • Online Rules – Another effect of the pandemic is an accelerated shift in consumer behavior (again, already begun pre-virus) in increased online shopping, which is soaring in the double digits during this shutdown. It will become routine and will stick. Grocery shopping online will likely be a major standout. Pre-virus, only about three percent of groceries were purchased online. Some experts believe this could jump to 30 percent, particularly given the new shopping and delivery technologies that allow shoppers to complete the entire journey in their living rooms.
  • Empathy – When the young consumer cohort does go shopping in the physical world, they will seek a higher social experience, empathy and conversation from store associates, as well as in-store activities and events. And the experience may be less about theatrics and more about providing valuable services that make the overall experience safer, healthier, faster and helpful in getting the products consumers want.
  • Belief and Trust – Customers will be more selective for brands they trust and the frivolity of \”fast fashion\” in the face of what they have gone through will be greatly diminished. Furthermore, young consumers who were driving retailers to incorporate sustainability throughout their product offerings, along with humane and environmental sensitivities up and down their supply chains before the crisis will continue those demands, even more ferociously.
  • All About Me – Personalization will be more important than ever due to the hangover effect of consumers being isolated for so long. They will want to feel special and connected with brands and retailers who have empathy on an individual level.
  • Virtual Space – Over time, there will be a huge structural shift in all of commerce. Virtual offices will predominate for staff and employees in many sectors, with only intermittently scheduled meetings requiring one-on-one discussions. This will include seminars, conferences, trade shows, fashion shows and major events that used to be gathering spots for commerce. These will take the form of online webinars, 3-D streaming events and other tech-enabled systems. Corporate cost allocations in time, travel, lodging and event fees will be drastically cut. Selected major events will still be conducted, but with a higher level of health and safety for both staff, suppliers, exhibitors and attendees.

Start Planning Now

While most of the above points were already evolving pre-pandemic, they will only accelerate during this seemingly endless period of physical distancing and outright shutdown. However, it behooves every consumer-facing industry to plan on these possible outcomes.

For many of the legacy brands and retailers who were evolving their models pre-crisis to be competitive and survive these consumer and business model shifts, my advice is to bite whatever financial bullet you must to go from evolution to revolution — tomorrow is now!! Make whatever radical changes that need to be made. And if it\’s downscaling to the extreme, just do it. If you have the plan, the good news might be the flood of liquidity you may be eligible for.
For those who were not already evolving, who did not have a plan and who are deeply in debt, your theme song is playing on the deck of the Covid-19 Titanic: \”Nearer, My God, to Thee.\”

Related

Articles

Scroll to Top
the Daily Report

Insights + Interviews right to your inbox.