“NEVER give in. Never give in. Never, never, never, never — in nothing, great or small, large or petty — never give in, except to convictions of honour and good sense. Never yield to force. Never yield to the apparently overwhelming might of the enemy.” — Winston Churchill
The world is in a great lockdown, facing the worst downturn since the Great Depression. The enemy — coronavirus.
The coronavirus outbreak has evolved into a global pandemic with over 200 countries affected to date. With no vaccine in sight, the virus has caused over 260 000 deaths and 3,7 million people infected.
VUCA — volatile, uncertain, complex and ambiguous — a term coined by the United States War College in 1998 to train officers for the 21st century describes perfectly the world we are living in.
The virus has created utter chaos, disrupting every aspect of our lives. The economic recovery will be a slow journey.
Some of the challenges that businesses are facing amid mounting uncertainty, consumer behaviour and demand patterns have been fundamentally altered. Another is that there is no clarity on the long-term financial state of the economy. Lastly how to define the way forward when economic recovery will differ from country to country.
It certainly won’t be business as usual as that is what got us here in the first place. Instead it will be changes that we have had to make to adapt and survive that will define our future in this volatile environment.
Organisations must be alert, nimble, and agile as they face long lasting demand and supply changes. It’s imperative they understand what customers value, their needs, their fears and their priorities, develop products and experiences based on those insights.
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Companies need to reconfigure their business models, develop cohesive over-arching strategies. They must build an agile model around clients, suppliers and resources that responds to volatile unpredictable global events, allowing quick decision making devoid of errors or early inaction.
Resilience and adaptability are essential
Making this turnaround requires strong leadership with a clear and coherent vision, building a resilient cohesive team, as well as investments in innovation and digital transformation. This isn’t a normal economy, nor is it a normal world, certainly not a normal challenge.
To pull us through this VUCA world, we need leaders with VUCA vision — charting a clear path, mission and strategy for the future; understanding the changing circumstances, seeing the moves as they are happening, not when they are being revealed to the world; courage to step up and make tough bold decisions and moves, and; adaptability — adapting quickly to changing circumstances without altering strategic course.
The company strategy, market footprint, assets, systems, processes, and its entire supply chain must be re-evaluated to formulate strategic action plans that are sturdy across multiple scenarios.
With changing priorities, travel, tourism, retail and luxury, purchases will be impacted. In the short-term, there will be a decrease in consumption and demand for global consumer products, especially for luxury brands. At this point, it’s impossible to define what’s a short-term duration, it can be six months, a year, two years or more.
Panic buying, driven by fear and anxiety, on the other hand, has led to an increased demand for staple packaged products, home care items and consumer health products. Demand for these may subside sharply post crisis.
During these uncertain times people’s routine and purchasing habits are reshaped. However, this also creates an opportunity for businesses which can pivot operations and invest in new technologies to adapt to the changing environment.
Businesses need to reprioritise their portfolios based on shifts in consumer and customer needs and a new supply chain.
There will be a reconfiguration of the food industry business standards and the way supply chains operate. There may be more government regulations on consumer health and food security, along with more digital traceability to ensure safe production standards. Businesses need to keep their eyes and ears close to the ground, be in tune with the changing regulatory measures.
As consumers’ desire to remain healthy and safe will be stronger than ever, businesses may need to focus more on innovative sustainable products and services centred around immunity and safety.
The push towards a healthier diet has led to increased sales of plant-based and cell-based protein commodities with more investments and innovation in the industry. Investors are leveraging on consumer shift towards sustainable and healthy choices.
The crisis has impacted consumer mobility and retail footfall. As retailers try to cope during the lockdown, they are also faced with a new challenge (and opportunity) of increased e-commerce demand.
Globally online retailing has been the major beneficiary of the coronavirus impact. The sector has experienced exponential growth since the virus outbreak. There has been a spike in app downloads for e-grocery and food delivery services.
For many consumers, the challenge with e-grocery is getting used to selecting and ordering a big basket of products. Normally, it will take some time to adjust to this mode of purchase, but forced lockdowns have accelerated that process.
The convenience may be too much for some consumers to revert to their old way of shopping, it could even lead to permanent adoption by some.
Digital transformation will change consumer habits and demand. Retailers and supply chains that do not re-position and adapt fast will cease to exist.
Regrettably, many retailers will be wiped out during this crisis but those with both online and offline presence are capitalising on e-commerce to mitigate the losses from the closure of their physical stores during the lockdown.
Necessity is the mother of invention
The upsurge of innovation is one of the positive outcomes of this crisis. Automation, immersive new technologies, digital platforms and networks will reshape our world, defining the way we work, live and socialise. Since the lockdown, there has been an increase in telepresence surge in people using cloud platforms and SaaS providers to work from home.
Robot manufacturers have seized the opportunity to showcase their bot’s abilities during this crisis, especially in hospitals or other facilities where patients are quarantined. The use of artificial intelligence (AI) and robotics is accelerating. It holds a lot of promise but at the same time challenges as these technologies will replace many work activities currently done by humans. Fortunately, the transition will not be abrupt, but a gradual process, differing from industry to industry, country to country.
Nonetheless, digital solutions need to be developed quickly, and organisations and stakeholders must come out of their comfort zone, reskill, adapt to new operating models.
Digitisation and automation need to be accelerated in areas of supply chain, back-office functions, procurement, and route to market. All of this will have a major impact on earnings.
Because China is a major producer of various products as well as a supplier of components and raw materials for multiple industries, when it went into a lockdown some five million companies globally were affected. This coupled with the US-China trade war has made companies and governments realise how overly dependent and vulnerable they were.
Supply chain managers had traditionally focused on cost, quality and delivery. They are not wrong to do so. However equally important now is paying attention to resilience, re-configurability, and responsiveness.
Moving forward, businesses need to conduct a rigorous review of their supply chain, map it out — first, second, third tier, supplier’s own source, logistics etc. They must switch from an operational supply chain to building a resilient supply chain that is smart and flexible, reconfigure their supply chain exposure, plan for diversification.
This may mean working less with traditional suppliers, a diminished negotiating power, increase shipping cost, etc. Unfortunately, in the short term this cost may be passed on to consumers in the form of higher prices but in the long run everyone benefits.
Organisations need to analyse consumer demand in real time and deliver solutions. To win back clients, marketers must leverage on analytics to design online marketing campaigns and communication channels that are immersive, engaging and social.
Big data analyses are increasingly being used in decision making in the various sectors. Sales channels will be more digitalised, pricing, marketing and promotions adjusted based on data.
Live streaming will grow bigger and faster. A wide range of products are sold via this platform, from food, cloths, daily necessities to houses, cars and cosmetics to electronic devices, pets, construction services and events. It has helped retailers broaden their sales channel. There will also be increased advertising spending via streaming and a decrease in outdoor advertising spending.
According to iiMedia Research, sales via China’s live streaming platforms is estimated to hit US$130 billion this year, accounting for 8,7% of online retail sales, users of live streaming within China would reach 526 million.
Many of our assumptions of in-person services with physical locations have been challenged during this pandemic.
Digital medicine tools are showing their usefulness to patients and medical practitioners in this pandemic. Instead of booking an appointment with a doctor, patients now have multiple options at their disposal whether it’s to get advice via a chatbot or to message a nurse or doctor.
From remote working, video conference calls, e-learning for children, telemedicine, esports, to sales and workouts via streaming, food and alcohol delivery, lots of things have changed and post-pandemic some of these habits are likely to stay.
Organisations grappling with integrating technology in their business need to adapt to the modern age. The future is now, not six months or a year or two away. The possibilities are infinite.
According to an Econsultancy and Marketing Week’s “COVID-19 Business Impact Survey” — 60% of large global organisations (with annual revenues of over US$60 million) have identified new processes that they might use post-outbreak.
Significant numbers of respondents said they had also observed new ways of working which could be used post-outbreak (82%), innovations in marketing messaging/branding (49%) and innovations in products and services (47%). Will this be a prolonged recession, or are we entering a depression? Will there be a second wave of the virus hitting our shores in fall?
The unknowns are many, the economic recovery will surely be slow. But for sure consumer shopping habits will change, and businesses need to adapt.
Shaun Jayaratnam is a sales and marketing, business development and operations management professional with over 25 years of experience in several industries He has worked in Russia, Ukraine, Africa and Asia. Connect with him on Linkedin.
