Navigating the Three Phases of Covid-19 – Phase Two “The Company”

By: Bob Dearing, CFE

It would be hard to find someone that would argue Covid-19 has not had a dramatic impact not only on this country but across the world as well. Covid-19 led to a lockdown of business and stay-at-home orders for non-essential workers. Of necessity these events prompted significant shifts in consumer living and purchasing behaviors. Rarely in history have there been events of this magnitude.

In a survey by McKinsey & Company, “US Consumer Sentiment During the Coronavirus Crisis,” five key consumer behaviors were identified that are likely to have a lasting impact. The behaviors, examined in detail in Phase One of this article, are listed below.  

• Shift to value and essentials
• Flight to digital and omnichannel
• Shock to loyalty
• Health and caring economy
• Homebody economy

Businesses clearly understanding the importance of these behavior shifts now discover themselves in the position of having to react quickly and decisively to accommodate consumer demands.     

Customer-facing business types

Every business, regardless of type, has been affected by the pandemic. Some have been hit harder than others, but all are faced with a new strategic watchword, agility. The most affected businesses are those dependent upon a face-to-face customer interaction. Think restaurants, hotels, airlines, entertainment, tourism, salons, and fitness centers. Each has reacted in its own way to remain viable while others simply will not survive. Social distancing, restricted occupancy, limited crowd gatherings size are not sustainable restrictions for these business types. 

All that may seem to be a dark picture, however most of these businesses have found other ways to offset the five consumer behavior changes. Restaurants that have migrated from on-premises to off-premises consumption are returning to profitability. Others dependent heavily or entirely on on-premises service are likely to experience a significantly longer recovery period. In either event a long-term plan will be to continue to support an omni-channel sales and distribution strategy. Look for menus to be redesigned to allow for improved packaging and portability to accommodate delivery systems.  

Business types aside from restaurants have also begun to adapt to other methods. Hotels are opening with limited services, airlines are flying with fewer flights and empty middle seats, entertainment venues are responding with social distancing requirements and Hallelujah, football is back. (Albeit with empty seats or a restricted number of fans)  

Limited customer-facing business types

Do not misunderstand, all businesses are customer-centric if not directly customer- facing. This grouping is just not dependent on face-to-face interaction on a regular basis. These companies are generally engaged in multi-location retail, financial management, data management, distribution, and similar types. They have their own set of issues resulting from the pandemic. They are generally, but not always, larger companies with a significant number of employees.

Covid-19 has forced these type companies to reduce their workforce, give up their offices, make substantial changes to their business model and rethink their strategic plan. Technology and data analysis have become front and center as business evolves to adapt to the consumer behavior shifts. This evolution has led us to an advanced technology system coupled with a data-driven scheme. That journey has exposed what we can expect in a digitally driven workforce world. The coming digital environment extends to the company’s operating system, customer and supplier interactions as well as expanded internal communications. As it is implemented, it will require training to expand employee skill sets.   

So, what can we expect?

Management will focus on adjusting operating models to accommodate the shifts in consumer behaviors. Companies will rely heavily on what the data tells them and develop shopping opportunities that mirror changes in consumer behaviors. They will redefine the role of physical stores with an emphasis on safety, convenience, and value. Name brand offerings will be used to boost consumer confidence and loyalty. Continued expansion of online purchasing opportunities will be emphasized and include Buy Online Pickup In Store (BOPIS), buy online for delivery and online apps whose popularity has expanded 28% year over year. Webpage optimization for digital shopping, speed and stability will be top of mind.

Efforts will be made to bring an “in store” feel to the digital platform. Today’s technology provides the ability to offer personalized interaction such as virtual appointments using videoconferencing. Companies ‘continue to search for the best way to engage with the consumer. Just how, where and through which medium will determine the most effective interaction to enhance the consumers’ experience. Look for organizations to adopt policies and processes that establish strong trust among employees, customers, partners, and the community.  Higher service levels will be employed as a strategic initiative to protect the brand promise and deliver reliability that other brands may not be able to provide to boost consumer loyalty.

Are there threats?

Yes, of course. There are always threats. How long will Covid-19 be with us and what happens once it is under control? Will the current consumer behaviors stay with us after Covid-19 or will they go away? Those are all unknowns but “smart money” says they will be around for quite some time.

One other issue is the supply chain. Where does your product come from and where does your supplier get his raw materials and so on down the chain? Covid-19 has disrupted many of these businesses and that disruption could easily have a lasting effect.

The next step

This is part two of Navigating the Three Phases of Covid-19. Please follow us for Part three coming soon.  

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