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Riding the Black Swan towards the ‘New Business-As-Usual’

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The COVID-19 crisis, a so-called ‘Black Swan of Black Swans’, has elicited a wealth of important and insightful articles and papers from SWL’s fellow thought leaders on both sides of the Atlantic. This article will synthesise many of their main points and theses in line with our own visualisation of our movement from this transitional and troubling phase towards a kind of ‘New/Next Normal’ for everyday lives and commerce and, once we emerge at some point in the future, a ‘New Business-as-Usual’ for Retail.

 

Our economies are currently in a state of flux across the yawning gulf between the ‘WoW’ (Ways of Working) of 2019 and an oft-cited ‘New Normal’. It is SWL’s opinion that we are simply too early in the transitional grip of the COVID-19 pandemic to be describing anything in ‘normal’ terms. Clearly there will be new modus operandi for every business, at indeterminate points in the future, however it is only after Government and Social constraints are completely lifted, and Consumers are comfortable with each Retailer’s new offer, that an operational ‘New Business-as-Usual’ can prevail. RetailLeader.com concurs:

…defining normal is extremely challenging because COVID-19 is still upon us, among us. That means shopper expectations are still being reset in potentially dramatic ways that are likely to accelerate the demise of some retailers and accelerate the growth of others.

Awin.com offers further support for this precarious intellectual precipice. How can we know an unknown when it becomes a different unknown on a daily basis:

‘But such is the speed with which the virus is disrupting our lives, every day seemingly throwing up a ‘new normal’, we need to exercise caution.’

https://www.awin.com/gb/news-and-events/awin-thoughts/the-coronavirus-consumer-what-might-the-new-normal-look-like-for-retailers

 

Indeed, as these quotations aptly demonstrate, it is illuminating to study the recent articles from McKinsey & Co, Forbes, Retail Leader, Essential Retail, Retail Dive, Awin, Retail Gazette, Multichannel Merchant, Pymnts.com, Forrester, Marketing Dive et al. All give valuable analyses of our current situation, and attempt to give the uncertainty some kind of tangible shape.

McKinsey & Co’s excellent article ‘Beyond Coronavirus: The path to the next normal’ speaks of a new commercial life that,

‘In this unprecedented new reality, we will witness a dramatic restructuring of the economic and social order in which business and society have traditionally operated.’

Like SWL, they are casting their gaze on business practices beyond the ‘new’ to the ‘next’ iteration of normality:

‘What will it take to navigate this crisis, now that our traditional metrics and assumptions have been rendered irrelevant?’ They propose five phases for our transition and eventual recovery, each of which will be governed by geographic and industrial context:

McKinsey’s Phase 1 – Resolve

Many are dealing with acute slowdowns in their operations, while some seek to accelerate to meet demand in critical areas spanning food, household supplies, and paper goods… Resolve: the need to determine the scale, pace, and depth of action required at the state and business levels. As one CEO told us: “I know what to do. I just need to decide whether those who need to act share my resolve to do so.”

 

McKinsey’s Phase 2 – Resilience

Businesses are fire-fighting on an unprecedented level. Commerce and society were experiencing huge strains even before the crisis:

‘In the face of these challenges, resilience is a vital necessity. Near-term issues of cash management for liquidity and solvency are clearly paramount. But soon afterward, businesses will need to act on broader resilience plans as the shock begins to upturn established industry structures, resetting competitive positions forever. Much of the population will experience uncertainty and personal financial stress. Public-, private-, and social-sector leaders will need to make difficult “through cycle” decisions that balance economic and social sustainability, given that social cohesion is already under severe pressure from populism and other challenges that existed pre-coronavirus.’

Awin.com agrees, citing some brands’ resilience being built into their business models.

‘Online gaming, streaming and downloads, digital rather than physical products, are experiencing a surge, almost doubling sales since the time of lockdown. More traditional sectors like DIY, with the double whammy of Spring being the traditional period when we fix our houses combined with the plentiful time to do so, are seeing sales increase by upwards of 50%.

But beyond the time we’re filling now, will our longer-term behaviours change? While many twists and turns of the pandemic are yet to unfold, sooner or later our lives will return to normal. But will a new normal emerge? Our perceptions of the brands and products we buy indelibly scarred by our recent experiences?’

 

It is central to SWL’s core business to enable Retailers to better focus on their Customer Experience. Important brand loyalties can be built or destroyed through operational giant leaps or faux pas.

 

McKinsey’s Phase 3 – Return

‘Most industries will need to reactivate their entire supply chain, even as the differential scale and timing of the impact of coronavirus mean that global supply chains face disruption in multiple geographies… Government leaders may face an acutely painful “Sophie’s choice”: mitigating the resurgent risk to lives versus the risk to the population’s health that could follow another sharp economic pullback.’

In a Retail Gazette interview, Professor Joshua Bamfield at The Centre For Retail Research stated that ‘it would take UK retail about six months or more before retailers can manage to reach previous levels of sales: “It will be slow and shoppers will remain cautious for a long time.”’ In the same article, they predict a possible surge in retail sales once lockdown is lifted and consumers spend some of the cash they’ve been cautiously ‘hoarding’ throughout social distancing.

Retail Leader also discuss the mutual desire to ‘return to normal’, but seen through the distorting prism of our current social-distancing and basic sustenance needs:

‘getting back to normal would mean abandoning the totally unnatural act of attempting to stay six feet away from other people and resuming things an inherently social species does.

Retailers have a desire to return to normal too, especially those devastated by the fact that the products they sell are deemed non-essential. This has created the most unusual of situations where non-essential retailers are forced to close stores and employ every imaginable cash conservation measure to ensure their survival. Meanwhile, essential retailers of food and consumables are overrun with shoppers, increasing wages and looking to bring on more workers.’

In summary, says Retail Leader, the future will see ‘the behavior of an entire generation of consumers is in the midst of being reshaped by a global pandemic.’ With pithy realism, they paint a strictly monotonal picture:

As for what’s on the other side of the COVID-19 nightmare, we all have our suspicions and some will prove more accurate than others. There are a couple things we can be certain about though. There will be no return to normal for retailers and people have to eat.

https://retailleader.com/new-normal-will-be-anything

 

Indeed, SWL are employing their extensive experience and expertise to navigate our clients’ ‘Return’ to operational health. The future however will be different from the 2019 norm, and that is all that any of us can say with certainty at the moment. Hence SWL’s drive to assist our clients in learning from their present transition phase so it contributes towards a clearer strategy for the next phase, the next after that, and eventually a new ‘business as usual’.

 

McKinsey’s Phase 4 – Re-imagination

If we are contemplating the ‘survival of the fittest’ in this new war-zone, then this ‘fitness’ must surely be based on a business’s ability to re-imagine itself.

A shock of this scale will create a discontinuous shift in the preferences and expectations of individuals as citizens, as employees, and as consumers. These shifts and their impact on how we live, how we work, and how we use technology will emerge more clearly over the coming weeks and months. Institutions that reinvent themselves to make the most of better insight and foresight, as preferences evolve, will disproportionally succeed.

Will globalised logistics, for instance, fall by the wayside as societies strive to move sourcing and production closer to home? Re-imagining an operational business model will entail, among many other things, shedding light on ‘what is ultimately required versus nice to have.’ In addition, technology and its roles will evolve (are evolving) and the result is ‘a stronger sense of what makes business more resilient to shocks, more productive, and better able to deliver to customers.’

Retail Gazette makes a similar point: that the customer’s relationship with Retail is now more pragmatic and utilitarian than before, which may indeed engender positive and more responsible changes in their buying habits:

‘Retailers may need to consider their long-term plans as the enforced closure of shops has seen customers restricted to buying what they need instead of what they want. This may indeed see a positive change in shopping habits as consumers could increasingly adopt more sustainable habits in the future and become more mindful about their shopping behaviours.

As of now, it may be difficult to predict when things will resume back to normal. But retailers must not be naive to underestimate – or overestimate – consumers’ understanding of what “normal” is once lockdown is lifted.’’

https://www.retailgazette.co.uk/blog/2020/04/coronavirus-when-will-retail-return-back-to-normal/

Marketing Dive further hammer home this point in their analysis of a Forrester research report, which proposes and measures its four-tier “consumer energy index” for consumers:

‘eagerness to connect with brands fell 10 points to a record low this month from two years earlier. The “identity” part of the index declined the most, followed by the “trust” measurement, showing that consumers are less optimistic that people and companies will keep their promises. The “novelty” score changed the least, indicating that consumers still want something new.

The “efficacy” measurement of the index fell as well, signalling that consumers are less likely to feel in control of their circumstances than they were two years ago. Still, the indicator is the highest part of the consumer energy index, showing that consumers are still looking for something to improve their experience.’

https://www.marketingdive.com/news/forrester-brands-must-build-trust-as-coronavirus-saps-consumer-sentiment/574993/

 

CX in any business climate or context is volatile. Of course CX, in the hands of the (never more) wary and sensitive customer, needs managing – with care – in near real-time. This is at the very heart of SWL’s DNA and expertise.

McKinsey’s Phase 5 – Reform

Now that the world has looked this Blackest of Swans in the eye, societies have sharp focus on the challenges this pandemic has presented them.

‘Business leaders need to anticipate popularly supported changes to policies and regulations as society seeks to avoid, mitigate, and pre-empt a future health crisis of the kind we are experiencing today.’

Essential Retail eschew any temptation to peer into the mythical ‘crystal ball’. However, they look to retailers’ embrace of technological solutions to not only weather the storm, but to predict and adapt to weather patterns not yet on the business horizon. Whether through an increase in eCommerce activity or a greater move towards automation, visionary retailers are effectively driving major aspects of what this ‘Next Normal’ could look like:

‘A much quicker expansion into automation, ensuring retailers can sell and deliver products efficiently during a crisis such as a pandemic, could also result from the experience of Covid-19, further shifting operations away from physical stores and warehouses. This could potentially range from the use of drone delivery to automated warehouse processes.’

https://www.essentialretail.com/features/covid19-coronavirus-change/

But, according to WWD.com’s analysis of Forrester’s and Navar’s report on pivotal changes in Retail during the pandemic, an overestimate of eCommerce’s potential growth could well be a pitfall:

‘And the idea of retailers making up losses via e-commerce is, unfortunately, more idealistic than realistic. “Retailers’ confidence in e-commerce is limited, with 48 percent of retailers not planning to reallocate resources to e-commerce operations and 50 percent of retailers thinking e-commerce would fare only a little better than the rest of the business, indicating that there will be significant declines.”’

https://wwd.com/business-news/business-features/retailers-adjust-strategies-wake-of-coronavirus-1203554409/

 

This is indeed a crucial time for technological, scientific and societal reform, and in many ways this will be to the benefit of the world we live in:

‘The aftermath of the pandemic will also provide an opportunity to learn from a plethora of social innovations and experiments, ranging from working from home to large-scale surveillance. With this will come an understanding of which innovations, if adopted permanently, might provide substantial uplift to economic and social welfare—and which would ultimately inhibit the broader betterment of society, even if helpful in halting or limiting the spread of the virus.’

Governments of course are attempting, and will continue to attempt, to support and affect these reforms. This at a time when, as McKinsey states is, this ‘next normal’ is ‘a normal that looks unlike any in the years preceding the coronavirus, the pandemic that changed everything.’

https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/beyond-coronavirus-the-path-to-the-next-normal

McKinsey, among many other thought leaders, points to a potentially bright long-term future, notably in a previous article, ‘The future is not what it used to be: Thoughts on the shape of the next normal’. While much of the current landscape appears economically, bureaucratically and immigrationally bleak, it is highly plausible that

Decisions made during this crisis lead to a burst of innovation and productivity, more resilient industries, smarter government at all levels, and the emergence of a reconnected world.

https://www.mckinsey.com/featured-insights/leadership/the-future-is-not-what-it-used-to-be-thoughts-on-the-shape-of-the-next-normal

 

Forbes too highlights the resilience and resolve of the Consumers themselves as a key pointer to brighter days:

‘They are resilient, they have short memories, and they are inherently social. If anything, this pandemic will exacerbate people’s desires to go out to stores and restaurants after being unable to do so for the longest period of time, from a national perspective, that I can recall. If we can beat this pandemic—and I truly believe that we will—there is going to be some serious pent-up demand for a little retail therapy, which would be welcome news for retailers, shopping centers and the overall economy.’

https://www.forbes.com/sites/gregmaloney/2020/03/26/coronavirus-social-distancing-and-retails-new-normal/#71ee46851ff9

 

In an article for MultiChannel Merchant, Greg Zakowicz reminds us of the obvious but vital priority: that Retailers must focus on the needs and loyalty of their customers:

‘While there are many unknowns, we do know that consumer shopping habits will change, and retailers need to adapt in concert while remaining financially viable. With adversity comes opportunity. For retailers, focusing on customer needs and building loyalty may never be as important as it is right now.’

https://multichannelmerchant.com/news/8-ways-the-retail-landscape-may-change-after-coronavirus/

 

But what future ultimately lies in store for our Retail businesses? With nearly 30 years’ experience in Retail Operations, SWL are ever more committed to navigating their Customers’ businesses beyond their present predicaments and the ‘next-normal’ phases, towards a future that is not yet clearly on the horizon. SWL will help your business to predict it, plan for it, adapt to it and proactively optimise your operations within it. SWL is experienced and equipped for this ‘Next Business-as-Usual’:

  • Innovative approaches to near real-time CCX management

  • Employing Insight through analysis of data fact

  • Innovation and Evolution through thought leadership

  • Re-invention through technology and expertise, and

  • Business Optimisation through experiential analysis of your operational DNA.

 

Call SWL today to discuss how we can help your retail business re-imagine, innovate, re-invent and optimise in a new ‘Business-As-Usual’.

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