COVID-19 Market Insights - successes, challenges and lessons learned
Read time: 9 minutes
This article draws upon the topics discussed during Michelmores' Business Legal Hour webinar on Friday 24 April 2020.
Our panel shared insights from what they have seen in the market, together with client successes and challenges, whilst responding to specific questions submitted by the audience.
Market Insights: employer brand and the importance of communication
As the Coronavirus (COVID-19) pandemic unfolds, concerns are rising about the reputational impact of how businesses are behaving and how they are interacting with their staff, with a particular focus on employer brand.
Many companies are concentrating on how to keep their employees on board. This goes far beyond the 'self-protection' approach which hit the headlines only a few weeks ago. Here certain businesses were alleged to be more concerned with slashing costs and how to avoid potential legal action from confused and disgruntled employees than on acknowledging the importance of one of their major assets – their people.
We have seen a distinct shift towards increased transparency, the involvement of staff in business-critical decisions and a recognition that employees will reflect on their experience and feelings under COVID-19 conditions, and how well their employers have worked with, and for, them. One of the most powerful marketing tools any business can have is when all of its employees are singing to the same tune.
Clients have reported their successes in communicating directly with employees about the risk of closure. When consulted, employees have contributed invaluable insight into how to keep factories, distribution centres and other structures open, adopting new shift patterns and additional operating measures which enable them to work safely. In turn, management have acknowledged that this voluntary approach is helping to save their business for multiple stakeholders: owners, workforce, suppliers and clients.
Continuing to communicate clearly with stakeholder groups is one way of pre-empting wider reputational issues, whether prompted through 'trial by social media' or legal action.
Market Insights: how to burnish your consumer brand
Whilst the current crisis may seem rich in opportunities to move brands into the spotlight, there is a genuine reputational risk in trying too hard and failing to match one's offering to the circumstances.
Three brands which have struck the right balance with considerable success in areas adjacent to their core products are:
Salcombe Gin – by producing complimentary hand sanitisers for the public health care sector with high brand values.
Client, St Austell Brewery, who are doing home deliveries, and have just launched an inspired campaign to buy a pint for a key worker when the pubs re-open which they will match with a £4.50 NHS Charities donation.
Another example is a major retailer, which is debating carefully whether to draw on Government financial assistance because of how this will be perceived. Adverse reactions to several top football clubs which furloughed non-playing staff almost immediately demonstrate how quickly seemingly unassailable brands can be tarnished at a time of peak national sensitivity.
Market Insights: pivoting and the value of prior investment in technology
Businesses with a strong online presence prior to the pandemic are positioned better to perform well under lockdown.
Our client, crowdsourcing/customer service platform, Limitless, reported that they have seen the equivalent of 15 years of online growth in around 15 days.
Client, Mindful Chef, is one of the few food-box delivery companies which is still able to take on new orders – the result of time and money dedicated to slick logistics and technology as part of its pre-COVID-19 business strategy.
Others are having to shift their focus in real time by 'pivoting' into different operating areas and investing to bring their online capability up to speed. Pivoting may come with its own challenges: stock availability due to supply chain issues and direct-to-consumer sales impacting a business's other brands and products.
Success stories include a number of Food & Drink sector brands, whose traditional hospitality and leisure client base has shrunk, and which are now adapting to provide direct-to-home delivery.
Clients in the fishing industry are selling direct to individuals with home delivery.
Frobishers, the premium fruit juice business, is now selling to consumers via Amazon to adapt from selling mainly to restaurants and bars.
Another client, which makes Power Plate gym equipment, sold mainly to large gym chains, has recorded a big online sales increase since focusing more on home-use customers.
We have also been working with Lay-Z-Spa, the UK's leading inflatable hot tub brand, which has seen a massive surge in demand (if not supply) – last week's top three Amazon product searches were apparently: Lego, Nintendo and ….Lay-Z-Spa
Some firms which are purely online are seeing a dramatic upswing in interest due to lockdown and the virus. For example, the fact that people are unable to attend funerals has increased demand for online books of condolence by The Online Book Company, and MiVentures client, Once I've Gone, has just launched, and seen strong demand for, its service for those wishing to record end-of-life wishes and keep key information safe and accessible.
Another client, Snapfish (formerly Truprint), has seen a huge rise in orders for its photobooks and yearbooks, as people with spare time are finally sorting out their digital photo albums and doing gift books for self-isolating or geographically-remote relatives. They may, of course, see a novel take on summer holiday photos this year.
Market Insights: the benefits of being 'open'
Interestingly, certain clients are making the decision to reopen production now. Whilst this may be a profit-neutral move, it allows them to take their employees off furlough, and to resume production, at the same time as training and upskilling staff. Crucially, this action helps to protect the supply chain – and highlights this vital inter-dependence.
Market Insights: new forms of collaboration
Support and cooperation among businesses is also notable within the logistics sector. Many are offering their services to companies which may not have existing logistics capability and have been forced to pivot into supplying customers directly online.
Some are holding goods in their warehouses against invoices pending the relaxation of lockdown, with a promise that those clients will be at the top of the list when deliveries become possible again.
We have also seen clients offering better payment terms, longer sale or return periods, or entering into previously taboo conversations with competitors about short-term strategic joint ventures as a way to ensure a degree of survival.
Market Insights: adjusting to the challenges of working from home
Now that the novelty of working from home every day is beginning to wear off, many clients are looking for a more sustainable angle on an environment where the traditional work-life-time boundaries have dissolved. Senior management at companies with global operations have found themselves holding video-conference calls for 18-20 hours a day, as different territories 'follow the sun'.
In response, one large pharmaceutical company has moved away from video-conferencing to telephone-only conferencing in recognition of the prolonged intensity of back-to-back video-meetings projected into the home setting and its possible negative impact on wellbeing.
Others report that less extreme forms of 'WFH' are better than expected, and that staff are more productive when not tied so rigidly to a '9-to-5 + commute' routine, and are saving on travel and child-care costs while in lockdown.
Market Insights: navigating the funding schemes
Many companies have expressed concerns about how long it will take to receive funds if they apply for one of the Government's Coronavirus loan schemes. This is an iterative process and, hence, subject to change.
Key takeaways at present are:
The importance of an existing relationship with a bank participating in the relevant scheme. New banks are being added, but overall experience suggests a more streamlined journey where relationships are stronger, although it can take at least 3-4 weeks for funds to be released.
Professional advice on strategy and tactics for preparing and presenting forecasts can help to break down barriers and really increase the chances of timely success.
Decisions are generally based on historic profitability, a plan of action for the pandemic period, and how things might look afterwards. Viability is key and directors should bear in mind that the suspension of the wrongful trading regime, though welcome, should not be interpreted as licence to engage in irresponsible conduct.
Market Insights: reflections on the future
Lockdown has afforded some businesses a period of reflection and given them more time to consider their next strategic move, as well as longer-term plans.
What can be decided now to ensure that, once social distancing relaxes, they are ready to fly out of the gate? Whether through technology, joint venture or exit, strategic decisions will be taken to help companies position themselves to benefit from the upturn in the economy.
Among the factors being considered are:
How can we start to future-proof our business based on our experience so far?
To what extent will a 'return to normal' be possible or even desirable?
How can we restructure our group business to de-risk and plan succession with tax efficiency?
How do we review and measure the notions of productivity and sustainability?
Should more funds be directed towards technology at the expense of office or retail space and locations?
How do we improve our access to, and understanding of, up-to-the-minute business and market data?
How do we measure and manage risk?
Market Insights: some thoughts on economic recovery
Whilst we can be certain that recovery is unlikely to be at the same rate across all industries and sectors, it is harder to predict whether it will follow the 'V'-shaped pattern, with relatively steady growth, or a more complex 'W' model, or something else entirely. However hard, clients are having to do these forecasts to manage cash-flow and survival.
The innovation and resilience demonstrated by a great many organisations over such a short time-frame suggests that what constitutes recovery may well require recalibration every bit as much as the market sectors against which it is measured.
If you have any unanswered questions, or would like to share your thoughts and experiences, we would be delighted to hear from you. Please contact Richard Cobb.
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This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact our specialist lawyers to discuss any issues you are facing.