October 2, 2020

Beating Mr Covid

colourful umbrellas in Rovereto (photo: Mike Dawson)
Creativity against corona: A colourful sight over the streets of Rovereto, where the locals refuse to capitulate to the virus, delighting both shoppers and tourists
Since February retailers and fmcg manufacturers have been challenged as never before in peacetime. They have risen to the coronavirus threat with feats of organisation and radical changes to their logistics.

On the front line, store employees tread warily. Admin staff are now familiar with working from home. Some ask why they once commuted to the office every day. Even top managers question the vast carbon footprint they make by jetting around the globe when a videoconference would often do just as well.

Lockdown, home office and furlough have accelerated structural change in the trade. As customers order more online, home delivery is becoming mainstream. Fear of infection has taken what little joy there ever was in shopping at mass retailers.

A wave of small business closures has already begun to stoke unemployment and recessionary concerns. At all events, the feel-good factor is totally lacking among consumers.

Anyone can draw a doomsday scenario, but ways out of the crisis are what really matters. So we asked a panel of international trade experts to find them...



Ways out of the Crisis
 


Professor Utho Creusen, Positive Thinking (photo: private)
Utho Creusen: "We are in a new era of running a business"
Professor Utho Creusen, POSITIVE LEADERSHIP, Ingolstadt, Germany:


"The virus is a challenge for every business. A new way of leadership is needed. We call it Vibrant Thinking.

We have identified some of the principles vibrant retailers apply. For a long time, our perspective on organisations has been static in nature. This has led to a very mechanistic perspective regarding organisations, which function very much as clocks work, i.e., controllable and predictable.

But the virus demands a change in perspective where the dynamic, evolutionary and human dimensions of organisations are addressed. These include:

  • Fast Learning by Quick Experimentation
  • Relentless Openness in the Assessment of Results
  • Freedom to Decide and Self-Organize
  • Obsessive Customer Centricity
  • Honesty and Transparency
  • Reliability and Predictability

Some retailers and producers have learned this lesson well. They have created a culture based on the innovative competence of their people. We call them Vibrant Thinkers because they ask the right questions. In retail this has led to innovations such as:

  • Pick-up Solutions
  • New Packaging
  • Contactfree Deliveries
  • Contactless Payment
  • Investment in Digital Innovation
  • Cocooning, Snacking and Health Products

We are sure that there are more to come, and those companies will survive who have learned to be vibrant."



Linda Eatherton, Founder, Eatherton Consulting (photo: L. Eatherton)
Linda Eatherton: "There is stronger, more measurable ROI in building 'owned' online selling platforms"
Linda EathertonFounder, Eatherton Consulting, Chicago:

"We are nearly eight months into a world where the Covid-19 virus has upended life and business. It has also rewritten the scripts for food fmcg manufacturers and retailers.

Initially, all businesses went into 'survival mode'. Rapid changes were initiated simply to survive. Fmcg manufacturers put new food and brand launches on hold while others raced to keep retailer shelves stocked with essential products and foods for those sheltering in place.

Retailers were literally swamped with consumers panic-buying and hoarding. And both struggled to put protective measures in place to keep all their 'essential workers' out of harm's way.

While Covid concerns are no less today, both the supply and value chains are currently calmer. Businesses and consumers have settled into a pattern of modified behaviors on all sides while hoping and waiting for a return to normalcy. Yet, all predictions indicate this is as normal as it gets for the foreseeable future. 

The churn in the channel has created several new strategies born out of necessity but showing all signs of remaining in place as strategic priorities going forward. Emerging strategies that appear to have 'staying power' include:

  • Stronger, more robust ecommerce business platforms for both selling (B2B) and marketing (B2C) products 

Consumers who were previously hesitant towards online purchases have found safety and speed in the platforms. Retailers have quickly rallied to improve their sites and functionality, while marketers have built strategies to bypass face-to-face selling with enhanced online and virtual technologies.

Retailers that did not have relationships with the powerful Amazon, or those wishing to go it on their own, took to building 'dark retail stores' in local communities to store and distribute inventory with greater efficiency. The giant Walmart used the opportunity to launch Walmart+ in direct competition with and to bypass Amazon Fresh.

  • Handshake selling shifts to a virtual trading floor

Gone are the trade shows, expos and congresses. Industry trade events scrambled to find ways to go virtual. Some succeeded, some struggled. But what all have learned is that online participation for sharing business information, brand/product news and building sales is higher and more robust than the costly trade shows of the past. 

While 1:1 relationship building will never disappear, fmcg companies are quickly learning that there is stronger, more measurable ROI in building 'owned' online selling platforms and creatively capitalizing on industry virtual selling platforms. At Eatherton Consulting, we are providing clients with tools, tips, and guidance to navigate and optimize virtual trade shows. And we are custom-designing and producing dedicated virtual thought-leadership and selling conferences to many others. 

While the channel continues to roil, we should expect to see more disruption birthing more innovation. And, as all adapt to the rolling waves of a pandemic, we can expect to see calmer, fresh sailing ahead for all."


Martin Gaber, Partner at JosDeVries (photo: JosDeVries)
Martin Gaber: "Bricks & mortar retailers must now convince their customers to return to their stores"
Martin GaberPartner responsible for German-speaking countries & international, JosDeVries, Munich:

"There are always winners and losers in any crisis – and it's the same with Covid. Retailers did a great job in handling corona by adapting their store operations to the required safety & health regulations.

It's now more about how the trade intends to handle the 'unforeseeable future'. We know what happened but there are strong uncertainties regarding what might come. So how can the industry respond best to 'the next normal'?

In order to support retailers in their decision-making, we've developed a workshop called 'Future Proof'. It's based on future scenario planning and will help identify potential outcomes and their impact on the economy, society and the business itself.

We strongly believe that Covid will also change long-term planning. If retailers and manufacturers recognise this early enough, then another shock like they experienced this spring will be less likely. 

In the short-term, food, DIY and furniture retailers will profit from the shift in consumer spending from holidays to home improvement. Meanwhile fashion and non-food retailers will continue to have a very difficult time.

Consumers ordered far more online during the lockdown. Bricks & mortar retailers must now convince their customers to return to their stores. They can only do this by providing an exciting and enjoyable shopping experience which outdoes the online one. It will be very difficult for them to succeed if they can't do this." 


A wall in the Cotswolds (photo: Tim Harrap)
Tim Harrap: "Instead of my photo, and applicable to my piece, perhaps this brand-new Cotswold wall will lift people's spirits – there's nothing better than craftsmanship"
Tim Harrap@WorldTradeMaven, UK:

"Ways out of the crisis might best be considered through metaphor. A tweet at the end of September from Ireland stated the author had finally hit their 'Covid Wall' – have your readers not been there yet? The writer of the tweet shared a picture of a stone wall near the Cliffs of Moher in an effort to raise everyone's spirits.

And surprisingly they did, with messages of support and pictures of people's own favourite walls!  

We have to understand that we are facing the twin psychological challenges of working with a familiar wall (factory process, retail environment) with all the regular ways of working, yet the wall is shaky. Some walls have collapsed, and rubble and confusion remain. None of us are immune from Covid-19 or its impact, even Donald Trump.

Unless we comprehend how our own business and personal walls have shifted, we will remain at risk of further and deeper collapse.  

Fundamentally renewal of our 'walls' will require honesty in our surveys. Can we as individuals carry on with ways of working that are outdated? Can we build new walls that delineate a structure with strength and stability without disturbing the free flow of community?

After all, it was my Maths teacher who said: 'If we built a wall around the whole of the equator who would be on the inside and who on the outside?'"

 

Alfred Jungmann (photo: DIE VISION)
Alfred Jungmann: "The time is right for taking responsibility and thinking things through – not for new records and sprints"
Alfred Jungmann, supports corporate communication in times of change with analyses, concepts, venues, coaching and training, Die Vision – Gesellschaft für Unternehmenskommunikation mbH, Eppenrod/Germany:

"We're still on our way into a crisis where the market forces we once knew no longer apply. We've all been caught off guard. We've all heard about the 'new normal' and increasingly fear losing the 'old normal'. So, the pandemic is a challenge for everyone: suppliers, retailers, service industries, our culture, the health system, and our whole society. 

But it's wrong to blame the pandemic for a whole host of other, unrelated difficulties. For instance, we're experiencing the destruction of retailers where many things have gone wrong and many mistakes have been made. In fact, retailers have often got things so wrong that they've almost become a classic example of poor customer focus and superficial thinking.


On a more comforting note, it's precisely now that we're rediscovering how valuable community, cooperation and empathy are. We've also seen small and large manifestations of human respect and communal feeling. There have been many different private and civic initiatives with humane goals. All were based on a conscious and benevolent effort to look at our human situation more closely.

We're also beginning to realise the madness of ever more growth and ever greater efficiency. Few now tout the dubious concept of limitless growth. We're again experiencing how different entrepreneurship and management are and that human values don't need quarterly guidance or annual reports.

Values such as communality and empathy have been rediscovered and increasingly characterise both thought and action. We must put some of these ideas into practice, however, so that we can correct an economic model that's out of control.

We must learn to look more closely at what is going on around us. We must realise how breathless both markets and those who act within them have become and draw our conclusions: For instance, how unimaginably big we've grown by creating new dependencies via the global relocation of manufacturing.

We've also learned how comparatively helpless we are before nature which we have skilfully tried to enslave in the past.

So, this crisis has a lot of potential to improve the general situation on this planet. But only if people aren't already loosening the champagne corks for the next economic growth party. The time is right for taking responsibility and thinking things through – not for new records and sprints." 



Uwe Klenk (photo: Uwe Klenk)
Uwe Klenk: "Retailers have a disproportionately important role to play in reassuring customers and the broader community"
Mag. Uwe W. Klenk, Founder & CEO, Wolves of Retail Ltd., Budapest and Vienna:

"The food-retail industry and fmcg vendors are playing a critical role in these uncertain times. Here are some actions food retailers and consumer goods companies should take to help their communities, their employees, and their business:

- Protect your employees and customers;

- Shift from business continuity to crisis management;

- Deliver on demand for digital, but economically;

- Digital is a MUST. Since the lockdown, consumers have been stocking up heavily on basic fmcg and home luxury goods in all monitored markets.

It's noticeable that retailers with strong digital capabilities are experiencing growth (with delivery slots booked for months in advance), while retailers with weaker e-commerce offerings are losing consumer interest.

At the same time, it's important for fmcg brands to hit the right tone when communicating and not to risk their campaigns being considered inappropriate. Research shows that only brands with purpose-driven advertising and social support seem to be successful.

- Categories in Focus: examples of growth in Germany, Spain, Italy, France and the UK versus 2019: food, including dairy products (+54 per cent); washing powder (+16 per cent); water (+12 per cent);

- Keep Businesses Moving Forward: In the short-term, crisis measures must have priority; in the medium-term, concentrate on e-commerce capabilities; and in the long-term on creating a loyal customer base;
 
- Plan for the Long Haul: Retailers need to manage their finances over both the short- and longer-term. Cutting costs today may help short-term survival but should not be done at the expense of laying the foundations for a successful longer-term future;

- Be a Force for Good for Your Customers: The coming weeks and months will be challenging for everyone. As one of the cornerstones of people's lives, retailers have a disproportionately important role to play in reassuring customers and the broader community. " 


Boris Planer, General Manager, Edge by Ascential Germany (photo: PlanetRetail)
Boris Planer: "Generation Z is coming into its prime spending years"
Boris PlanerGeneral Manager Germany, Edge by Ascential, Frankfurt:

"As the pandemic and economic outlook will remain highly uncertain over the coming months, retailers and consumer packaged goods manufacturers must anticipate a broad range of disruption scenarios.

There is little doubt that on the shopfloor and along the value chain, things are likely to get worse before they get better. So, a way out of the crisis will begin for most businesses with a journey through a crisis that is far from over.

The following must all be high on the agenda now: the provision of core products and services; national and cross-border supply chains and distribution channels with flexible fulfilment; in-store and online product availability; digital engagement to win the loyalty of home-bound consumers; staff and customer safety; hybrid home working/office solutions for admin roles; and a credible communication of value-driven corporate responsibility.

Longer term, retailers should recognise that the world we live in will be less stable and less predictable. They should get behind more modularised store formats that can be flexibly adapted to economic cycles, future pandemics, and other sudden swings and U-turns in consumer priorities.

Retailers and brands must keep feeling the pulse of consumer needs in order to stay relevant. Health, wellness, sustainability, traceability, a sense of purpose and contributions to regional communities will only become more important.

This is because customers are increasingly feeling the need to take responsibility for what they consume, and Generation Z is coming into its prime spending years.

Being able to respond to consumer trends fast and flexibly, from shopper insight to new product development, and from go-to-market time to supply chain and fulfilment, will differentiate the winners from the losers in a retail world that will only move faster going forward."


Hans-Joachim Stickel, International Business Mentor (photo: FCJ Venture Builder:)
Hans-Joachim Stickel: "There are seven learnings from Covid-19"
Hans-Joachim Stickel, International Business Mentor, FCJ Venture Builder, Belo Horizonte/Brazil & Bad Homburg/Germany:

"When people ask me the famous question, 'What would you do differently if you could live your life again?', I always answer 'I'd do everything more or less the same way, but I'd go to the dentist before I'm in trouble; tell my wife more frequently that I love her; and pay more attention in history classes.'

Maybe the last phrase needs some explanation: Not only the two world wars, but all the other big crises in the 20th century (the cold war, the energy crisis, various financial crises, PIGS, refugees, etc.) have all shown that life went on better than before after each crisis was resolved.

Being somewhat advanced in life, I think I can foresee the result of Covid-19. It may have a similar effect to 'Black Friday' (actually it was a Thursday, but it took a night to be communicated to Europe via the New York Stock Exchange). That's why I already feel like a witness in one of the history books my grandchildren will read at school in the future.

I believe students in the mid-21st century will learn the following seven things from Covid-19: 

1.     It was proven once again that crises are the best way to separate mediocrity from excellence (Many companies went out of business, while others invented or became tremendous success stories);

2.     Department stores, as the last dinosaurs of traditional retailing, were finally reduced to niche players, and e-commerce made its absolute breakthrough;

3.     The revolution in the workplace and home office helped to democratize family lives and sexual equality;

4.     Billions of new independent micro-businesses were created in the delivery sector;

5.     The food sector was a big winner again because people never stop eating;

6.     'Old Europe' made a huge comeback as the best place to live on earth and gained substantially in economic significance;

7.     Presidents and other politicians, who believed they were invincible, were defeated by their opponents. To a certain extent the good triumphed over the bad.

As an international business mentor, I have the privilege of accompanying young entrepreneurs in the start-up field and owners of midsize companies on both sides of the Atlantic in Brazil and Germany. In this capacity I would like to make one further point:

The nay-sayers and the 'terribly concerned' people may seem to be victorious at the moment. But the ones who have the right mental attitude and who never surrender will always win in the end. I'm thankful to guide so many coachable talents so that they can be future leaders.
"



Julian Wild (photo: J. Wild)
Julian Wild: "The performance of Amazon across all sectors should set alarm bells ringing loud for all other forms of retailer"
Julian Wild, Partner, Corporate Finance for Rollits LLP, Hull, UK:

"
It's hard to know what to think when the UK government is in total disarray on Covid-19, the EU trade agreement, international law, and just about every other subject.

Coronavirus has caused fundamental changes in the way consumers work and shop. There will be a continuing push to work from home rather than a return to the office, at least part-time. Also, the demand for home deliveries rather than visits to the supermarket will continue apace. The performance of Amazon across all sectors should set alarm bells ringing loud for all other forms of retailer.

It will be interesting to see how the discounters Aldi and Lidl recover from the setback of not having had a home delivery capability during lockdown. That will require a long-term solution. Covid will clearly result in a huge rise in unemployment and a likely return to austerity. This will put increased emphasis on value for money, and Iceland is one UK retailer likely to benefit.

The last six months have been a disaster for food service and, despite a brief respite in August, the outlook there is dire. Overall it is going to be a very tough couple of years for both manufacturers and retailers. It will certainly sort the wheat from the chaff, and only the more efficient will survive."


Podcast. Click arrow to listen to an audio version of the text:





Statements collated by Mike Dawson, International Editor, 
Lebensmittel Zeitung


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