The sands underneath our feet have never felt less stable than in 2020. Supply chains, ways of working, ways of relaxing, ways of spending money and much else besides have crumbled and precariously reformed before our eyes. Planning in this age of uncertainty is extremely difficult. To create a platform for this, we’ve posed ourselves one question: what aspects of the world as we now know it are likely to endure?
1 – Faster (and more radical) innovation
Since the pandemic hit, BrewDog has begun making hand sanitiser, Formula One teams have collaborated to engineer new ventilators, theatres have become court rooms and car parks have become Covid-19 testing centres. Countless in-person services have gone virtual, from GP appointments to gym classes to opera performances and trips to the zoo.
Necessity is indeed the mother of invention.
These experiences and countless others have demonstrated that rapid innovation, and company reinvention, is possible. When the will is there, companies can change their delivery models very quickly, and also accelerate NPD and proposition development. We expect to see this trend endure: the pandemic has given rapid innovation its own proof of concept. Businesses of all sizes will be more confident driving through change quickly and nimbly, embracing new ways of working and digital technologies. This will create greater competitive threat, including from new directions – but will also create opportunities to meet new needs quickly and expand into new markets.
2 – Ethical Pragmatism
Sustainability was already set to be one of the defining trends of the 2020s, even before the decade began. Covid-19, and the initial hard lockdowns seen around the world, initially created a beacon of hope that this trend would be accelerated by the pandemic. Air pollution and carbon emissions declined dramatically. Children in some Chinese cities saw the stars for the first time. Fish once again became visible in Venice’s canals. However, this early optimism has given way to despair amongst environmentalists as single use plastics have resurged and patio heaters have been dusted off in pub gardens ready for the autumn.
What will emerge from this situation, as far as business and consumer ethics are concerned? I attended a fascinating webinar given by Twitter last week which provides an insight into this. They’ve analysed tweets posted since the pandemic began to gain an insight into user sentiment on a broad range of topics. One conclusion from this is that people now have ‘messy ethics’. There’s been a 111% growth in ‘shopping local’ conversations, alongside a 26% YoY increase in Amazon sales. There’s been a 12 month low in ‘climate change’ conversations, alongside a 116% increase in ‘cleaner living’ conversations.
It looks like we’re entering a period when ethics and values are important, but when people will be prepared to compromise if it comes down to it. The pandemic has shone a dazzling light onto the topics of fairness, community and responsibility, but it’s also increased the need for people to look after their own interests. Customers will forgive imperfection, provided its delivered alongside low prices and convenience. Staff will, too, provided it comes alongside job and wage security. But companies who have genuine ethical purpose, and also prove other benefits consumers and staff are looking for, will gain significant advantage in the future world.
3 – WFH is here to stay – but not every day
There has been much talk of ‘the end of the office’. High profile companies including BT and Twitter have announced that staff could work remotely permanently. Staff really value working from home, and companies see this as an opportunity to reduce costs and recruit from a broader talent pool, and technology has proven itself as an enabler of change.
As time has passed, though, I think staff and employers have come to realise the benefits that office working brings. People want to be with people, at least some of the time. Teams work better when they can get together in person to brainstorm, discuss and share ideas. Junior staff, in particular, benefit from being sat by their line managers so they can ask questions and receive spontaneous feedback.
Some statistics from a recent UK workplace survey by digital health firm BioBeats make interesting reading:
- 23% of employees wish to continue working from home post-lockdown
- 21% say their mental health will be negatively impacted by an extension of remote working post-lockdown
- 51% agreed that working from home and using technologies to communicate has streamlined processes (only 12% who disagreed)
I think this indicates that we’re heading for a hybrid workplace, longer term, for people who were traditionally office-based: combining home and office working will become commonplace. As we’ll see in the next section, this will change how and where people spend their money. It will also have operational consequences: companies will have to assume responsibility for the safety and security of all of their workplaces, including people’s homes.
4 – More e-commerce
Online sales are forecast to grow by 19% in the UK in 2020, up from pre-pandemic estimates of 11%. In one future scenario, shoppers return to physical stores once the pandemic is over, or is under control. In another, they keep on shopping online, with physical stores either becoming less relevant or needing to take on a new role within the retail landscape. There’s strong evidence that, in the UK at least, the shift towards ecommerce is here to stay:
- Customers have had positive experiences shopping online: 80% of European shoppers were highly satisfied with their online shopping experiences in May, during the heart of lockdown (according to Astound Commerce’s 2020 Global Consumer Survey Report)
- The pandemic will be with us long enough to change habits: researchers from University College London found that the average time it takes to form new habits is 66 days
- Homeworking is here to stay: this enables e-commerce, allowing people to receive home deliveries more easily, and reducing the barriers to shopping online during the working day
For retailers and manufacturers, understanding how e-commerce is developing will be critical. How are platforms, marketplaces and direct-to-consumer offerings changing? How is online selling and customer service being enabled by new technologies? How can virtual reality being elements of the physical shopping experience into our homes? These questions relate to a bigger broader need: rethinking how and where brands are engaging, selling to and serving their customers.
5 – Supply chain resilience
Supply chain vulnerabilities were badly exposed when the pandemic first hit. Over 200 Fortune 500 companies had presence in Wuhan. Globalisation’s great, but not when you’ve got key suppliers in a part of the world that’s suddenly in lockdown (when your business model is based on lean and just-in-time principles). These principles won’t be thrown out of the window, but resilience and contingency will become more important within supply chains longer term.
6 – Increased costs
Resilient supply chains, along with innovation and business ethics all increase costs. There will be pressure to offset this by embracing automation and other labour saving technologies, cutting out middlemen and by reducing costs associated with labour and premises. Many companies will still be left with a difficult challenge: figuring out how to pass on higher costs against a backdrop of recession and cutbacks. Developing new pricing models could help this, as could extending product lifecycles. Or companies could become more targeted, focusing on customers who have a greater ability to pay (and accepting this could mean operating at a smaller scale). Working out exactly which products, customers and markets make money will become a greater focus for business planning, alongside which are actually loss making.
Conclusion: a market-led path to the future
It’s impossible to predict exactly what lies ahead, but it is possible to plan ahead. There will be many more enduring consequences of Covid-19 than the six pulled out above. However, they provide a starting point for planning, based around some fundamental requirements:
- Innovation: develop an ability to innovate quickly in new and existing markets
- Values: have a set of core ethical beliefs that your company is true to
- Working environment: invest to maximise safety and effectiveness of home working (retain but rethink and resize your office premises)
- Tech adoption: invest in e-commerce and online service delivery (if relevant to your industry)
- Supply chain: increase resilience in high criticality spend areas
Customer and market understanding can help in all of these areas. Gaining relevant insight in the here and now can help plan for the future ahead:
- Do customers already have new needs you could address through innovation and R&D?
- What ethical values are important to your customers and staff?
- How is home working changing how your customers are buying and consuming your products and services?
- How price sensitive are your customers?
- How do leading ethical companies associate with and benefit from their causes?
- How are other companies embracing tech as part of their response to the pandemic?
- How have other companies built resilience into their supply chains?
White Space Strategy specialise in helping companies create market-led strategies for new and existing markets. Examples of how we’ve done this for companies around the world can be found on our website.