As of this writing in April 2020, we are in the midst of a once in a century pandemic. Like the “fog of war,” it is difficult to see when this deadly and economically destructive virus abates. Referred to as COVID-19, this particular strain of coronavirus has radically and drastically altered the lives of billions of people worldwide. Even if the pandemic has not affected an individual’s health, they inevitably feel the downstream economic effects. Practically every industry is feeling the pain imposed by the government-imposed shutdown of the economy, which aims to mitigate the spread of the virus and associated death toll.
As with the mass market, we saw an in tandem and significant downtrend in the Jewish segment’s marketing activity as the pandemic progressively worsened. These decreases are almost across the board and do not discriminate based on location or category though there are a few exceptions.
Here, we perform an overview of how we have been advising clients to navigate through and beyond the crisis. The themes are constant regardless of the sector. A focus on the future with a specific eye on making strategic investments for the new normal will be essential drivers of success and help to differentiate from the laggards.
Slowly Then Suddenly
One of the most fundamental consequences of the pandemic centers around the speed of change to personal, consumer, and business behavior and proclivities. Indeed, many of the shifts due to COVID-19 were already underway in some form or fashion. With that said, it is the speed of change that is remarkable. Modifications to our buying habits or service and product adoption that would have taken years or even decades in routine times have instead occurred in weeks. In other words, changes previously happening slowly are now occurring suddenly.
An oft used example of one such COVID-19 “slowly then suddenly” change, is the work from home (WFH) concept. Over the years, there has been an increasing yet relatively slow move to allow employees to work from home. Employers were generally resistant to the generalized wholesale allowance of WFH. The concerns spanned across a range to include potential lack of accountability and a belief that in-person presence is more beneficial to achieving business goals. Notwithstanding these qualms, due to an understanding that employees are potentially even more productive when allowed to work from home, businesses of all shapes and sizes started allowing gradual WFH, usually a day or two a week, depending on the employee’s specific role.
‘There are decades when nothing happens, and then there are weeks when decades happen.’
With the pandemic hitting swiftly and destructively, federal and state authorities imposed strict closures of business aside from essential food and medical services. Companies had no choice but to have employees work from home. Thankfully, we are in an age where conducting many business functions is possible by using the vast array of digital tools. While there was a ramp-up period that was of a particular challenge to the less digitally forward companies, we saw swift action to meet the new reality by and large. Whether that meant providing funds for employees to upgrade their work form home tools or even more dramatic effects such as bringing employees to a hotel, there was an adaptation of enormous proportions.
Stressing the advancement in the number of invaluable tools currently at a business’s disposal versus only a decade ago is essential to gain the proper perspective to plan for the future optimally. The positive changes are too numerous to recount individually, but we will touch on some major ones.
At a fundamental level, the amount of employees with high-speed internet to conduct work from home tasks, including data-hungry video meetings, has dramatically increased over the last decade. The broad-based access and adoption of better connectivity set the foundation for making WFH more possible.
The tools on the market in terms of both cost and capability has also vastly improved. Take Zoom, for example. A now-ubiquitous phrase, businesses of all shapes and sizes can now run meetings by merely sending out a link. Previously, expensive licenses and frustrating software installation requirements added substantial friction and acted as an impediment to virtual meetings’ ease.
The list is practically endless, but the themes are the same. Progressive advancement in technology made WFH and, therefore, present in the office less of a need. While the adoption of WFH increased, there was still apprehension of wholesale enactment, especially by more traditional companies such as finance. The pandemic forced even these sectors to adopt WFH.
There Are Winners & Losers
The effects of such sudden and monumental change are hard to predict in their totality. What is certain is that there will be winners and losers from the changes brought to bear from the pandemic. Take commercial real estate, for example. Predictions point to a decrease in the need for office space and a hit to retail establishments that serve these offices. In a city like New York, where retail was already experiencing a historically high vacancy rate, the exacerbation of caused by the pandemic makes the industry a likely loser. In terms of winners from the WFH reality, perhaps companies will save money by not spending as much on high office rent costs. Further, when it comes to the transition away from the office, cloud SAAS providers are in a prime position to benefit from the changing dynamic.
Another core winner of the change in consumer behavior due to the pandemic is grocery delivery operators. The CEO of Instacart, one of the more significant players in this field, said, “The customer demand we expected over the next two to four years has happened on the Instacart platform in the last two to four weeks.” While most business sectors did not experience such a stark growth in their businesses, the exponential trajectory illustrated by Instacart is emblematic of the tectonic shifts taking place.
Catering To The Current Reality
With businesses of all shapes and sizes being shuttered suddenly due to the mandatory lockdowns, many were caught off-kilter. While everyone was affected in some form, there were two core classes of business in the pandemic context. Those centered around in-person interactions such as retailers and those able to conduct primary business operations online, such as accountants.
Regardless of business type, though, there were creative methods for practically all to diminish the closures’ economic blow measurably. From our view, some allowed the shock and awe of the disaster to leave them flat-footed for weeks or even months, thereby cementing consequential financial losses. At the same time, others quickly gathered their capacities and began to make the best of a bad situation. These businesses were especially advantaged if they were already pivoting toward the new digital reality before the pandemic. What resulted was the former standing in stark differentiation from the latter proactive and successful businesses.
Some examples of innovation and out of the box thinking include the expansion of online stores with omnichannel functionality, including an in-person pickup option. We also saw the sale of gift cards at a discount to shore up finances to help bridge the business to calmer waters.
Another intriguing trend catered to the fact that families were at home for much of the day needing entertainment. Especially for the more religious segments of the Jewish audience, on-demand video offerings provided a unique selling point. For example, this vendor offered virtual tours of Jerusalems Old City.
Look To The Future
When trying to navigate the adverse effects of the pandemic, it is crucial to think beyond the current moment. Specifically, we believe that COVID-19 is simply an accelerator of innovation for many companies with shorter-term negative impact. That is not to say that there will not be permanent effects of the virus. Instead, unnecessary closures will occur due to a lack of will for adjusting to our new reality. After all, change is uncomfortable and requires a departure from the status quo. Thinking about the changes that will occur and how your business can most effectively adjust will help to power through the current moment and drive success beyond right now.
Some of the overarching themes of change that we see in the market include robust omnichannel capability, digital transformation, and a renewed consumer-focused ethos.
Make Strategic Low Resource But Large Impact Investments
Preparing for these growth projects should be methodical. Taking a phased and measurable approach is integral for success, especially for those smaller businesses with more limited resources. First, an analysis of the varying areas of opportunity and accounting for the corresponding implementation costs and complexities should be undertaken. Once this has been accomplished, choosing the highest impact projects in light of associated resource requirements is possible. It is essential not to create a scattered and unconcentrated effort. Focusing on specific improvements will go a longer way than trying to perform the complete transformation of the business overnight.
Another risk-prone domain relates to the instinct of apprehension during uncertain times. While it is wise to be intentional and strategic with spend during times of financial constraint, it needs to be balanced with trying to deliver business both now and for the future. This is easier said than done for sure as the drive to shut down and not do anything during a crisis like a pandemic is powerful like a gravitational pull. Fighting this urge is essential, as inaction will lead to inevitable decay.
One of the spheres that see immediate and drastic contraction during times of uncertainty is marketing and overall business generation costs. Sometimes this is an astute decision. For example, for travel brands in the heat of the pandemic, during April and May 2020, when no one was thinking of travel, they were smart to limit their advertising exposure. At the same time, these same brands must not be too skittish about powering up their ad spend. As a data point of illustration, businesses that cut ad spend most aggressively during economic downturns were slowest to recover. In contrast, those that kept strategic spend flowing recovered most quickly.
Another point to keep in mind concerning marketing can be summed up by an expression native to the stock market. Warren Buffet is famously quoted that “it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.” While this is not a perfect quote as it relates to marketing, we do believe it holds value. A great example we stressed in client conversations was the discount on PPC costs due to the diminished competition for ad inventory on the main social media platforms. A campaign that had a more pricey historical cost could now be had for a significant discount. Taking advantage of this fear in the market and capitalizing on the opportunity is a good example of the steady and strategic thinking needed for successfully navigating tumultuous times like these.
Lean & Nimble Wins The Day
While the coronavirus is a black swan event (or white swan) of epic proportions that most had never seen in their lifetimes, it served as a wake-up call and lesson. The sudden and drastic effects of the crisis and the differing responses of businesses illustrate the need to be nimble when dynamics change and immediate action is needed. As time progresses and we come out of the pandemic, we believe there will be case studies that show that the operators who were flexible and ready to act even when uncertainty reigned supreme are those that will come out stronger. They will have used a crisis to effectively differentiate from the laggards in their respective segments, thereby cementing their future success.
The Pandemic Cohort
We previously discussed how the pandemic was a catalyst accelerating changes that were occurring slowly to happen more suddenly. It will have other lasting effects, too, though. Some are hard to predict amid the current fog but will be evident in hindsight. What is certain is that the impact of the pandemic will be far-reaching and high impact. The changes are not only limited to the world of business but are societal as well. There is consensus that the protests and riots that took place in June of the pandemic were at least in part due to the lockdown, including the fact that so many were out of work.
A more welcome development seen as a result of the crisis is the surge in startups created by the downtime created by the lockdown. With the entrepreneurial-minded at home, there was a unique opportunity to put ideas into action. The number of new businesses formed in garages during the pandemic is unknown, but it is safe to say there will be many. This is not a surprise as the past has shown that some of the hallmark companies of present began as startups during times of crisis, such as during the recession in 2008. Hemant Mohapatra of VC Lightspeed India summed things up succinctly, stating, “Calamity leads to creativity.”
The Obstacle Is The Way
Turning challenges into opportunities is perhaps a cliche theme, but it sums up the human pursuit of brighter days, even in the darkest of hours. The obstacle is indeed the way to future success. In business and marketing, the pandemic is an impediment only if measures are not taken to turn it into a springboard.
