The initial social and economic impact of COVID-19 has seen consumer spending across Europe drop by around 40% and with continued uncertainty in a post-furlough world, people are tending to stay cautious even as lockdown eases and recovery begins. The businesses that are going to come out of this crisis successfully are those doing three things:
- Responding promptly to the change – shifting to remote working, using the furlough scheme, managing their supply chain and cutting costs as well as putting digital solutions in place quickly to keep trade moving. By now we’ve come through this phase, but as the furlough scheme tails off, businesses are still waiting to understand the true impact.
- Taking the opportunity to transform their business – with the mantra of “never wasting a good crisis”, business leaders are making the longer-term digital investments that may have stalled previously. Whilst the focus of these investments tend to be around customer experience, they are also shifting how their teams work, as well as where they work. They are rationalising their real estate footprint, embracing remote working as a permanent model and reengineering their organisational structures to remove costs and increase efficiency.
- Using the crisis to make strategic moves – many businesses are looking at how to take strategic advantage of the situation and seize opportunities, whether that be through the introduction of new products and services most relevant to shifts in customer behaviour or acquiring businesses that will struggle to stay afloat during an extended period of financial stress.
The digital opportunity
Businesses who have the right digital capabilities are the ones who are in the best position to succeed and this hasn’t just been true for larger businesses. Many small businesses have had to deploy digital solutions to operate safely. I think COVID-19 has accelerated us to a tipping point where businesses need to invest in digital solutions to survive and thrive. It may be too costly not to digitise or not provide eCommerce solutions as more and more consumers avoid the high street and shift to online shopping and home delivery.
COVID-19 has accelerated us to a tipping point where all businesses must be digital in order to thrive.Brandon Bichler, Partner at Elixirr
Ability to adapt
There is some good news. While their resources may be more constrained, small and medium-sized businesses can often move a lot faster than their larger counterparts. They can accelerate decision-making, implement change and adapt to new circumstances in a much shorter timeframe. We’ve seen examples of restaurants switching to deli-style offerings or even sending ingredients to customers to cook items on their menu at home.
Businesses that respond quickly to how consumer needs are changing and can adapt to that will have the highest chance of weathering the crisis. Those that navel-gaze their way into unsustainable cost structures, become paralysed by overthinking their next move, or avoid change in the hope that things will get back to “normal” will likely struggle.
Keeping growth on the agenda
All businesses, large and small must make room for growth initiatives. The most successful businesses constantly run small experiments to test new concepts, target new customers or increase the spend of existing ones. They keep their investments small until they see which concepts will work. Those that stick with a “maintain business” mindset only will eventually run into difficulty, especially when crises like the current one arise.
During this current crisis, it may feel like the wrong time to think about growth. However, there’s no question that competitors or new entrants will be looking for opportunities even if you’re not. If you can think strategically, COVID-19 presents new opportunities for growth. Volatility always creates opportunity.