The impact of the pandemic is not only creating temporary changes to business markets, it is also accelerating structural changes.
Take the film and television market, for example. In the UK, 12 million people joined a streaming service – led by Netflix and Amazon Prime – that they hadn’t used previously. Three million of those viewers had never subscribed to any streaming service before.
Or, what about grocery shopping? The online channel now accounts for 12.5% UK grocery sales, compared to just 7.0% pre-Covid. Little wonder, then, that earlier this week the value of Ocado, the online grocery business, exceeded that of Tesco, the UK’s leading grocer, for the first time.
Understanding these changes is critical to building a post-pandemic growth strategy for your business. In particular, you should separate out those trends that will have a temporary impact from those that will have longer-term effects.
Earlier this summer, at a medium-sized personal care business, I worked with the executive team to do just that. Using market reports and our analysis of broader societal and governmental changes, we were able to create an overview of likely market changes across a range of factors (see chart).
Chart: Covid Change Drivers in the Personal Care Market
As we reviewed our outputs, we realised that the longer-term changes – both those that are increasing and decreasing in importance – related to the acceleration and intensification of trends that were already driving the pre-pandemic market. The short-term changes were those that were more specific to the Covid crisis.
Having identified these fundamental changes, the business was able to review its wider business strategy and re-focus its agenda. For example, it has accelerated its NPD pipeline, shifted its supply chain to more local and regional suppliers, invested more heavily in digital marketing and accelerated its participation in online shopping channels.
To understand how your markets are changing, answer these six questions:
- How are customer needs and priorities changing? And what permanent changes are taking place?
- What are the new strategies and behaviours being demonstrated by the winners across your competitor set?
- How are your suppliers impacted by Covid, and what does this mean for your future relationships?
- What are the big governmental changes in policy that will impact your markets?
- What are the biggest changes to social attitudes and behaviours? And how are they impacting on your customers’ needs?
- How is the world of work evolving, and how will this affect your organisation and operations?
Once you have your responses, you can use the grid set out in the chart to map the most important drivers. Each of these shifts will have a range of consequences for your business. For example, the rise of online shopping not only led my client’s executive team to increase the business’s investment in pure-play operations, but it has changed the offers and deals being managed with the its traditional retail customers.
Of course, judgement is required, and not all ‘longer-term’ changes will turn out to become firmly established. But going through the process of analysis, discussion and decision-making gives you both insight and control. It helps to shift your focus from immediate survival to future growth.
The evidence is clear from all the research. In times of low overall growth, it is those companies that can balance short-term cost and cash management with longer-term growth that perform best.
And the first step in making those trade-offs and investment decisions is to understand how your markets are actually changing. Only then can you identify the new opportunities that those changes are creating and innovate to create new customer solutions and value.
© Stuart Cross 2020. All rights reserved.