COVID-19 has subjected around 3/4th of the country living under stay-at-home order and displaced over 25 million jobs. Governments across the world are striving to safeguard their citizens and manage the social and economic fallouts. As the world braces itself to face the post-covid era, everyone is anxious to understand the path to recovery. We took a glimpse at the countries started slowly opening up and combined that with the lessons from history to project how the new normal may look like.
The world has been hit by various crisis in the past, and every crisis altered the economic landscape, from which emerged new winners and losers. The SARS outbreak of 2003 has given rise to e-commerce giants such as Alibaba and JD.com. Financial crisis of 2008 has given rise to rapid digital transformation which companies like American Express and Starbucks leveraged to dramatically increase their business. COVID-19 will likely be no exception.
As world economies resume operations, businesses will face new economic realities with shifting consumer behavior and preferences, new regulations and increasing chances of a short term recession. Not all changes are temporary, as historically deep crises have brought fundamental changes in social attitudes, behaviors and policy responses so that businesses who waited for the past normal to return struggled to grow in the ‘new normal’.
Historical examples of crisis induced long lasting changes
How will COVID-19 shift economic landscape?
Post COVID, it’s plausible to see greater focus on crisis preparedness, business continuity planning, systems resilience, hygienic measures, access to health care and social solidarity and consciousness. Another trend is “great decoupling” of international dependencies and focus on national self-sufficiency. National security agencies are also drawing analogies with cyber warfare and bolstering cyber defenses as a result. And it’s already changing our life and workplace in terms of remote working, digital collaboration, workplace hygiene and protection of temporary workers.
How to operate and grow in the new normal?
Understand the shift
Consumption analysis of past few months show remarkable shift in purchasing patterns. Groceries and pharmacy products have increased by more than 50% with significant demand for Amazon, while Travel declined by 56% and Apparel by 30%. Many of these will get back, but at different rate. Here is a quick illustration of the potential demand shift.
Study from regions ahead in the COVID-19 curve
Although it is too soon to affirm which changes will be lasting, we can look to China for hints. After over 2 months of lockdown, the post-reopen indicators are as follows. Consumer survey also reveals the below trend of spending preferences:
Spending more on: ↑
►Preventive health care
►Vitamins and supplements
►Organic and healthy foods
►Personal hygiene, sanitary products
Spending less on: ↓
►Tobacco and alcohol
►Public entertainments (concerts/theaters)
Identify your weakness develop strategy to overcome
Crisis exposes weakness of a company but also gives the opportunity to address those, get more agile, improve resilience and renew products and services for better customer engagement. Companies who analyze granular data and recognize emerging demands and customize their products and services for the new normal will grow after the crisis.
For example, restaurants and shops may need to invest in hygienic technologies, such as supply chain tagging of vital health indicators of food preparers and carriers and body temperature sensor for customers.
Travel and outdoor entertainment businesses need to find ways to engage customers without imposing health risks. Businesses in other industries need to find ways to remotely conduct business, e.g. personal interaction free car buying or remotely offering financial services. Businesses lagging in digital capabilities such as e-commerce, CRM and automation have to rapidly ramp up to grow in the new environment.
Turning the tide from crisis
The rise of intelligent automation
Historically, companies who stay aware of the changing environment and make bold changes to adapt have turned adversity to advantage among crisis. For example, many companies are considering developing supply chain redundancy and Artificial Intelligence (AI) driven automation to automate activities that involve health risk exposure. Use of machine learning and AI is also instrumental to analyze large volume of data to predict change in consumer behavior and drive growth.
During crisis 14% of companies improved both growth and margins
|Uncertainty requires operational redundancy which drives up cost||AI helps achieve greater efficiency and scale of utilizing resources and minimizes cost|
|Consumption moving to ecommerce||AI helps quickly detect and predict consumer shift|
|Lack of demand for luxury items||Hyper personalization using new products & services|
|Remote working will be more frequent||New collaboration platform and solutions|
|On-demand labor market growth||More precise demand and labor management|
Invest in innovation to pursue growth opportunities
Post this crisis the world will likely face economic recession. But the best time to invest in growth is when aggregate growth is low. It is the time to innovate and exploit new opportunities which can be the growth pillars after the recession. For example, Amazon’s acquisition of Kiva systems for warehouse automation provided significant competitive advantage. Similarly large data analytics can help you spot which sales opportunities that are worthy of investment.
Plan for longer downside, but prepare to rebound
Resilience in downturn requires scenario-based downside forecasting with supply, demand and operational constraints and commitment to people, customers and business partners. As economy rebounds, rapidly diagnose supply-demand impact to accelerate transformation. Take advantage of leading technology to make big changes and win in the recovery. Use downtime to refocus on capacity planning and delivering long-term value to customers. Winners from each crisis emerged by successfully riding the technology and innovation curve. However, SMBs are often challenged to get the right technology support for business growth. Not sure how to prepare? Contact us to explore how CMIT Solutions can help you prepare for growth in the post-COVID era.