Many of Us Will Be “Reformed Consumers” … Post-COVID19 Businesses will Feel the Pain

For the foreseeable future, you and I will not be the same consumers we were back this past February.

COVID19 has been for many, especially for those who were in the middle of chasing the “American Dream,” a lifestyle edema.

Thanks to COVID19 having halted retail, travel and going out, I have come to realize that what I do need is a lot more of what I do not need. I now see restaurants and shopping mall visits as time and money I spent chasing stuff and experiences I thought would bring me happiness.

These past 3 months, I wake up to quiet time, do some reading, and think about the direction and priorities in my life. I have been going for walks, spending a lot more time with my wife and listening, really listening. Because COVID19 has stripped them out, I am discovering what I do not need. Restaurants (Post COVID19 my wife and I frequented local restaurants no less than 2 times per week, never spending less than $75.00 per visit.)? I am now enjoying the process of planning and cooking meals, which I find therapeutic. Weird, I know. I had forgotten that cleaning up after a meal gives a sense of accomplishment. Shopping? I could not even estimate how many times I bought something and then realize I do not really need it, or it did not live up to the expectations I had of how much it would change my life.

COVID19 has purged much of the noise in my life.

COVID19 is a powerful lesson in disruption.

With your spending options severely limited and not driving as much, you may be going through the same thing as you realize how much money you have been saving these past few months. Most likely social distancing has forced you to evaluate your relationships and friendships. The experience of not having the negativity and drama some people in your life is a relief. On the flip side, you might be now realizing how important a particular person is to you.

Many of us are currently wrestling with “needs vs. wants”. Out of financial necessity, “needs” seems to be winning for now.

As restrictions are lifted it will be interesting to see what happens. When we start becoming more confident going out in public, or if a vaccine is ever developed, will we go right back to old behaviours, mindlessly consuming in an attempt to buy happiness, social acceptance and relationships. Will, many of us, go back to chasing the “American Dream,” or will we make a permanent change in how we choose to consume?

Keep in mind COVID19 has not been eradicated, it still exists amongst us. I would speculate the fear of getting COVID19, being laid off or losing their job, strategically mitigating negative impacts on one’s personal finances due to a drop in income, and witnessing firsthand how unstable our economy is, will be foremost concerns consumers will have for the foreseeable future. The next priority will be their safety, when commuting, at work, at home and in public. For those who want to be in control of their financial future, and health, lining up for a sale, or eating out, will be a distant afterthought.

Undeniably most businesses have experienced a dramatic reduction in revenue. Therefore, the question, at least for the balance of 2020, is what percentage of business decline can businesses tolerate and for how long? It is fair to say a 10% decline in transactions would put most big and small businesses deep in the red. Survival will depend on a business owner or management’s tolerance for risk and debt. As businesses relaunch, it will be the choices they make that will be the difference between surviving 2020 Q3 & Q4 or closing their doors.

Here’s what I believe is essential:

1. Strict adherence to PPE safety practices.
2. Building trust with employees and consumers that your place of business is safe.
3. Creating a new customer experience that mutes the Covid19 fear.
4. Create theatre of the mind, which refocused your message that you have repainted the future.
5. For employees rewrite company vision and mission for the repainted future.
6. Creatively finding ways to lower costs without sacrificing service.
7. Embrace that, for the most part, stores are now showrooms, and e-commerce is the selling platform. All businesses, not just retailers, need to have a robust online presence, which includes an easy to purchase experience coupled with an uncomplicated return policy.
8. Businesses need to wrap their head around being better than just the convenience of delivery and need to create a company-wide culture where every sale is a big deal.
9. Above all, businesses should presume there will be a second COVID19 wave and begin strategizing for when this happens (most likely in the early days of autumn).

Much of the economy will never go back to how they were before; at least not in time for those employees affected to continue to maintain any semblance of their 1st world lifestyle. Entire industries have been obliterated by COVID19’s wrecking ball. Knowing the difference between which industries have a good chance of coming back, and which ones have been wiped out for good, is crucial right now. This is not a time for wishful thinking.

A prime example is with theatres shut down, filmmakers had to finally pull the trigger and release movies online. This is the end of the movie theatre. Since the commercialization of television, and then online streaming many years later, theatres have been dying from death by a thousand cuts. According to Box Office Mojo, in 2019, Americans went to the movies less than any time since the 1920s. Those who were not choosing to regularly watch movies at home pre-COVID19 are doing so now and enjoying the convenience and safety of doing so. Those holding out have been converted. Three years from now, theatres will go the way of record stores and DVD rental stores.

The demise of the department store is a given. Online shopping was a disruptor. Many retailers did not take how much consumers wanted the convenience of shopping online seriously and came to the table late in the game. The lockdowns forced many consumers to buy online for the first time.

I imagine millions of first-time online shoppers are having an epiphany right now. They pressed a button, and a parcel shows up at their door a few days later and probably said to themselves, “Wow, why haven’t I done this before?”

You may have been anti-Amazon, but that was before being forced to experience their online shopping experience. COVID19 is a massive win for those businesses that had created post-COVID19, an online shopping experience that consumers felt comfortable with.

The same survival principles hold true for restaurants. To continue operating, restaurants will need to create a business model that speaks to fewer patrons dining at their establishments and customers doing takeout and delivery.

Sadly, thousands of retail shops and restaurants will not be reopening their doors after the lockdown.

Is retail ever safe?

The education industry, especially after post-secondary, will need to shift to e-Learning. Those institutions that deliver an engaging online learning experience will be the winners in this arena.

As more people work from home, they will question the need for having the expense of own a vehicle, which is now just mostly parked. Using Uber and Lyft, and renting for longer trips, would make more financial sense. Who wins? Who loses?

Speaking of winner and losers, Zoom, one of the world’s leading video conferencing platforms, has seen exponential growth due to COVID19. A new market of people had no choice but to use a video conferencing platform since they are now working from home. Gen-Xers and older had always gravitated to face-to-face meetings before they were forced to work from home. I think business travel will drop significantly, given the cost-savings of videoconferencing over travelling to a meeting.

The hospitality industry is facing what I call an existential threat. The nature of their service has too many human touchpoints to be able to comfortably mitigate the risk of getting COVID19. As well it is dependent on disposable income. Predicting the travel industry will be skeletal in size compared to what it once was is not a stretch.

At minimum business need to consider:

• Problem-solution fit: Design value propositions that directly address your current and potential customer pain points.
• Distribution channel: Get your product/service in a timely and health safe, manner.
• Customer segment(s): Find, or create, niches. Don’t try to be everything to everybody.
• Revenue model: Pivot to how your customers are now more comfortable interacting with your business (takeout, delivery, curbside pick up) and rework your revenue streams accordingly.
• Cost structure: Lower your fixed (renegotiate your rent), and variable (payroll) costs as much as possible.
• Marketing channels: Think where your customers, and potential customers, hang out and build your presence there.

On another note, people and governments need to accept the fact that for a large portion of their respective population, the employment landscape has forever changed. A travel agent will no longer be able to pay their bills with their old job. The same if you are an event planner, server or personal trainer. There are thousands of other examples.

COVID19’s economic destruction has undeniably caused many business and industry causalities. We are now entering a new world order. Businesses who have the creativity, the inner courage and foresight to adapt and accommodate what will be new consumer behaviour will not merely survive but will thrive.