NOW, THEN & WHEN: THE 3 PHASES OF COVID19 CONSUMER RECOVERY (PART 1)
Blue Monday was on the 20thof January this year. Traditionally it is known as one of the most depressing days of the year. The Christmas vacation already a distant memory, the credit card bill arrives showing up how you overspent over the holidays, and you have most likely failed on most of your New Year’s Resolutions by now. Summer seems far away, the nights are dark, the new you that you promised this year would bring has already somehow morphed back into the old you. Blue Monday. Depressing.
This year we get to have two. Monday 20thApril 2020 was many people’s second Blue Monday. After 5-6 weeks (and more for some) in isolation, the novelty has truly worn off. Over-eating, binging on the Tiger King and living this Groundhog Day over-and-over has replaced all those great intentions of learning a new language, home-schooling, staying super fit and redecorating the spare room. Easter holidays have given away to extended lock-in notices and slower than expected freedoms for many. Our good intentions fade, our anger and frustrations rise, patience is thin. It’s ‘Blue Monday II: The Revenge’.
“Are we there yet?” Perhaps the most frequently asked question from the back-seat of every family car journey of all time. “Are we there now? How long more? This is taking ages.” We may all have grown up a bit (some not so much, myself included) but I think we can all identify with our younger selves again on this one.
“When will this end?” A question being asked by every brand, business, government and citizen every day. A question that is important to have an answer for if we are to survive mentally and emotionally as individuals, and also if we are to adequately plan for business recovery and social normality. But answers seem vague and short-term at best. Our government parents keep telling us that ‘it’s just around the next corner”.
So, what are we to do? How best to cope with the current crisis in terms of planning and how should we look to move forward? What is the shape of the recovery likely to look like for your industry, brand or business? While no one really knows, here are some thoughts to keep you engaged while on the car journey.
A Currach not a V
Along the West coast of Ireland, there is a rowing boat design that dates back thousands of years, traditionally built stretching animal skins over a wooden or woven frame. A Currach is shallow and long, with a sharp bow to cut through the wild Atlantic waves and a flat stern, its lack of a keel (bottom of a boat) giving a shallow draft for stability. If you are looking for the shape of our recovery, look to the Irish Currach.
There are three phases to what we are all going through.
The NOW is characterised by a complete collapse, economically, socially and behaviourally. Life has stopped in many ways, entire industries in hibernation, businesses collapsing, negative GDP predictions. Similarly, consumer sentiment follows suit. Uncertainty breeds restricted spending, tightening of belts, fear of the future.
If this was a rollercoaster, we would all have our hands in the air and feel our stomachs in our chests as we drop at near terminal velocity down the tracks. In fact, it is similar to Europe’s tallest freefall water slide in PortAventura, an 8-storey drop where you need a flashlight and tongs to extract your swimwear from the cheeks of your butt after descending (Also take the advice of park staff and cross your ankles, otherwise you also end up with Europe’s fastest freshwater enema. Trust me, I know. Just watch).
How we talk to consumers in the NOW phase will differ from future phases. What they expect from us differs and we need to understand that.
The THEN phase follows. The naïve amongst us still fantasize about this being some sort of V-Shape incident, that the collapse will be followed by some kind of magic instant recovery, a reversal of recent weeks in the same timeframe. It is imagined as the economic and consumer sentiment equivalent of that 1990s Chumbawamba hit ‘Tubthumping’ with the lyrics “I get knocked down but I get up again” (written about the resilience of ordinary people apparently!). That is not likely.
We are in for a long bottom, and not in a Harry Potter sense (that’s one just for the HP fans). I don’t have an answer for just how ‘long a bottom’ we are facing, just like I never have an answer for when a woman asks me ‘does my bum look big in this?’. Some answers are beyond my ability (although as we all know, the answer to that last one is no, always no). Recovery will be slow because our new reality is not going to just snap back to ‘normal’. This will be an elongated return and you need to prepare your brand and business model for that.
Lastly, we have the WHEN, the moment when we accept that things have got back to some sense of recognisable normal. There is no guarantee it will be the shape of the old normal, in fact it is likely to be as different as the stern and the bow is on that currach, part of the same craft but very different from each other. In this phase, our new reality, opportunity will favour those that have navigated their businesses well during the previous phases. To stick with our earlier roller-coaster metaphor, this is the slow and steady trundle upwards, excitement palpable. Unlike the chaos of a freefall, that initial trundle uphill is controlled, strong and definite. And it shall be when we get there too.
So how are we to alter our engagement strategies with consumers as we progress along these phases? Consumers are confused, uncertain, scared. They are happy some businesses are making an effort to still provide a service. There are winners such as Amazon, hiring an additional 175,000 workers to cope with demand. And there are losers, like Debenhams and Laura Ashley, both UK retailers that announced administration and bankruptcy.
What is critical is that businesses realise that the PIVOTS they are undertaking are not temporary as they think. If you look back to that Currach Curve, you can see that the bottom of our NOW will be the same bottom as our new THEN, and will be for a while. This isn’t a casual 4 to 6-week business survival exercise, but part of a much larger repositioning. It is also forcing some great creative executions and new business approaches.
As the AirBnB model comes to a standstill, many hosts of the ‘AirBnB Experience’ products are moving online. Fancy following a plague doctor around Prague, attending an online burlesque class or meeting the dogs of Chernobyl live? AirBnB online experiences encourage interactive travel with live hosts from home. Genius. Pivoting a business during the NOW phase is critical to survival.
My favourite opportunity savvy business is Sweet Farm in California, a not-for-profit animal sanctuary. You can now hire a goat (Goat2Meeting) to appear for a 10-minute surprise cameo, live, as part of your Zoom call. They have been so inundated by requests, their business is now virtual goat meetings and farm tours for bored corporate types stuck at home. In every crisis, there is opportunity.
For some businesses, the fundamental product will change as we progress from phase to phase. Let’s consider the simple restaurant.
In the NOW phase, the restaurant is closed, lock-down rules apply. They can just wait it out or take some action, and most businesses did. The restaurant is now functioning as a Take Away, investing in delivery and click/collect models. The THEN phase requires businesses to adjust how they do things going forward over time. As lock-down rules are eased somewhat, things start moving again but very slowly. The restaurant has to remove some tables to adhere to the 2m social distancing requirements. But as we move along the THEN curve towards WHEN, the restaurant realises that home delivery was always a lost opportunity. They already had the staff, the kitchen and the produce. Now that they have added the delivery capabilities and associated digital connectivity, their business channels grow. What once was a traditional ‘sit and eat’ restaurant becomes a take away and a home dining subscription service (raw or pre-cooked) serving the entire locality. Instead of just earning revenue in the evening as was their pre-Covid model, within 12 months of launching their meal home delivery subscription service, it accounts for 50% of revenue.
It is the same for a gym. In the NOW phase, they were forced to close, supporting their members at home with a live-streamed class schedule as well as 1-on-1 digital Personal Training sessions. As the restrictions start to lift, the gym has to redesign the space, ensuring members can work out safely in a 2m squared space. But as they continue along their THEN curve, they realise that their physical asset is just one part of a fitness solution. Their members can now buy or rent home fitness equipment through their gym, complete with personal trainers and digital live-streamed classes, complimenting the traditional business. Their business grows, diversifying into retail and digital, using the gym as the hub, not the sole product. They become a fitness community hub, not a ‘gym’.
The THEN and WHEN of other businesses are harder to predict. The airline industry is badly hit, some running minimum flights but grounding most of their craft (as of writing, a $25 billion bail out fund has been provided for US airlines). In the early THEN days, they will want to encourage a return to travel and so will want to make passengers feel comfortable. This week EasyJet announced it was considering leaving middle seats empty (reducing capacity by a third) to make passengers feel more comfortable.
Also this week, Emirates trialled a serology test (blood pin prick test) to screen for Covid-19 antibodies, results available within 10 minutes for all those passengers on the Dubai to Tunisia flight. While a serology test will only show antibodies, it is still a step in the right direction in trying to encourage safe travel. Gone too are online check-in, airport lounges, on-board magazines and carry on luggage. Pre-boarding temperature screens are likely to become standard in the near future.
So, what does all this mean for your business? It means that you need to plan for the NOW, THEN and WHEN. To realise that the business, its shape, channels and proposition will need to flex and develop to survive. There will be no V-shaped return to normality, and the businesses that plan and seek opportunity at each phase will continue to win.
St. Brendan famously crossed from Ireland to the US in a currach type boat in the 5thcentury. If a monk in scratchy robes can cross 5000km of wild ocean in a boat made of just wood and animal hide, I think we can all navigate our way through these next 24-months. But just like Brendan’s journey, it will take resilience, planning and effort.
Part II of this Blog looks at how consumer emotional engagement will change during the three phases of the recovery. Read it now or else your life will never be complete…
Ken Hughes is now acknowledged as being one of the world’s leading authorities on consumer and shopper behaviour, blending his understanding of consumer & cyber psychology, digital anthropology, behavioral economics and retail futurology to explore the needs of the new consumer and predict the changes to come.
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Photo credits: @clemensvanlay @tinamosquito @timmossholder @dncurello @randomlies