Restricted living 2.0: How are industries tackling long-term strategies?

“When things are growing, lots of companies can be successful,” said Harvard professor and competitive strategy expert Michael Porter during the 2008 financial crisis. “In difficult times, the companies that win are the ones who are very clear about who they are and how they are trying to deliver value.” There’s no denying that the Restricted Living 2.0 brought on by COVID-19 is significantly affecting businesses and consumers alike, and companies need to start making long-term strategic plans if they want to be successful in these circumstances.

Restricted Living 2.0 is not just about the economic fall-out from the pandemic, it’s behavioral too. Consumers are growing more cautious not only in their spending, but also in terms of the types of activities they are comfortable participating in. When we started researching consumer confidence, sentiment and behavior on the journey to a new post-pandemic normal back in April through our Understanding the New Normal consumer insights program, half of the global population was optimistic that things would return to normal in 3 months or less (contrary to what health experts were saying). Cut to 6 months later and when we look at the same data from our consumer insights program, we see a drastic fall in optimism. Now 42% of people globally feel that things will get back to normal in 10-12 months from now, a clear shift in the goal post that we refer to as ‘back to normal’ (see below).

Source – MetrixLab Understanding the New Normal Data, August 2020

It’s equally clear if we look at brand actions across industries that businesses are starting to prepare for a long road to recovery ahead, especially if we look to some of the harder-hit industries like hospitality, offline entertainment and travel. Different industries have responded with different actions depending on where they fall on the continuum of economic impact and consumer perceived risk: The more severe the impact on an industry, the more long-term plans businesses need to make.

But what we see now is that in fact every industry has been severely impacted and needs to make longer term plans.

Bracing for long-term impact

It’s plain to see the damage that COVID-19 is causing across global economies. History teaches us that the fallout of a pandemic may last for decades, like a long economic hangover.

Source

This means that brand owners need to figure out their long-term strategies and really dig in to prepare for the coming years. Businesses need to be more strategic in the face of economic downturn, says Michael Porter: “In times of economic distress, clarity of strategy becomes even more important. In an economic downturn, figuring out what part of the industry that you want to serve becomes incredibly important.”

Industry perspectives on delivering value

COVID-19 has had varying degrees of impact across multiple sectors, and each one needs to think carefully about Porter’s advice. Hospitality, offline entertainment and travel in particular have been hardest hit as the world was drawn into a global lockdown. As Porter suggested, in times of crisis brands have to be super clear on their strategies and value offerings.

Let’s take a look at how some smart brands across industries are not looking to wait it out or employ short term fixes. Rather, they are reimagining and taking decisive action with an eye on sustaining these actions for the longer-term. These leading brands have reinvigorated themselves to deal with COVID-19 and its detrimental effects on consumer confidence and behaviors.

Pubs and bars

Let’s face it – we’ve all missed going out to bars and restaurants. Lockdowns cut off the biggest driver of revenue for alcoholic beverage companies, and rising in-home consumption powered by online deliveries could not make up for the huge losses. As the world opens up, people are still hesitant to head to bars and pubs given the close proximity to large gatherings. However, we see a number of brands in this space trying to rebuild that consumer confidence in a socially responsible manner.

Heineken, a brand that typically showcases socialization and celebrations in its adverts, has had to reconfigure the way it talks to its customers. Heineken launched a new through the line campaign titled ‘Back to the bars’ as part of its global initiative, #socializeresponsibly. The global campaign is aimed at supporting the hospitality industry around the world, by celebrating their re-opening while reminding consumers to behave responsibly. Heineken has been agile and tweaked its communications strategy to suite the present day while still staying true to its core of celebrating together.

Source

Media and entertainment

While lockdowns the world over made sure people were stuck at home and spent huge amounts of time on their screens, on the other end of the spectrum it has also meant that going to the movies was brought to a screeching halt. While the world recovers and limps back to some sense of normality, our tracker data shows that consumers are very conscious about making a return to movie theaters. In fact, they are as cautious about it as they are about going to clubs, bars or sporting events. When consumer confidence is this fragile, businesses have to reimagine what their strategy looks like so they can meet consumers where they’re at.

The dates of some major releases like the latest James Bond film (No Time To Die) have been pushed back, but some titles have explored the uncharted path of a hybrid approach. Disney’s Mulan has taken on a strategy to open in theaters in markets that have opened movie theaters post-lockdown and where the streaming platform Disney+ hasn’t launched. But in other markets (US, UK, Canada and Australia) they’ve launched the predicted blockbuster on Disney+ for a price of $29.99. This approach charts a path for potential future titles that may want to consider a hybrid release or purely video streaming on-demand approach.

Source

Travel and tourism

One of the most severely impacted industries from COVID-19 has been the travel and tourism sector, which is predicted to be one that takes the longest to recover. Our data shows that people are not at all confident in traveling abroad at the moment, and that’s not surprising given the fragility of the situation at hand. What we do see is the likelihood that people might be willing to travel domestically. In the quest for normalcy, people are seeking an outlet and to clear their heads. And we see a number of brands who have reimagined their relationships and customer service protocols accordingly.

Realizing that consumer expectations of hotels have changed in terms of cleaning and disinfection, Hilton has teamed up with Reckitt Benckiser (the makers of Lysol and Dettol) to help provide a cleaner stay. Some of Hilton’s initiatives include removing all items like bedding and towels, wiping down all surfaces with hospital-grade cleaners and having a housekeeping inspector verify the room and place a Clean Stay seal on the door. They are also providing disinfection of high-touch public areas every hour. It all amounts to a brand who has taken up a clear and robust strategy in order to be ready for the future.

Source

You can’t build a long-term future on short-term thinking…

… and this is something for brand owners to really take to heart now. People’s lives have been shaken up and along with that their feelings, behaviors as well as habits. While it’s perfectly fine to innovate in the short term to mitigate some challenges, brand owners need to put on their long-term thinking hats and plan for the future, not only for the present.

Gartner suggests an interesting framework highlighting the importance of focusing on the longer term as you continue to respond and recover:

Source

Chris Howard states, “The pandemic may have wiped your strategy slate clean (or at least it feels that way), but you’ve also garnered invaluable experience. Now it’s time to bring together your executive team and use those lessons to reconfigure your business and operating models for a new reality. As we shift from response to recovery, the key for senior leaders is to make strategic decisions that will lead them to a renewed future state, however paralyzing the uncertain outlook may seem.”

We are in agreement with his views and certainly would encourage brand owners to immediately start planning for the longer term, if they haven’t already.

For more information on our Understanding the New Normal consumer insights program, get in touch.