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8 ways business may change after lockdowns end

Is it reasonable to expect that life will return to normal, with no lasting impacts from the pandemic? Unlikely.

The end of quarantine will be a challenging time for companies, as they are likely eager to compensate for lost revenue, but their customer base may be equally hesitant with their spending.
The end of quarantine will be a challenging time for companies, as they are likely eager to compensate for lost revenue, but their customer base may be equally hesitant with their spending.

As COVID-19 social distancing measures and closures slowly come to an end, many are understandably eager for a return to regular day-to-day life. Businesses, especially those who rely on in-person interactions, were struggling with this altered reality. The news is changing rapidly, with updates on vaccines, cases with more details changing by the minute. This makes it particularly difficult to determine when any measures such as social distancing will cease to be necessary. 

Is it reasonable to expect that life will return to normal, with no lasting impacts from the pandemic?  It is unlikely.

The probability is that there will be lasting effects of the pandemic after it fully ends. The following are eight ways that businesses – and their consumers – may change when life resumes post-pandemic.

  1. Unpredictable customer behavior

A major challenge for businesses will be understanding the varying ways customers interact with their company going forward. Some will be eager to purchase and continue as normal while others will be more cautious and hesitant about spending.

Following the 2008 financial crisis[1], nearly 9 million jobs were lost and household spending dropped to WWII levels. With a deep economic blow, it’s understandable that individuals would exercise caution in the immediate aftermath.

Alternatively, some affected groups demonstrate the opposite behavior in what is known as “revenge spending[2].” The term was coined in the 1980s to describe the buying habits of consumers following a period of restriction. Already some Chinese shoppers are flocking to luxury boutiques as they reopen their doors, but it is unclear if these actions will compensate for the months of shutdown.  

Instead of working with typical relationship patterns (e.g., potential customer, new, existing, and loyal), businesses must be ready to adapt to new behaviors, requirements, and standards.

  1. A complete shift in strategy

For the past year, organizations were most likely focused on cost-savings, short-term planning and maintaining their current business relationships or contracts. Now with permanent re-openings on the horizon, these same companies will have to shift their thinking once again by revising their overall strategy and determining what aspects of the organization require change in order to maintain profitability. They will need to ask themselves:

  • What areas require immediate action? (e.g., fulfilling orders, receiving overseas goods, balancing budget)
  • What is the most pressing need? (e.g., generating new revenue, keeping existing clients, freeing up cash flow)
  • What do I want my business to look like six months from now?
  1. Digital first

One of the biggest shifts will likely be the increased emphasis on digital capabilities and automation. While many jobs or industries may not seem easily adapted to an online environment, the pandemic has showcased that digital, in its many forms, is no longer an accessory to business, but a necessity. It is not reasonable to expect all organizations to make themselves completely digitized, but it is likely that many manual tasks will become streamlined and automated so that the business can run more easily, efficiently and with less cost. Even seemingly small habits such as writing paper checks or manually handling invoices are prime for an update in processing.

  1. Remote workers

There are mixed fields of thought on the effectiveness of working from home but those whose roles can be performed remotely will likely  do so, at least partially.  While many are eager to return to offices, it is possible that the current arrangement may become permanent in some cases. In one study, a workplace saved an average of $1,000 per employee[3] per year due to less spending on office space. Additionally, if a business does not have to limit potential employees due to a geographic space, it could widen the selection of candidates to national or even international employees. After all, with today’s payment capabilities, it is just as simple to fund overseas workers as it is to pay those in the same building. Though work from home mandates were becoming more common prior to the virus, after extended periods of this practice both employers and workers may be more willing to embrace the trend.

  1. Customer base expansion

There are a large number of businesses which are highly focused on singular functions such as distributing one product, exporting to a particular region or servicing a unique group. While such a practice likely helped establish the organization as a leader in that field, it also limits their potential if the group or region is unavailable, as might be case the during the pandemic.

These companies may have to re-evaluate how they can expand and diversify in order to maintain their sales and viability. For some, this will mean expanding into a new market or repurposing their products and services to fit the current customers’ needs.

  1. A softer approach to sales

The full end of the pandemic will be a challenging time for companies, as they are likely eager to compensate for lost revenue, but their customer base may be equally hesitant with their spending. That is not to say that net new sales cannot be generated during this time period, but businesses could benefit from a softer sell approach. This means that they can place more emphasis on articulating their value, providing support over a more aggressive sales pitch and highlighting any charitable contributions or matching programs.  

  1. Revaluating overseas suppliers

Early into the pandemic it quickly became evident that there were serious challenges with the current supply chain management process. An incredible 94% of Fortune 1000 companies[4] experienced disruption in this area. Many were overly reliant on a single country or source for the bulk of their materials and products, for instance the epicenter of the virus, Wuhan. While some large corporations opted to move some of their production away from the location early on, others did not have the resources or time to make such a dramatic move.

Still, companies of all sizes will likely look to diversify their sourcing so they are not solely reliant on a single region, where possible. It is important to note that major structural changes can be costly, so it’s unlikely that businesses will rush to make big changes unless absolutely necessary.

  1. Cost cutting & cash flow

Regardless of the industry, it is understandable that nearly every organization will look to cut spending or trim unnecessary expenses to make up for lost pandemic revenue. Even if their profits have not been hit severely, the unexpected and prolonged closure underscored the importance of a healthy cash flow. Expect businesses to look for any type of savings, from seeking new suppliers, to automating manual tasks, to delaying new hiring – at least in the short term.

Next steps for businesses

As the world looks towards the end of the pandemic, it will not be to the same working environment. The effects of the quarantine and economic ramifications could possibly have an impact on nearly every operation.

The behavior and demands of customers will inevitably change, meaning that their actions will be less predictable and easily standardized. Businesses must be able to adapt to shifting expectations and accommodate the new needs. Similarly, regular sales tactics will not necessarily be effective as the environment has changed and individuals can be more concerned with their own immediate finances rather than future investment. Yet because of this cautious approach, businesses will need to expand their target base or even revise their focus in order to recoup lost revenue.

In terms of an organization’s regular practices, adjustments will likely be made in several areas such as re-evaluating overseas partners and diversifying in order to avoid future blocks in their supply chain. Many companies are already prioritizing any digital elements including initiating remote working and automating tasks. Such moves may become more widespread and popular once quarantine limitations are lifted. Finally, most businesses will likely look for cost-saving opportunities to protect their operation during uncertain times.

Owners should be prepared for the shift and make adjustments now, to bolster their chance for success in the new environment.

[1] Source: Monthly Labor Review https://www.bls.gov/opub/mlr/2014/article/consumer-spending-and-us-employment-from-the-recession-through-2022.htm

[2] Source: Fortune https://fortune.com/2020/03/12/chinese-luxury-industry-rebounds-coronavirus-revenge-spending/

[3] Source: The Atlantic https://www.theatlantic.com/ideas/archive/2020/03/coronavirus-creating-huge-stressful-experiment-working-home/607945/

[4] Source: Fortune https://fortune.com/2020/02/21/fortune-1000-coronavirus-china-supply-chain-impact/