Understanding Business Change During Coronavirus

He makes everything on-site, and it's sold through the shop and via wholesale to trade customers around the local area.

The greatest threat he's had is the creeping pressure of the supermarkets. Year-on-year there are more of them, and they're constantly cutting prices; a familiar tale for many small businesses on high streets across the country. The bakery responded well, and they've differentiated their high quality, higher-priced handmade product versus the cheap, mass-produced supermarket offer. 

That was, until the coronavirus pandemic and the corresponding lockdown hit, almost without warning.

The shop had to shut, and a chunk of the wholesale trade dropped off too, which meant revenues fell off a cliff. The solution? Set up an online service to customers delivering orders to the door during the lockdown. Sounds simple right? The reality is far from it.

When you've operated as an offline business for 190 years and are asked to digitalise an entire (and quite fragmented) product offering and create an e-commerce platform overnight, that's pretty much the definition of difficult.

Fair play to them, though. They've mobilised the entire family. Mum's been wrestling with an off-the-shelf online platform, and the two kids are fulfilling orders while dad bakes and delivers. What a team!

It's going well too. We had a delivery the other day, and it was a real treat. Chatting to my mate from a safe distance of 2 meters (and through a window), he was telling me about all of their trials and tribulations in getting set up. The exciting thing about it is that it's made him think about his business differently. Probably in a way that he'd never have considered if this pandemic hadn't hit.

The difficult question he will face when this is all over is – do I go back to the old ways of retail, or do I stay on this curve and lean in? I'm sure there are good arguments for both sides.

All of this started me thinking about what will change for business and brand once it's all over. My mate's business won't be the only one that's had to become 'digital first' overnight. You can see the challenges everywhere. Zoom and Teams have been available for years. But it takes an event like this to nudge us into adopting them and using them seriously. We're paddling in that boat along with everyone else. 

So, what does it mean for brand? That's a tricky one to speculate on because a lot will depend on the elasticity of customer behaviour. Right now, we're all digital migrants, meaning that anything we're 'consuming' is pretty much forced into a digital experience (unless you're queuing in an old school fashion outside of Lidl). And it doesn't matter what sector you're in - from education and entertainment through to manufacturing and healthcare - everyone's had a glimpse of their own "ghost of digital yet to come".

But once this experiment is over, we need to reflect on how much has become a habit and how much will revert back to analogue behaviour. I'd argue three things are important here:

Firstly, does the customer group enjoy or prefer the new digital experience? Is it at least as good as the offline alternative? Maybe the trade-off to digital comes with additional, marginal benefits (e.g. a combination of not having to travel with an environmental boost, or saved time, or quicker delivery) without significantly diminishing the brand experience? If so, then you can be reasonably confident that you'll be able to go on and ingrain this new consumer behaviour into a habit. And this picture may not be immediately clear. It might take a bit of time and customer research to understand precisely where you are in this trajectory. Don't jump to immediate conclusions either way.

Secondly, do the numbers work for you? As a brand owner, what does it mean to shift your entire operation to a digital platform? How much is it going to cost? 

And finally, what is being sacrificed in terms of 'brand experience'? Back to my mate's bakery: Part of the charm, character and appeal of his shop is the full-on experience. The bread and cakes are made in the back shop. The place smells amazing. The friendly staff all wear branded uniforms, and the packaging looks great on the shelf. That's an immersive brand experience which, according to received wisdom, should hit the jackpot. Three weeks ago, it was inconceivable that an online offering could compete with that. But necessity is the mother of invention, and he's now operating a completely online D2C business inside a three-week window, with margins that seem to make sense.

These elements are not small considerations. They're pretty fundamental to the success of any business whether it operates on or offline. 

In the first instance, you have to find a way to gain a deep and thorough understanding of your customer and their journey to purchase. Whether that's your brand, or a competitor's, you need to know where and when your brand can play a part in influencing that journey. That's no small task, and post coronavirus, having an understanding of how customer behaviour has been affected is absolutely crucial. We'd be interested to see the customer data for people using the service. Is it current customers that have already been in the store, loved that experience and felt it was a safer step to order online? Or new customers looking for something a little more "real", supporting local business but have missed that key step in the brand journey.

In the second case, being able to link this behaviour to hard metrics (e.g. the contribution towards business goals) is the grown-up task of serious marketing. That'll take time. Set up costs need to be controlled for and sales spikes or depressions need to flatten out over longer cycles. In time, more meaningful conclusions can be drawn. But they can only be drawn if the source data is pure, which means the analytics set up and associated reporting is the foundation upon which all of this is built.

So, final thoughts on the bakery. I really hope they stick with the online offer. Maybe his digital-native kids will take on the business and push it forward well beyond the 200-year mark. There's something nice about that…one of the oldest professions in the world being brought bang up to date. Good luck to them.