Action-Plan for Day One of Unlockdown…

As governments realise that lockdown is doing more harm than good, and that removing civil rights is easier than trying to restore them in terms of lockdown reversal, it is now important that NAMs and their companies prepare for a return to ‘business as usual’. However, keeping in mind that those who do not deal in reality, will find that someone (banks, creditors, rivals) will do it on their behalf, it is imperative to accept that business will never be the same again.

We need to face up to a new reality where nine weeks of lockdown is demonstrating that certain sectors such as airlines, travel retail, and hospitality will contract by up to 50%, causing a knock-on effect for many suppliers. Even companies in ‘essential’ categories will find that those consumers still employed have become super-savvy, demanding nothing less than demonstrable value for money…

Meanwhile, consumers less fortunate will face the frustration of wanting and needing your product but are unable to afford the purchase. In addition, given that Amazon and the discounters are emerging from lockdown stronger and more appealing to the new UK consumer, the ‘mults’ are focusing on meeting key consumer needs such as home-cooking and working from home, all severely impacting many supplier product portfolios.

This is also manifested in consumers becoming fashionably frugal. When it comes to food consumption, we need to factor in the impact of housebound consumers ‘making do’ in terms of making the best of lockdown, hopefully via a ready-meal+wine upgrade, but more often by becoming more adventurous in their home cooking, and becoming more fundamental in their choice of base ingredients. Meanwhile, if consumers are stretching sell-by limits and not binning meal left-overs but are in fact re-heating for even one meal in three, we have at least a third of demand removed from our sales forecasts.

Moreover, on a micro-level in terms of personal grooming, given lockdown’s removal of the opportunity to have an escapist drink on-premise, consumers are finding that combined with the smoking ban in what were public places, means less detergent is being consumed in washing clothes and hair. Meanwhile, homeworking reduces the need for the daily application of decorative cosmetics. If in any doubt, check out your acquaintances in detergent, toiletries and beauty categories…

Realistically, in an environment where only politicians and vested interests are optimistic, we need to factor these ‘making do’ drivers into our business budgeting. It also means accepting the ‘good times’ are gone, that our business models were based on ever-increasing demand, and realise that in a zero-sum game, post lockdown, any growth has to come at the expense of the other guy.

These developments are having a fundamental and unprecedented impact on ‘demand for new’, in ways that are becoming socially acceptable… In other words, shops are closing, not simply because of the increasing power of the big guys, but because real demand is down, in ways that will not reverse, anytime soon. Lockdown has simply accelerated the trend.

In the process, many companies that were on the brink financially are finding that lockdown is fast-forwarding the inevitable. This will result in increased concentration of supply and retail, meaning stronger companies will take over the weak, resulting in potential prices and terms issues for those that remain. Meanwhile, local independent convenience stores are enjoying a new lease of life as housebound consumers accelerate the change in behaviour re closer, smaller, and more frequent shopping.

Facing reality means dealing with the ‘here and now’, reassessing what you believe is left of your categories, product portfolio, customer base and markets, and deciding what business you are in, and whether this provides a sufficient basis for the future.

In other words, act as if you are launching the company for the first time, into a vaguely familiar market, against competition that is under extreme pressures and can only grow at the expense of their rivals. Many of your customers are emerging into a new world, and will act as if they don’t know you, your company or your brand, their chief interest being prices and terms…

Above all, apply the ‘your own money’ test for every SKU in your portfolio: ‘Would you choose your brand in preference to the rival, or would you even bother to shop the category?’

Essentially, find out what people need and help them get it. In terms of realism, the key is to conduct an OTSW (email me [email protected] for a copy of a KamTips followup article) as if your life depended on it, for this time it does…

All else is detail.