Creating new business models by solving customer problems

As we emerge from our shells like snails on a rainy day, consumer behaviours and needs have changed dramatically.

A heavily bearded Theo Paphitis was interviewed by the BBC and commented "Retail will never, ever be the same again".

M&S have captured the zeitgeist with the name of their transformation programme ‘Never the Same Again.’

“(customers) may never shop the same way again…..some customer habits will return to normal, others have changed forever” said Steve Rowe, CEO

M&S report that their product mix has changed with fewer suits and more t shirts, a channel shift to online, shopping online earlier in the day, greater desktop usage; even how stores are used is predicted to change in the future. M&S seem to recognise that they can take their cue to transform from changes in consumer behaviour. A good example of ‘outside in’ thinking to grow the business rather than simply cut costs by closing stores. Time will tell if M&S see their initiative through to its potential.

Many customer-facing businesses have adapted in the short term and some of these initiatives may become an ongoing new income stream. OpenTable for example quickly modified their platform to produce a tool to help consumers and businesses book a slot at grocery stores, allowing users to choose time slots for their grocery shopping with a text alert at their chosen time. The tool can also be used by restaurants offering take-away to reduce queues. A customer problem..…solved. Given how long social distancing is likely to continue, what probably started out as tactical may well be a smart strategic move from OpenTable.

There are examples of partnerships to open up the customer delivery chain in response to customer need. Both Majestic Wine and M&S Food have partnered with Deliveroo. Morrisons has 40 stores fulfilling same-day deliveries through Prime Now. Pret a Manger has partnered with Amazon to launch its first retail coffee range.

Some restaurants have adapted their services quickly to maintain and grow relationships with customers and suppliers. Canlis, a fine dining restaurant in Seattle, has opened three pop-ups with a bagel shop, a drive through burger take-away and a meal delivery service. These are much simpler foods to produce that are suitable for take away – a huge switch for a fine dining restaurant. Closer to home, we see Evuna the Spanish restaurant offering home delivery on their amazing wines and tasting notes for a home wine tasting. Countless restaurants across the UK are offering take-away afternoon teas and Sunday roasts. Suppliers of meat and fruit & veg to restaurants have switched to a consumer offer. Milk and More reported that they don’t have enough milkmen and women to keep up with demand – following lockdown 25,000 people had signed up by the end of April. These milk rounds have added meat and fruit & veg boxes to their deliveries to respond to a customer problem.

The constraints from Covid-19 and changing behaviours may accelerate the move of organisations to e-learning at scale. The educational technology company, Olive Group brought forward the launch of its online training platform in response to demand from organisations who had a problem with training staff remotely.

If we look back to learnings from China and SE Asia after the SARS outbreak in 2003, we saw the emergence of digital services and digital consumers. Jingdong (now JD.com) reversed their strategy of bricks and mortar in response to focus on fulfilment infrastructure. Alibaba changed strategy to focus on connecting SME Chinese businesses with the world and created a self-perpetuating critical mass delivering exponential growth.

Looking at the trends in China in 2020, we can see that Covid-19 has acted as a massive accelerator for customer demand for digital channels. China’s online retailers saw a growth of between 200% and 600% in demand during the outbreak. 

To use a McKinsey phrase ‘As physical doors close, new digital doors swing open.’ Many business strategies, marketing mix and estate will need to change significantly in response to customer needs and behaviours. Online and offline working together, with both at their best, will be the ones that win the hearts and cash of the consumer.

As happened after the global financial crisis, businesses that achieve market growth will be the innovators, the disruptors, the ones that seek to solve customer problems, the ones that take bold steps. I am fascinated to see how businesses respond to the opportunity presented by the new customer needs and behaviours arising from Covid-19.

‘Never the Same Again’…..coming to an M&S lorry near you.

About the Author

Jacqui Rigby (PhD) has more than 20 years’ experience in transformation in digital product, marketing and business development. She has worked in sectors as broad as legal, insurance, retail, financial, travel, pharmaceuticals and funerals. For the past 6 years she has provided specialist senior interim skills, bringing together teams across the business to drive change, establish agile teams and develop innovative digital products driven by solving customer problems