Doing Business Under The Covidian 'New Normal'

New Zealand's ability to rapidly overcome the public health disaster of a global pandemic provides a uniquely valuable opportunity for the country to capitalize upon. Where brands and reputations are everything in this media driven age - forging a future reputation that builds on 'the clean, green image', (that encapsulates New Zealand's typical branding internationally), yet transforms this halo effect towards the bestowment of an 'exceptionally healthy and well-managed nation' is key. Such positively glowing global branding helps New Zealand businesses capture premium market prices especially if the 'new normal' is to focus more on 'value' rather than 'volume' as markets decrease due to the effects of anti-globalization.[1] 

'Value' is a key concept for a small population to grasp onto, especially when pitted against the bigger, nastier, dirtier, and unhealthier markets abroad. New Zealand's underlying reputation of sustainability and public and environmental protectionism - a country that protects its people and ecosystem services becomes more globally respected and even envied with every passing day that the rest of the world remains stuck dealing with the daily casualties of Covid-19, not to mention the resulting surges in unemployment growth and ever increasing risk of economic and social collapse.

New Zealand's agricultural produce, in particular, food and beverage industries, benefit greatly from the formulation of such a 'value' brand. For example: Why not eat from the land that cares about their people, and its environment...this is true healthy eating and drinking.'[2] However this brand can also be extended to our clothing and other textiles sales as demonstrated by the earlier success of companies like Icebreaker capitalizing on the New Zealand 'clean, green and environmentally healthy' image to sell high quality and stylized Merino wool outdoor wear. (Jeremy Moon's company was sold to VF Corporation, [the owner of Northface and Timberland] for an estimated $288 million NZD). Also in this esteemed 'value' position is New Zealand co-owner Tim Brown's San Francisco based company Allbirds, selling sustainable merino shoes to the US market and currently valued at approximately $2 billion NZD.[3] 

Branding aside, the biggest changes to the ways businesses operate under the Covidian-era is the need to become more digitally savvy. It is vital to diversify one's revenue streams to become more sustainable due to the health risks associated with normal brick and mortar commerce, and safety in smaller group settings. In the first quarter of 2020, during the height of China's Coronavirus outbreak, retail sales in the market titan fell 15.8% overall, while online sales of products grew by 5.9%.[4] Those that were able to adapt fastest were the biggest winners during this period. For example, Beijing based seafood supplier Xinliangji which supplied restaurants with crayfish and basa fish swiftly pivoted its target market from supplying businesses to consumers. Utilizing its growing stockpile of crayfish and catfish through the creation of ready to eat meals for the home buyer, the company avoided going under in January and from February 7th to 17th raised its sales tenfold to $140,000 USD. By April 1st, after utilizing the ecommerce platforms Tmall, JD and social commerce through Douyin, the company's in-home meal sales reached $2.8 million.[5]

Another good example in China was Les Mills, a New Zealand company with 22,000 gyms around the world. Business was looking decidedly grim for the industry when gyms were forced to close down for long periods throughout the Middle Kingdom. By setting up initially free online exercise regimes in 15 minute blocks to help Chinese parents keep their kids engaged in daily routines during shutdown, (no doubt giving them a much needed break from hands-on child care), the company was able to raise its profile significantly. Instead of going bankrupt as was expected, the company's subscription rate rose significantly when the gyms were allowed to reopen, and the 90 yuan fees for access to the online classes, (that were later charged once the classes had become popular), gave it a handy alternative revenue stream.

Taoboa Live - a live-streaming platform saw an 88% growth in merchants utilizing this increasingly popular sales strategy over the first quarter of 2020 as the virus took hold in China. In addition to live-streaming, the popular adoption of social commerce has boomed which provides the advantages of customer ownership, greater margins and higher price points.[6] Thus the Direct to Consumer (DTC) models have really taken off over this period, shutting out the middle man in many cases, and major e-commerce platforms like Alibaba and JD have benefited enormously by rapidly adopting these initiatives.[7] For example, JD have partnered with electronic brands such as Dell, HP, Lenovo, and Konka to connect these manufacturers directly to the customer by manufacturing specifically tailored products at lower prices.

The significant acceleration of digital commerce, especially given the need to work remotely due to Covid-19 is taking us even more rapidly and intimately into the digital age. 9800 stores closed in 2019 in the USA due to the rise of e-commerce which showed the decline of the traditional retail business model but that number is set to soar to over 25,000 due to Covid-19, 60% of those stores situated in malls. Iconic retail stores already filing for bankruptcy include Brooks Brothers, Lord & Taylor, Le Tote (all due to less buying of business attire), J.C. Penney, Victoria Secret, New York and Co. and women's fashion retailer RTW Retailwinds who are set to close 400 stores apiece, as well as Zara's closing 1,200 stores. Other permanent shutdowns are also occurring for companies such as J. Crew, Stage Stores, Tuesday Morning, General Nutrition Centers Holdings, Bed Bath and Beyond, Levi's, Neiman Marcus, Lucky Brand Dungarees, Ascena Retail Group, Tailored Brands and Sur La Table. Rental car company Hertz also filed for bankruptcy in May, and Chanel, Rolex and Hermes all ceased production. Nike is also commencing its second round of lay-offs as well as Los Vegas Casino MGM furloughing 18,000 employees, (equating to 1/5th of its workforce.)

In the hospitality sector, grubby menus may be a thing of the past as customers use their QR codes via their smart phones to access their food choices in restaurants digitally instead.[8] Even salt and pepper shakers and sauce bottles have been removed to stop the spreading of the touch of countless customers. Furthermore, some bars and cafes in Spain and South Korea are using Robots to pour and serve beers and collect the dishes to limit person to person contact. Those industries that lag behind on the digital innovation front without the ability to adapt quickly are very precariously placed. (Fortunately, New Zealand has been well prepared for the digital revolution with the significant Ultra Fast Broadband investments driven by the previous National-led government.) 

For many, it's a whole new way of finding your customers and getting your product seen or services utilized, especially considering how advanced these markets are becoming, and getting ahead of your competitors, especially in America, Europe and Asia. In cosmetic retail for example, customers are able to try on eye shadow, blush and lipstick through an I-phone or webcam. This even extends to trying on new clothes, shoes, glasses, earrings as well as trying out new hairstyles and eyebrow shapes via tablet and computers as fitting rooms are taped off, product testers have been put away, and sample counters have been closed in-store. It's a whole new skill and competence level required of employers and employees, but rapid adoption helps to generate a whole new energy, efficiency, excitement, creativity and pulse for the company that can ultimately enhance the overall working culture. For example, on top of 1-metre distancing between tables in restaurants, stylishly dressed mannequins are placed in bars to ensure social distancing occurs wearing the latest fashions of the cities fashion designers in cities like Paris and Milan. Furthermore, the novel notion of placing clear plastic screens between restaurant diners, as seen in Myanmar and Thailand has been developed in France to incorporate the use of plastic bubbles that come down from the ceiling fully encompassing each diner for a 'novel culinary experience.' Other restaurants are utilizing Teddy bears to create the same social distancing impact, while simultaneously creating the type of morale boosting atmosphere that New Zealanders used in the windows of homes, cars and buildings to keep lockdown daily walkers amused and full of levity during undeniably challenging times. 

Such fast-paced competition to get novel ideas to market becomes incredibly contagious for staff and employers alike, but the groundwork has to be set up properly.[9] Many companies who were caught off guard with the rapid onslaught of the pandemic were unable to stock enough products to keep up with the rapidly increasing online demand, which meant inevitably losing customers as they would simply surf other sites for available deals in a matter of seconds. The pandemic process has illustrated the blueprint for the sort of speed, complexity and behaviour changes necessary for business communities to adapt to in order to survive and thrive in the Covidian-era. A good example is the rapid adoption by over 200 million migrant workers around the world utilizing digital methods (through companies such as Remitly and Azimo) to send payments back to their needy families rather than through the more expensive, less secure and slower cash process of banks, especially when a lot of these services were deemed non-essential and thus closed during the lockdowns.

However this digital evolution is something we too must be mindful of, especially with regards how deeply we tread, lest it dominate our lives as is being experienced throughout Asia. For example, Hong Kong, Singapore, South Korea, Taiwan, and Japan among other countries, have focused their pandemic blocking efforts away from modern techniques of disciplinary and societal architectural control to individual detection of the viral load through the multiplication of tests and constant digital surveillance of patients through their mobile devices. Under this strategy, cell phones and credit cards become surveillance tools that allow close tracking of potential individual vectors. This overrides the need for inserting 'chips' or utilizing biometric bracelets, especially given how attached we all are to our cell-phones, even having them adjacent to us while sleeping.[10] With GPS informing police of all movements of suspected carriers and an individual's temperature and vital signs (observed in real time) - this 'sovereign cyber-authoritarian' approach helps curb spread but also enhances digital dominion and the management power of big data and its analysis via artificial intelligence. (Even passing across one's body size information for the purposes of online fittings for clothes and shoes can provide businesses with valuable personal and biometric information.) For example, in April 2020, Apple and Google signed an agreement to launch a new smart phone-tracking application for Coronavirus patients. For those countries that signed on, it meant that if the phone user tests positive, the app notifies public-health authorities who would then be able to alert anyone else whose smart phone has come near the infected person’s phone during the previous fourteen days.

The ensuing high-tech mass control of one's population can be seen as a boon for the utopia of avoiding being caught by the virus' spread, but caution must certainly be practiced with this enhancement of the Big Brother surveillance type State and the power this wields over individuals. Furthermore the highly digitized world created essentially takes most of the human to human interaction out of business endeavour altogether, especially with transactions taking place with cell-phone based credit cards, and certainly no need to ever be physically present, except for picking up the goods from the front door or mailbox. As a result there is less potential human contact, particularly direct phone calls, nor the ability to gather together and collectivize.[11] Furthermore, according to Paul Preciado in his fascinating essay 'Learning from the Virus', "people could even potentially lose the identity of their very faces, interacting in masks in real life, and existing primarily behind their digital personas such as those developed through their email addresses, Facebook profiles, Zoom, Skype, Tiktok, Snapchat and Instagram accounts etc..."[12] Physical agency will thus become a thing of the past as we transform into an age of cyber producers and tele-agents, our identities seemingly refracted into a series of pixels, coding, bank accounts, addresses where companies like Amazon, Apple, Google, Ebay and Alibaba can send its orders amongst a whole new horde of global online competitors.[13]

Being flexible and open to rapid future change technologically (and in many other areas of business) are key to the survival and eventual success for companies moving forward. No one is going to have all the facts and answers regarding how exactly the future is going to unfold, especially given the pace of change to the workings of the market and supply chains on a weekly and even daily basis under Covid-19. For example, one industry that has been rocked by the virus are Air B'nB properties which were unable to service people as usual and had to enforce minimum stays of 30 days leaving this tourism based business model effectively redundant. Many owners had to adapt, turning their properties back into rentals, and those that owned several properties but were unable to find short-term tenants were forced to sell part of their real estate portfolios just to cover costs of rates, insurance and power especially if clients were not utilizing their properties for weeks and even months at a time.[14]

Every future potentiality has to be put on the table if one is to be poised to repurpose at pace and pivot to where one needs to be at any given moment. Institutional agility and working flexibility are thus key survival traits. For example AMP Wealth Management announced that it would ditch its downtown offices in Wellington and Auckland because 70% of its 350-strong workforce preferred to work from home as they found the lack of office distraction more productive overall. (Another key reason was driven by studies that showed the odds of catching the virus from an infected person in an indoor space like your typical office setting being roughly 19 times higher than when outdoors.) On top of the clear reduction in business overheads, (small hubs built up in suburbs instead to deal with those still wanting an office, or face to face engagement with customers), the work from home ethic means far less transport demand, carbon emissions and spending up on fashion accessories and lunches etc at cafes. The emptied commercial property can also help serve the community by providing further accommodation options in traditionally expensive rental settings. This would also help keep cafes and other eateries alive which would suffer from the impact of lessened workforces in the country's biggest CBDs.

Faster decision making, shared choices and more equal distribution of key workloads at all levels of the business spectrum not only help to build long term sustainability and creativity amongst the members of a businesses' workforce, but helps forge a culture of greater buy-in and more positive morale for those involved. Work clearly isn't the be all or end all, but if employers can draw their workers with this growing sense of ownership in the company and its rapidly adapting direction, then this can be highly motivating and advantageous for all involved. If this evolving culture can be delivered with the addition of working enjoyment such as the flexibility of working from home or flexible hours, meaningful goals and weekly or monthly targets and still deliver ongoing financial security, then employee loyalty is likely to be built up significantly.[15] For example, Twitter and the London office of The Economist had all their staff working from home from March 2020 successfully managing their jobs. Facebook estimates that half their workforce will be working from home within the next decade, and Google will continue to have the bulk of their employees working from home through 2021.

Those companies that had clearly over extended and not built up enough 'resilience styled capital' to prepare for a rainy day prior to Covid-19, unless their product or services adapted in time, were unfortunately clearly headed for the chopping block in this survival of the financially fittest 'new normal.' It is vital that pandemic stimulus not prop up 'zombie firms' incapable of innovation or dynamism or even deserving to stay in business. For example, marginally profitable firms underpinned Japan's 'lost economic decade' in the 1990s as banks kept credit flowing to otherwise insolvent borrowers which severely hampered long-term financial recovery. (In the 1980s, 4% of firms were unable to secure profits to cover interest from loan payments rising to 15% in 2017 which is projected to surge under the Covidian-era.) 

The remaining companies would then be able to later pick and choose between the best people spat back out into the recruitment market. One example of this in the USA was the closing of 400 Starbucks premises as the business pivoted rapidly to a takeout model to best adjust to the challenging Covid-19 reality. Furthermore, the global fashion industry has seen a significant upsurge in the buying of eyeliner, mascara and false eye lashes due to novel ways of beautifying oneself while wearing a mask. Meanwhile, items like lipstick and men's luxury work-shoes or women's high heels have taken a significant sales reduction due to so many people being out of work, or not having to turn up to the office, or not having excess revenue to spend due to the lessened work hours etc.[16] The resulting job losses have made the hunt for new opportunities more eager than ever.

In order to achieve entrepreneurial survival and work culture success in the Covidian era requires clear and sincere communications to all involved. (Just as the New Zealand government successfully demonstrated throughout the lockdown period to the public.)  Companies that were able to listen to new ideas from their employees, and be open to trying out the best ones, were the ones that really excelled when the country went back into Alert Level 3 following the 5-week Alert Level 4 lock down. Capitalizing on the talents of staff that were ostensibly stuck at home, it was also vital to enhance everyone's skills relating to conference calls on line. Sometimes this would require meetings with up to hundreds of team members from their respective social isolation hubs all over the world, and thus the skill level and dynamic leadership required to hold such meetings successfully is significant. (For example muting everyone's mikes before starting to ensure it is not a free for all, and having a clear agenda organized and communicated by those running the meeting). Helen Clark, former New Zealand Prime Minister and former Head of the UNDP who currently chairs multiple overseas boards including the WHO Covid-19 Panel to review the global response stipulates that it is vital to run these zoom meetings with a highly organized structure and not let other members of the committee get too embroiled in political or ego battles online as it can take up a lot of the time allotted.[17]  Clearly not all companies or institutions have the means to achieve successful online meetings, and can find themselves in a 'communications void'. This is particularly the case for the 20% of New Zealanders that currently have no access to the internet, not to mention billions more people around the world in the same precarious position. As a result, it could be argued that access to the internet and digital online communication can be classed as a new form of 'human right' for our world to strive towards under the Covidian era.

Ascertaining exactly what a company is trying to achieve is also key, and often has to be done on the run if you are able to successfully outwit your competitors. For example, asking the tough questions such as: Is everyone's work 'essential'? Do they really feel like they are a key and intimate part of the company's current and emerging direction? Or are staff superfluous, and thus likely to lose their jobs altogether under these challenging market conditions? Giving people a chance to show off their initiative can lead to innovative ideas that can help save jobs in the long run. It is also vital however, to be upfront and realistic, communicating exactly where employees stand with regards their future so people can make specific plans or seek social security as necessary, especially once governmental wage subsidies are due to run out. 

The Covidian-era is therefore a time where the company has to be brutally honest with itself, and in this new 'value economy' ask the hard questions regarding whether they serve any meaningful purpose to the community or are involved with merely selling 'fluff' that people no longer have the means or will to buy, especially it if serves to further destroy our environment. For example, massive market and fashion chains in the USA were having to store all their summer stock utterly packed to the brim in warehouses as they were unable to sell their spring stock in time. Furthermore, issues like the incredible wastage present in many forms of packaging, not to mention excess plastic in our ecosystem would also have to be addressed.  These and many other hard truths are needed to be courageously explored by all businesses, and may indeed require the help of custom given advice from specialists such as KPMG, Deloitte, and PwC (that the government bailout was opening up access to for free for businesses to help them get back up on their feet) - especially when customers become more critical of the safety, quality and necessity of the service or product, not to mention the existence of environmentally unsound practices.  

*This is an extract from Nathan's latest book 'Papatuanuku's Breath' published by Lulu Global Media. See https://www.lulu.com/en/us/shop/nathan-gray/papatuanukus-breath/paperback/product-vqwrzd.html

[1] Newsroom, Rod Oram, May, 2020. 'Covid could accelerate New Zealand's shift from volume to value.' Interview with New Zealand Trade and Enterprise Chief Executive, Peter Chrisp.

[2] Ibid.

[3] The company also sells $60 jandals made out of sugar cane and recycled polyester, and a new line of shoes made from eucalyptus pulp.

[4] China Skinny, Weekly Marketing Report by Mark Tanner, May 26th, 2020. (China Skinny is a marketing analytics firm based out of Shanghai.)

[5] Ibid. It also expanded, launching new products such as a Sichuan flavoured ready-to-eat fish set which sold over $140,000 USD on its opening day.

[6] Ibid. Similarly is the rise of private sales groups to more intimately connect with customers. 

[7] Ibid. Alibaba's Digital Economy Gross Merchandise Value (GMV) exceeds $1 trillion for the 2020 fiscal year. To put this in context, Amazon's GMV for its online market place in the USA was $339 billion, and Apple is valued at $2 trillion.  

[8] Washington Post, May 27, 2020. Miriam Berger. 'Robots, lampshades and mannequins: How restaurants around the world are adapting to the Coronavirus.' 

[9] Some businesses were way ahead of the pack having already adopted a virtual office collaboration tool called 'Slack.' This novel software is great for business continuity and transforming effectiveness and a positive culture across working streams and teams especially when individual workers are isolated at home. (The software is especially useful when workers are situated in separate countries and time zones and people are able to see what decisions were made, by whom and when for the running of the business rather than the delays that would be experienced when communicating solely over email.)

[10] Art Forum Blog, April 12th, 2020, Paul Preciado. 'Learning from the Virus.'

[11] Ibid.

[12] Ibid.

[13] Ibid.

[14] Air B'nB did offer to pay those that use its services up to 25% of lost revenue from the horde of cancellations, but the experience in the USA found that many owners received far less than they thought they were going to get and thus had to sell. These forced sales did help open up affordability on the housing market for some however, although many homes that were just outside major cities like New York saw their prices balloon as families sought more space and an escape from their city dwellings.

[15] The Economist, May 30th 2020, Bartleby. 'Work Life has entered a new era'. 

[16] Washington Post, June 15th, 2020, Abha Bhattarai. '5 ways the pandemic is changing fashion and beauty trends.'  Comfortable home wearing shoes like slippers, crocs and ugh boots have taken a dramatic sales rise, along with casual wear like jeans, tracksuits, khakis and t-shirts over chic dress and men's designer fashions.

[17] Comments from the 'Building Back Better' Conference run by Diplosphere and the British High Commission, August 3rd, 2020. Helen Clark went on to mention that in two three-hour Zoom meetings you would have to cover what you would normally achieve in 2 and a half days of meetings face to face. Thus it is important not to get too far off track during discussions, (aiming to resolve many of the potential disputes before the actual meeting took place.)