Published in Sep-Oct 2021
The call came through in the morning – we need to postpone this afternoon’s workshop, yet again. Now we don’t know when we will get together. Sometime soon? I give it a “definite maybe.” (In the immortal words of Sam Goldwyn.) Vaccination had raised our hopes; now, with the Delta variant who knows? Countries once lauded for doing well wonder what the future holds. New Zealand has closed its borders to keep Delta out. Will New Zealand, and can you, close the borders forever? Probably not. Radical uncertainty is the new normal.
Things we had taken for granted suddenly stop working. McDonald’s can’t serve milkshakes, KFC has run out of chicken and some supermarket shelves are empty. We hear more about “global supply chains” and a shortage of lorry drivers to distribute perishable produce. More surprises are around the corner – a shortage of cars because there are not enough microchips, which (you learn) are mostly made in Taiwan. Building sites grind to a halt – not enough cement.
Security and Reliability
The natural human response to fragility is to seek certainty. The strongest brands are now valued for their vital contribution to our security. Big food has never been more important. It appears to be holding up in spite of a few empty shelves, which stand between us and panic buying – or worse. Brands that supply life’s fundamentals are reverting to their original meaning. Brands in the 19th century often looked like legal documents, signed by their founders – as if to say this is a promise – and guarantee that the product is good, unadulterated and here to stay. To be more secure, many companies will manufacture and grow produce closer to home or at home – and will tell their customers about it. Resilience is the new watchword rather than “just in time delivery”, which looks like a risky bet rather than business efficiency.
Supply chain fragility plays into and magnifies that other great anxiety of our time – global warming and the potential collapse of natural systems. Climate change was seen as a threat to our children and grandchildren. It has become more urgent, and more unpredictable.
Sustainable Practices – The Price of Doing Business
Sustainability was, until quite recently, seen as an advanced practice, championed by visionary leaders such as Paul Polman at Unilever. Now, automotive marques don’t have much time to fully embrace an electric future. The alternative is to be seen as a dinosaur – and we all know what happened to them. Anyone who sells their products in packs that cannot be recycled is likely to be shamed. We are becoming more intolerant of laggards.
Covid-19, climate change (and geopolitics) are huge forces, beyond the control of individuals. This breeds a stoicism the ancients would recognise: don’t worry about what you cannot control, but you can cultivate your own garden (provided you are also stoical about a sudden glut of slugs). Stuck at home, people are finding satisfaction by ticking off the DIY ‘to do’ list. Tech companies that help us to work from home are having a golden time, but sales of plants, pots and DIY tools are also booming.
Brands Get Down To Earth
Ever since Dove launched their ‘Real Beauty’ campaign, brands have been promising to do good in the wider world. Grand visionary plans now don’t strike the right note. Cadbury have partnered with Age UK to combat loneliness and Nestlé are supporting Macmillan Cancer Care with coffee mornings. Brands are getting more down to earth, more rooted in the local community.
By propping up economies, governments have disguised what is really happening. As Warren Buffet said: “Only when the tide goes out that you learn who has been swimming naked.” Food banks, which predate the pandemic, show that money is very tight for many families – and they can afford only the cheapest goods.
Selling for Dramatically Lower Prices?
In Oxford Street, Marks & Spencer are selling T-shirts for six pounds, surprisingly cheap for a brand that prides itself on quality and value. Yet, the queues are outside Primark, which have T-shirts for three pounds. How so? Primark have bucked the trend by not going online. The conventional wisdom was that brands had to serve their customers in-store, online, over the phone – a costly way to do business. For some, the “omnichannel” model is fraying at the edges. You may, for example, see some shoes in-store – but not in your size, which will have to be ordered online or brought in from another store in the chain. This feels more like a desperate attempt to keep stocks low and protect margins than “a seamless customer experience.” Expect brands to close more shops, retain a few showcase stores and sell mostly online. Meanwhile, Amazon, the masters of keenly priced online selling, will set up stores. Rents of big box stores are cheap.
Something To Look Forward To
Primark hits the marketing sweet spot because they are also an affordable treat. Treating always booms in recessions. After 2008, the market share of the deep discount chains doubled and we also popped more chocolates in our baskets. Éclairs at two pounds are half the price of a coffee at Starbucks, twice as pleasurable and not really fattening at all (honest).
Never Knew I Needed That (But I Do Really)
Covid-19, a decade after the financial crash, is a bit different. We have been stuck at home, distracted from work; smartphones in hand scrolling through apps that give us little dopamine hits of pleasure. Instagram is a gateway drug prompting us to prod the ‘buy now’ button. Ordering stuff is quick and easy too. A day later a white van arrives carrying something you don’t really need – dungarees (never a good look in the over 40s) and a cycling machine (never knew I needed that, but in retrospect it is essential). We are geniuses of post-rationalisation. I will not be looking through backorders on my Amazon app for fear of being confronted by my history of spontaneous self-indulgences.
Hope Springs Eternal
Many businesses were swimming naked before the pandemic, propped up by cheap credit. Lockdowns and growing e-commerce tipped them over the edge. Yet, business destruction, as Joseph Schumpeter explained, can also be creative. Unencumbered by legacy costs and received wisdom, new businesses are growing out of the wreckage. Money and rents are cheap. It has never been a better time to be an entrepreneur.
I am about to go for a pizza at Brixton Covered Market which, 20 years ago, had emptied out until the local authority let start-ups use the retail units for a peppercorn rent. Franco Manca was born (now a small chain of 40 restaurants) offering a great sourdough pizza for £7.90 – 30% cheaper than its bigger competitor, Pizza Express.
Meanwhile, in the digital world, you can set up an e-commerce business from your bedroom. For just £240 per annum you can design a decent looking site on WordPress and use their plugs-ins for most of the tools to run a small scale start-up.
I, for one, am stoical, optimistic and working on my WordPress block editing skills. I have (very tentatively) suggested to my wife she returns the dungarees.
Julian Saunders is Founder, The Joined Up Company and former CEO, Red Cell (a WPP creative agency) and Head of Strategy, McCann-Erickson. email@example.com