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How Brands May Respond to Coronavirus

Whatever was going to happen to digital brands in 2020, it’s all been put on the back burner. The outbreak of the novel coronavirus and the COVID-19 illness it produces has completely reshaped everything that this year was going to be about. Between the colossal efforts to quarantine and contain the spread of the disease, the almost nationwide shutdown of China, the near-freeze on global shipping and travel, and social distancing, there is only one news story this year. 

But what happens to brands after the smoke clears and people emerge bleary-eyed from self-quarantine? The coronavirus pandemic has already left a mark on society, and in the coming years, it’s likely to be a pivot point in the way commerce works. While it’s still too early to say what the resulting shakeup is going to look like, these are our best guesses at the top trends that will shape brands in a post-coronavirus world.

In this article:
China’s Decline
Death of “Just In Time”
Increased Localization
Domination of Online Shopping
D2C to the Front
Everything Goes Digital
Distributed Workforces: The New Normal
Looking to the Future

China’s Decline

Over the past several decades, China has grown to be the world’s leading supplier of… everything. From umbrellas to toasters to baby strollers, China now dominates in many major consumer product categories. When it comes to raw materials, China is even more dominant. And this is before even diving into intermediate production — things like electronic components, plastics, processed metals, and similar products that go into finished goods but aren’t required to be labeled with a country of origin. Suffice it to say, almost everything a modern consumer comes in contact with probably made a pit stop in China.

In the early days of the coronavirus outbreak, however, much of China’s production capacity shut down due to state-mandated quarantines. Factories furloughed workers, retail stores shuttered their doors, and the entire country seemed to go into a temporary hibernation. For over two months, large swaths of the world’s economic growth engine simply went to sleep.

China’s quarantine proved to be incredibly effective at combating the further spread of the coronavirus, but it also demonstrated how big a bottleneck the country was to global supply chains and production schedules. More than that, it showed many companies just how volatile and unpredictable the Chinese market could be. 

Post-corona, it wouldn’t be unreasonable to think that China may lose its place as the most critical market in the world and brands may look elsewhere to produce consumer goods. This isn’t to say companies won’t still need to have a strong “China strategy” if they hope to be competitive in the 2020s and beyond, but that strategy will need to be much more cautious and take into account that the country can and will shut down on a moment’s notice in response to threats and other global events.

Death of “Just In Time”

Perhaps the second largest trend shaping the way modern companies sell products is the “just in time” economy. The basic principle, as perfected in the 1960s and ‘70s, is that companies maintain the smallest amount of inventory possible to meet projected needs. As computing technology evolved, so too did brands’ ability to project consumer demand, shaping everything from fulfillment to which products were marketed and how.

Of course, the problem with just in time supply chains is that products need to be able to move quickly and efficiently across countries and continents. With much of the world on lock-down and many factories idling under quarantine, even behemoths like Amazon are finding it hard to keep shelves stocked.

For marketers, that means that much of the recent orthodoxy on things like sales, discounts, and promotions will need to change. As companies readjust their inventory to insulate themselves from these kinds of shocks better, it wouldn’t be surprising to see a return to 1990’s style post-holiday inventory clear-outs and the resurgence of mainline items being sold through outlets and overstock sellers. 

For further reading on supply chains:

Supply Chain Management: How to Navigate in a Crisis

Increased Localization

With much of international shipping and travel curtailed from the novel coronavirus, brands are having significant issues moving products and people from region to region. In a connected global economy, that spells big trouble. Even products that are proudly made wherever they’re sold often have components that pass through a dozen countries before being assembled at the destination.

Brands looking for lessons out of the coronavirus pandemic are starting to seriously consider vertically integrating local supply chains, ensuring that products “Made in the USA,” for example, are also made out of products made in the USA. 

For marketers, the significant difficulty will be in educating consumers on why the new breed of hyperlocal products is different than the old “Assembled in X” ones. After years of preaching about locally-made goods, it may be a challenge to walk back some earlier claims to promote the new even-more-made-in-X labels. This trend is also likely to increase market separation even further. After years of product offerings converging — you can find the same sweater in Japan and the U.S. and Brazil — hyper-localized production may lead to the kind of fragmentation between regions that was much more common in 1999 than in 2019.

For manufacturing resources:

Manufacturing Resources: Plugging Supply Chain Gaps Left by the Coronavirus Outbreak [LIST]

Domination of Online Shopping

Online retail has been slowly gaining market share since the 1990s. In February of 2019, online shopping actually managed to beat offline general merchandising stores (department and other non-specialized big-box stores) for the first time. With so many people trying to minimize their exposure to the outside world, this trend is likely to get supercharged in 2020.

Of specific note are sectors that have been steady holdouts against the inevitable march of Amazon and similar e-tail giants. Things like groceries, household goods, medicines, and personal grooming products — products that many people still feel more comfortable picking out in person rather than trusting the web. 

These groups of products have been resistant to the encroaching digital economy. While categories like electronics and books are already purchased online as often as not, food and beverage lag at only 3.2% e-commerce market share. Health, personal care, and beauty aren’t much further ahead, with only 11.1%. A prolonged period of social distancing and quarantines may go a long way towards convincing people to try the web when buying groceries or shampoo.

In fact, demand for online grocery shopping is already ballooning — downloads of apps such as Instacart, Walmart’s grocery app, and Shipt are growing at a rapid rate.

On how to go digital-first:

Four Tips for Building a Digital-First Customer Journey

D2C to the Front

Direct to consumer (D2C) brands have been making a splash for several years now as the future of retail. These brands, which bypass standard distribution channels to focus on an integrated path from production to consumer, have hit almost every retail sector — from mattresses to fitness to health.

While younger consumers have readily adopted D2C brands for much of their news, eagerly shopping at Everlane and Bonobos and Warby Parker, older consumers have remained reluctant to jump on board. And despite the many breakout brands that have gained widespread international acclaim (Casper and Peloton, for example), many D2C brands are still largely less well-known than their established competitors.

The global pandemic is changing that. Brands like No. 2 (which sells toilet paper directly to consumers) are seeing a major lift from coronavirus. As consumers shift more of their spending from in-person to online, D2C brands are likely to get a significant boost. It may be enough to fully transition these brands from quirky underdogs to major household names.

Everything Goes Digital

With gatherings restricted in just about every major city in the world, it’s safe to say that any conference, event, meeting, and other in-person gatherings are going to be postponed at least until the second half of the year. That’s on top of sales visits, plant tours, vendor visits, and all of the personal touches that go into running a brand. 

In the midst of the novel coronavirus, Brands are scrambling to figure out how to recreate the in-person experience online, turning to a mix of webinars, presentations, teleconferences, group Slack channels, Twitter chats, and other digital communications channels. Everything is going digital faster than ever before.

It’s still too early to tell if these approaches will take off, but at no time in the past has there been such a widespread disruption in the way companies do business. This push, though born out of practicality and necessity, may finally be what pushes business past the conference and onto the internet. This is especially true for B2B industries, where change has been slow, and marketers have been reluctant to let go of the convention floor.

For more on how to take an event virtual: 

How to Take Your Event Virtual: Lessons From CAB

Distributed Workforces: The New Normal

Are employees more productive at home, or do they spend most of the day goofing off? Does coming into an office improve efficiency or damage morale? Business writers and sociologists have been going back and forth on these questions since the internet made it possible for a sizable portion of the population to work from home. The results have been mixed, which hasn’t stopped managers from forming opinions one way or another.

However, with so many workers working from home (WFH), the world is about to see whether large-scale WFH is really feasible. There are some serious concerns, not least of which is whether the internet can physically handle it. But there’s also a lot of excitement, especially from younger workers who’ve been struggling against reticent older bosses.

After the worst of the pandemic passes and offices reopen, it’s entirely likely that many companies will suddenly realize that paying for unnecessary office space may not be the best use of company resources. Moreover, they may realize the many benefits of remote work — access to broader talent pools, improved employee morale, fewer sick days, and the many other benefits of letting employees work from home. In the end, distributed workforces are likely to be much more common after this pandemic than before.

For more on WFH best practices: 

WFH Tips: How to Maintain Balance and Productivity

Looking to the Future

The coronavirus pandemic is likely to go down as one of the most significant events of the last 100 years. It’s already impacted the world in unprecedented ways, and that impact is likely to continue to grow. Black swan events, especially ones that hit the entire globe, tend to have unanticipated consequences that are difficult to predict ahead of time and leave marks that may take a full generation or more to understand fully. 

Either way, brands need to prepare for the world after coronavirus to be drastically different than the world as it was at the end of 2019, and they need to be ready to adapt to those differences quickly.

For additional reading around how your business can prepare for a new normal, download your copy of Tips for Acquiring and Retaining Customers Through Economic Change.
Jaime Lee
Author

Jaime is Head of Content Strategy at AdRoll. She works with a rockstar team of creative content producers and distributors to develop compelling stories on informative topics that help brands accelerate growth. An avid tennis player and Vesper Martini enthusiast, Jaime spends most of her spare time being the #1 dog mom to her chiweenie.