Paul Wilson, Global Head of Strategy
The COVID-19 pandemic has prompted brands - and their customers - to change the way they operate overnight. A global pivot is underway as brands embrace new business models and new ways of engaging customers. To help navigate this changed landscape, Dentsu Aegis Network took a deeper look at how the COVID-19 pandemic is impacting our clients’ business plans, how they have been responding to this unprecedented situation, and how they envision the post-COVID-19 future.
COVID-19 has had a dramatic impact on businesses – with 75% of companies rating the impact a 7/10 or above. If we are to derive one truth from the survey of 700+ clients across 36 markets, it is that the pandemic accelerates brands’ transformation
, especially regarding their digital capabilities.
The Immediate Business Impacts
The impacts have been short term – declining sales and lack of liquidity being the most oft-quoted immediate challenges by survey respondents, closely followed by reduced footfall and marketing challenges.
Looking ahead to Q3, GDP growth will largely depend on the speed and shape with which restrictions are eased, but consumers’ health concerns and perception of risk will also be crucial. If voluntary social distancing continues, the global recovery could be slower than anticipated. Few economic predictions see an immediate V-shaped recovery
, and the impact on businesses is going to be felt over the long term.
Businesses are already making more longer-term plans and reallocating their budgets elsewhere – particularly if they had invested in a major event that has been postponed.
Acceleration of E-commerce, Content and CRM
Recessions bring uncertainty, which creates new routines and accelerates trends that were already evident before the crisis. Specifically, we are seeing clients accelerate their investment in e-commerce. The same is true for Content and CRM.
Striking the right tone is critical in times of crisis. More than half (55%) of respondents have adapted their content to respond to the consequences of the pandemic. Additionally, the pressure to get closer to customers increases. With media budgets under pressure, many marketers have renewed attention to their existing customers, accelerating their investment in CRM (32% of respondents increased their CRM activity, and 45% believe they will need to invest in CRM on the long term).
Across all of these areas greater organisational connectivity is required
. These areas don’t sit and operate in isolation. E-commerce requires sales, marketing, and logistics to be better connected. CRM needs to be connected to data and to paid media and the new channels used in e-commerce and CRM require different forms of content and creativity.
Retail and Home Reimagined
But just as these channels don’t operate in isolation, the impact of this crisis is felt across multiple areas. With lockdown and all but essential brick-and-mortar stores closed, people are spending significantly more time at home and altering their purchasing habits, resulting in a reinvention of retail and a reimagination of our homes. This trend has been amplified and accelerated by technology.
We are seeing a radical alteration in how people across the world shop. The big question is how many of these new behaviours are here to stay? The expansion of home delivery and an entirely online path-to-purchase is speeding up the transition to e-commerce. Similarly, retailers are being forced to upgrade their digital engagement, bringing customer service online and experimenting with new channels like shoppable live streams.
In parallel, the home has transitioned to a polymorphous space becoming the primary
– and for many, the only
– venue for life’s various activities: work, learning, downtime, shopping, fitness, dining, rest, childcare, socialising, creativity, romance, cultural nourishment. Yes, the home has always been a multi-use space, but consumers will now demand a whole lot more from their four walls.
Recommendations for brands
- In the short term think about how you can help people thrive in the polymorphous home. How can you help them enjoy everything they loved outside but in their home?
- Consider the impact of an impending recession on spending habits and which of these trends will stick as people cut back on non-essential expenses, swapping gym memberships for online workouts and restaurant meals for dinner parties.
- Drive greater connectivity across your organisation with particular focus on the intersection of commerce, creativity and CRM.
- Review your current capabilities to support the above and identify key gaps to be filled.
- Remain agile and alert to new opportunities and trends – or adapt your processes to become more agile and responsive.