Over the past few years, e-Commerce has picked up significantly around the world as people are opting to find more convenient and in a lot of cases, cheaper ways to shop. With the COVID-19 pandemic, the growth of e-Commerce was exponential globally (read more about that in our blog “How Covid-19 increased consumerism despite many losing their jobs and streams of income”). The push to go digital has been great for brick and mortar stores. Snap lockdowns, social distancing rules and globally the risk factor of going out for non-essentials (and even essentials) continue to pose a risk for community health. Many stores have therefore opted to open up digital stores. Almost everything these days exists digitally and if your business isn’t shoppable online in these times, you probably aren’t going to be able to sustain it for much longer. Checkers60 were pioneers of online trade in 2019 (read more about that here), but other grocers and even pharmacies are now forced to head in the same direction.
Why are online stores looking to open up physical stores and why are physical stores opening up online stores – The bid for hybrid shopping is here.
According to Repsly, online retail startups who often pride themselves on being nontraditional are now working to bring back established brick and mortar stores while maintaining their fresh image online and even typically launching new products online first, rather than in-store.
Similarly, Repsly also reports that physical stores have also had to start leveraging the trend of online shopping. For most retailers, their big retailers use their stores as fulfilment centers.
Thus, combining the two and creating a hybrid-like model whereby consumers can shop online, but collect in-store gives major retailers the best of both worlds. The Mr Price Group has done this exact hybrid model of order online, pick up in-store, incentivising store visits through quicker collection and free collection as opposed to longer wait periods and fees associated with delivery.
This article suggests that the move for online stores to go brick-and-mortar lies within the fact that 85% of consumerism occurs physically. However, this now dated article (2019) does not consider the implications of in-store shopping in relation to COVID-19.
In spite of this, it goes on to explain that online retailers have many reasons for adding an offline presence due to the buying culture that still exists, the experience customers enjoy when visiting a store and the necessity in reaching a wider, but to an extent more targeted clientele.
In some situations, shopping in a store is also quicker (from an instant receipt of goods perspective) and more convenient (from a touch, feel, try and choose perspective) than shopping online. In addition, physical stores serve as local distribution centers for online retailers.
For any retailer, big or small, the COVID-19 pandemic has posed a number of threats to businesses. Many businesses liquidated, but also many started to spring up as people began to look for new ways to earn money. For brick and mortar stores, the cost of maintaining shops open while there were no customers buying in-store was a forceful hand to go digital. Since consumers have now primarily gone towards and are still growingly leaning towards online shopping, it is only sensible for the survival of retailers to exist online and for their product catalogues to also be present online.
Likewise, for online retailers, opening up physical stores gives way for storage capacity and can act as fulfilment centers, but also expand their customer reach for shoppers who typically prefer in-store shopping.
In conclusion, a hybrid of this model may prove to be the most effective.
Depending on the business itself, giving consumers the best of both worlds and catering to all kinds of shoppers is always better.
Logistics and Supply Chain Management when unrest hits South Africa
The recent unrest in South Africa and particularly in KwaZulu-Natal and Gauteng demonstrates how fragile the local, national and international supply chain and pipelines are. After experiencing the continued onslaught of COVID-19, the latest and almost unabated riots, pillage and attacks on people and property have created even greater impacts on general life in South Africa as well as critical shortages of food, medication, vaccines, fuel and other vitals in many suburbs in KwaZulu Natal and Gauteng. It goes without saying that political undercurrents can cause disruptions in sourcing, manufacturing and transportation in a supply chain, denying people of the fulfilment of much-needed physiological and security needs as per Maslow’s famous Hierarchy.
Supply chain management’s (SCM) solid foundation lies in logistics and the 13 activities pertaining thereto. Its main objectives are to get the right product, to the right place, to the right customer, in the right quantities, at the right price, in the right condition and very importantly the right time. When unexpected riots and mayhem occur, every single right is negatively affected because need-satisfying products and services cannot reach customers who have become deprived of possession utility, even though they have the means to pay for the offerings.
The thought of potential deprivation as a result of such havoc has the unpleasant consequence of herd behaviour, leading to Maslow’s hierarchy becoming almost meaningless as people procure not what they need but rather what they want. The resultant chaotic ‘feeding-frenzy’ behaviour plays into the hands of the perpetrators of the unrest as what little is left for the community to buy after the wake of the unmasked marauders’ looting, is selfishly purchased by inconsiderate consumers, without giving any thought to the elderly, the poor and needy, the infirmed and the shoppers behind them.
As mentioned above, because of the violent upheaval, the right products are not reaching desperate consumers and businesses resulting in even basic consumables such as bread, vegetables, milk, eggs and so on being deprived because of shortages at retail level and the hi-jacking of trucks trying their best to deliver their cargos.
The right places sadly have been burned down and destroyed and the content stolen not by the starving but by vandals who blindly obey those who are hungry for power. The right customers (in this case consumers and business owners) have been denied possession utility as the offerings are not being delivered to their retailers or even their homes (as a result of online buying), with the result that people are literally starving as the freebooters purposely and violently plunder the stores and transport trucks.
Because of the illegal actions of these uncaring ransackers, there is a dire dearth of food, mediation, fuel and essential services, resulting in the right quantities not being forthcoming, thereby providing selfish opportunists scope to charge what they will (up to R70 for a loaf of bread and R80 for a litre of petrol) … making a joke of getting offerings to customers at the right price. What does come through, when it does, is oftentimes of poor quality, especially perishable products such as fresh vegetables and fruit (not the right condition), which usually arrive late (if one is lucky), resulting in the products not arriving when customers need and want them.
Although attempting to pen this comment is like shooting at a moving target, one thing is certain and that is the ramifications of this chaos, both social and financial, will be felt for years to come.
From a Supply Chain Management perspective, the once solid supply pipeline has become permanently fractured as offshore and onshore organisations ponder whether to operate under this fragile blanket of uncertainty, move offshore to a safer and more secure environment or even conduct business with South Africa at all. Either way, all South Africans will bear the brunt of escalating prices, longer and more uncertain lead times, input shortages and above all reputational damage that will take eons to heal.
How Covid-19 increased consumerism despite many losing their jobs and streams of income
By March 2020, most of the world was put into mandatory lockdown after the World Health Organisation declared Covid-19 a pandemic (read more about that here). This meant that consumers were following stay-at-home orders and were restricted to leaving the house for essential services and shopping only.
For many people, upskilling, taking on a new hobby or not wanting to forgo their daily routines meant that the purchases of gym equipment, for example, increased as people were now limited to going to the gym. With many people losing their jobs or primary streams of income due to lockdowns, lots of people opted to open up home businesses turning their hobbies into products or services.
For many people, upskilling, taking on a new hobby or not wanting to forgo their daily routines meant that the purchases of gym equipment, for example, increased as people were now limited to going to the gym. With many people losing their jobs or primary streams of income due to lockdowns, lots of people opted to open up home businesses turning their hobbies into products or services.
Anything from candle-making, to monetising social media streams, to home delivery foods, people did their best to stay afloat and in turn, communities everywhere turned to supporting small businesses so much so that Instagram added a “small business” tool onto their platform to help others promote their favourite small, locally owned business – read more about that here.
In many parts of the world, panic buying ensued with retailers globally forced to limit the number of purchases of high-demand items (such as hand sanitiser and toilet paper) per shopper. A leading financial institute, JP Morgan, published their findings in an article and relayed that: “For the world’s largest personal care, food and drink companies, data showing which products sold the most tells the story of how consumers spent their time and money during lockdown” noting that “flat growth followed by a huge spike — double digit growth. That is very rare for this industry and was totally prompted by the lockdown and the fact that people couldn’t get out,” said Celine Pannuti, Head of European Staples and Beverages Research at J.P. Morgan.
JP Morgan breaks down what consumers seemed to purchase the most during lockdowns across Europe and the United States of America in 2020 into four main purchase categories:
Soaps and Household Cleaners: sales of household cleaning and disinfectant products increased greatly. Sales of cleaning wipes in the U.S. increased by over 100% in the first three months of the year, relative to a year ago, followed by a 60% surge in the second quarter and sales continued to grow by over 15% in the third quarter. In the third quarter sales of aerosol disinfectants climbed 120%, as did sales of dishwasher detergents and general kitchen cleaners, which have increased around 40%.
Vitamins and Supplements: Amid the pandemic, consumers also loaded up on vitamins and supplements. Revkitt Benckiser grew U.S. sales by approximately 50% in the first half of the year and maintained that momentum in the third quarter (+26%).
Hair Color: As a result of the lockdown, home hair color products have become particularly popular in the United States and Europe. For companies like L’Oreal and Henkel, sales of hair color were up over 30% in the second quarter of the year.
Coffee: Many workers around the world began working from home during the lockdown, and coffee became a popular drink. Thus, Nestlé saw fresh roast coffee sales grow by around a third in Europe, while in the US, Starbucks at-home products, Nescafé and Coffee-Mate grew at double-digit rates.
The boost in e-Commerce shopping and the logistics of it
Despite the logistics industry taking a knock as countries locked down (read more about that here) and the mobility of transporting of goods had been pushed back, globally, e-commerce shopping across all industries increased this past year as panicked consumers looked for hand sanitiser, groceries, and skincare products online.
Typically these items were also sought out in bulk. A McKinsey report suggests that consumers spent $211.5 billion on e-commerce during the second quarter of 2020, an increase of 31.8% from the first. With more shoppers going to the internet for their shopping, e-commerce now makes up 16.1% of all U.S. sales and this trend appears set to continue as non-essential businesses, restaurants and retailers start reopening. In the graph below, McKinsey’s report illustrates how e-commerce boosted more than ever before during the pandemic.
Despite the fact that many people lost their primary streams of income, many people dipped into their savings, others opted to open up small businesses and some were afforded government compensation. The increase in consumerism during the pandemic has spiked particularly via e-commerce. Online shopping has risen and that includes delivery services. While the continuation of this increase in consumerism is probable, analysts await the outcomes of consumer behaviour in the next year.
According to Forbes, the true value of a high-performing team and the effectiveness of its leader become all the more visible during major disruptions such as the COVID-19 pandemic. A team’s resilience is characterised by its ability to pivot, rebound and continually innovate its way out of an impossible situation. In reference to a leadership style, the acronym ‘A.G.I.L.E.’, Forbes states, produces an “approachable, grounded, innovative, leveraging and empathic” leader. These are arguably non-negotiable characteristics that leaders today need to demonstrate if their teams are to survive the impacts of COVID-19.
Let’s break it down.
Approachable aka ‘is friendly and easy to talk to’
Good leaders appreciate that great ideas can come from anyone. It is therefore important for you to operate with an approachable attitude during times of disruption and uncertainty. Team members need to feel that they can come to you with ideas or concerns.
Grounded aka ‘is honest, well balanced and sensible’
It is crucial for leaders to lead transparently by being honest so that the team can get a more complete view of any disruptions that the organisation may be facing. Honesty, along with sensible and unemotional responses help a team to better react to and solve the challenges of any particular situation – confidence is gained through clarity.
Innovative aka ‘is advanced and original’
Facilitate growth by encouraging creativity and originality – this builds healthy team morale. Innovation is necessary for an organisation to remain relevant and to thrive in a competitive business environment. As a leader you should create an environment that stimulates and rewards creative thinking.
Leverager aka ‘can get more done with less’
As the pandemic has pressured so many businesses to tighten budgets, leaders must maximise resources, and this often involves leveraging the talents already present within the team. Together your team needs to embrace new ways of using technology and other unconventional work styles in order to do more with less. Incentivise team members to rise to the challenge and you may uncover existing talents that you never knew they had. You may even find that team members volunteer for certain roles outside their current work scope.
Empathetic aka ‘an ability to understand and share the feelings of another’
Whether pre, during or post-COVID, a strong leader always displays empathy and prioritises the wellbeing of their team members. This is a good time for you to prove to your employees that you value them as people and that you understand the challenges their jobs and personal lives present. Showing empathy usually results in loyalty and a higher level of performance.
But is that all that it takes to be a good leader?
Contrary, the Renoir Group suggests that there is no “best” leadership style and that leadership requires flexibility and the willingness to evolve. Taking into account the uncertainty created by COVID-19 and the complete change it has brought about within the workforce, it is imperative that leadership strategies also change to meet the needs of current times. Good leadership is proactive leadership. Proactive leadership is flexible leadership. Flexibility in turn produces multiple ways to optimise your labour force. As a leader you need to be able to inspire, to explore all avenues available and provide a sense of security for those you are leading. Reigning in the troops by being a source of stability during a pandemic is especially key to the success and sustainability of a company’s success.
Further, low morale as a result of pandemic-anxiety, personal matters or general unhappiness within a company is not something a good leader should accept. Companies don’t take care of employees, the leaders inside that company do.
This is what good leadership looks like in a post-pandemic world
Navigating the world in itself during such uncertain times has seen many families and individuals hopeless and helpless. Snap lockdowns, impending new waves of COVID-19 infection cases, a fluctuating economy leading to job insecurity and higher daily expenses, the day-to-day difficulties of living, working from home, surviving with or without familial support, current personal struggles and possibly the loss of a loved one, all contribute to the functionality of an individual, which in turn, affects an entire team.
The Harvard Business Review suggests that poor leadership has a direct impact on employee mental health and might be triggering occupational anxiety disorders. For most, The KFF (Kaiser Family Foundation) released a report that suggests the feeling of impending doom and uncertainty due to COVID-19 has seen an increase in anxiety disorders and depressive episodes amongst people across the
age and labour spectrum and thus affects the greater workforce altogether. People desperately need to feel mentally, emotionally and physically safe in their work environment.
Without the security of an empathetic, supportive leader, workers tend to be less productive. If this pandemic has taught us anything, it’s that humanity must prevail to preserve our sanity: Humanity cannot be absent in the workforce, or it will lose the enthusiasm, loyalty and productivity of the worker.
Retaining talent does not only depend on an increase in cheques or benefits, but it also depends highly on the way people feel in their places of work.
In fact, according to Guthrie Jensen, a leading consultancy group, the happier and more grounded employee is 12% more productive, whereas an unhappy, demotivated and discouraged employee is 10% less productive, lacks creativity, determination and generally loses the vigour to succeed. The illustration below shows ways in which employees will show a lack of zest.
In order for leaders in any industry to succeed in a post-pandemic world, they must employ a new sense of humaneness unlike before. Prioritising employees is central to productivity and creativity. Good leaders in a post-pandemic world can leverage their organisations to become industry leaders as world economies and industries begin to open up. The key to success at this time is your employees.
Digital vs traditional marketing – how has it been influenced by COVID-19?
The debate of whether digital or traditional marketing is most valuable or otherwise more effective is an endless one. However, since the Covid-19 pandemic first hit, the shift towards digital has been exponential as traditional channels for advertising have come under pressure, become a lot more expensive and in some cases, obsolete.
As consumers have had to adjust their lifestyle habits during this time, their media habits have also changed; creating very real consequences for the ‘traditional’ media industry and new, accelerated opportunities for its ‘digital’ counterparts.
What’s the difference?
When we refer to ‘traditional marketing’, we are including any form of marketing that does not involve the Internet or digital technology. 99Designs passionately describes “The immersive experience of an impactful TV commercial and the tactile nature of a copy of Rolling Stone magazine are as important today as they were 20 years ago because of their lasting effects on your memory. Subconsciously you attach yourself to their brand emotionally, meaning they will stay at the top of your mind.”
Traditional media are just that – tactile and they exist in real time, physically. There are five main categories in this classification:
Print Marketing – magazines, newsletters, newspapers and catalogues.
Broadcast Marketing – radio, television and cinema.
Direct Mail Marketing – pamphlets and brochures.
Telephone Marketing – telemarketers or call centres.
Outdoor Marketing – billboards, bus stops and posters.
Digital marketing depends on the internet and the platforms it offers for a company to have a presence on it. It includes some of the following types of marketing strategies:
Search Engine Optimisation – the process of enhancing the volume and quality of web traffic directed to a website or a web page using keywords most commonly searched.
Social Media Marketing – the process of promoting products and services using Social Media platforms like Facebook, Instagram, Twitter, TikTok or LinkedIn.
Paid Search Advertising – when companies or organisations pay search engine providers such as Google, Bing or Yahoo to pop up first on a specific search input by consumers.
Affiliate Marketing – the practice of an online retailer paying commissions to an external website to run ads or take up ad space on the website, in return for traffic or sales.
Email Marketing – works by sending a mass email to a group of people (usually mailing lists or newsletter subscribers) a promotional message that encourages website traffic or sales for example.
There are many different views on whether or not traditional media or marketing is dying or not. Those that say no are usually the bigger businesses with massive budgets that continue to plough their money into television, radio and other printed forms of advertising.
The trouble with these forms of media is that they do not appear on a person’s smartphone or tablet. With the whole world looking down these days to the lit-up screen in the palm of their hand, who’s to say they will see your billboard or poster, let alone read a newspaper or magazine? Even if they were to be interested in what you have to say, the effort of going into a physical store or having to memorise the dates and times of your event is just too much when compared to it’s ‘click and buy’ from your smartphone alternatives.
COVID-19 has pushed the consumer to digital channels
Let’s review what has been happening in each on the traditional marketing media industries in South Africa recently:
In July last year (2020), as COVID-19 swept through the country and lockdowns started to roll-out over extended periods, Media24 announced the closure of many of their magazine and newspaper titles. CEO, Ishmet Davidson stated “the pandemic has accelerated the pre-existing and long-term structural decline in print media, resulting in a devastating impact on our own already fragile print media operations with significant declines in both circulation and advertising since April.” Ishmet also stated that Media24 is reshaping to further accelerate its transition to an increasingly digital world.
Magazine and newspaper titles were impacted as follows:
Move! and the Hearst portfolio (Men’s Health, Women’s Health, Bicycling, Runner’s World) have been closed.
DRUM was moved into a digital format only.
The frequency of the monthly magazines was reduced to six issues per year, and eight issues for tuis | home, SA Hunter/Jagter and Man Magnum.
Son op Sondag and Sunday Sun have been closed.
The Eastern Cape edition of Son has been closed.
Die Volksblad and Die Burger Oos-Kaap have been moved to digital editions only.
Amanzimtoti Fever, East Griqualand Fever, Hillcrest Fever and Maritzburg Fever have been closed.
Several other titles have been consolidated into one.
The Witness has moved into a digital format.
As we move to the big screen, we see a similar picture emerging where Cinema chains like Ster-Kinekor, Nu Metro, Cine Centre as well as other independent cinemas had to close completely for lockdown against an already dwindling attendance backdrop. The lockdown also led to record highs of streaming, with Netflix for example earning around 16 million new customers over the quarantine period. People love to be entertained, and will continue to watch movies, but perhaps they have found a cheaper, more convenient way to get their fix.
Not everyone is on Netflix or another alternative streaming channel. According to the Advertising Media Forum (AMF), time spent viewing TV during lock down almost doubled. However, ad spend declined by 27% between March and April last year. This happened as a result of advertisers’ cash flow drying up due to their supply and demand slowing down. So, with a reduction in ad spend and resulting financial strain, we may see further changes in the television broadcasting industry in months to come. According to the Daily Maverick (Jan 2021), the SABC is already struggling and is owed R57.1-million in unpaid television licences and advertising fees by government departments, municipalities and state-owned entities (SOEs): R29.2-million was owed in advertising sales, with R4.5-million owed by SOEs, R9.2-million owed by provincial departments, R13.1-million by national departments and R2.3-million by municipalities.
While not as a direct result of COVID-19, in January this year MyBroadband reported “The South African Post Office (SAPO) is on the brink of collapse and is facing bankruptcy despite receiving R8 billion in bailouts since 2014.” It also reported that “Notices on the doors of some SA Post Office branches now state “Closed until further notice” without a clear indication of where people can now get services from.”
This is not good news for direct marketing companies or businesses that rely on post as a channel for marketing and has forced them to move their efforts to email. Findings from Statista indicate that there are nearly four billion email users in the world. Campaign Monitor research reported that 72% of people would rather receive marketing materials from brands through their email.
Out Of Home (OOH)
Out-of-home (OOH) advertising was one of the worst hit by the pandemic as lockdowns sent people home, away from their offices and CBDs and prevented them from being able to commute or travel nationally and internationally. This has dramatically reduced the amount of people exposed to billboards. This channel is expected to return, but who knows when and how long it will take to return to previous revenue levels as its share of the marketing budget may have already been ‘lost’ to other digital platforms like Google display or social media ads?
The benefits of digital media
Social Media and digital marketing have made customer engagement and personalisation so efficient. The benefit of digital marketing from the perspective of advertisers is that it’s so much cheaper for wider reach, than the cost it would be to use a traditional platform for less reach. Other benefits listed by LeGusTry are that digital marketing offers the highest return on ad spend investment, higher exposure to new clientele and higher engagement rates.
This also evens the playing field somewhat in that smaller businesses are now able to compete with bigger corporates in the same markets. Where before, spending thousands of Rands on television and radio adverts were simply not an option.
Unlike traditional media is can be said that digital marketing uses every touch point of your daily use of the internet to reach you.
Marketing is an ever changing industry and marketers are constantly being pushed to new levels to improve sales and drive traffic to their products and services. With the advent of Social Media, the need for traditional marketing techniques has shown a steady decline as more and more consumers have moved away from traditional TV, radio and print media, to news and entertainment via the internet on their mobile devices.
With the unique circumstances COVID-19 is presenting, the demand for traditional advertising channels along with locked down audiences has dwindled. During this time, companies have heavily relied on Digital Marketing strategies to stay relevant and drive sales. The shift to digital does not start or end with the pandemic, but a global lockdown definitely showed the power of social media in the absence of physical movement and real-time, real-life forms of media like billboards and newspapers. The question is whether or not this trend will reverse when COVID-19 is finally a thing of the past.
Covid-19’s impact on supply networks is slowing down the fight against climate change
Solar energy developers around the world are slowed down by a spike in the costs of materials, labour and transporting as the world economy recovers from the Covid-19 pandemic (read more about that here). . An Economic Times India article suggests the zero-emissions solar energy market is showing slower growth at a time when world governments are ramping up their efforts against climate change, and marks a reversal to growth after a decade of lowering prices. One of the greatest challenges to solar energy manufacturers is the soaring cost of steel, which has risen three times in the past year, not to mention the unsteady cost of transportation and the uncertainty of when materials will become available for manufacturing to continue. The pandemic has caused inflation to occur at a staggering rate and many industries are struggling to keep up.
What does this mean for climate change
An online poll by Power Technology readers showed that 54.1% believe a pandemic induced recession could hurt renewable energy development, which in turn, puts us further behind in addressing the climate crisis. With the Covid-19 outbreak hitting the global supply chain and single companies alike, renewable energy growth is expected to slow, with projects consistently being delayed or cancelled as a result. The consequence of this is globally the fight against climate change as per the Paris Agreement, will be put on hold for an extended period of time. While the pandemic has forced us to slow down, the rate of climate change has not. A Time article explains that “Every day, due to rising water levels, some part of the world must evacuate to higher ground.”
Demand for solar energy
The demand for solar energy is higher now than ever before. More countries are facing longer, hotter summers and the energy source itself can easily be distributed and rerouted into national electricity lines as Australia has already done. The booming demand for solar energy is however only as in demand as it is available and affordable. With the rising costs of solar energy materials and installations, more and more companies and individuals alike could turn it away for a longer period of time than what the earth can afford. Without renewable energy sources like solar energy, the world depends heavily on non-renewable sources like oil and coal. If we don’t act now, Octopus Energy predicts that global oil deposits will deplete by 2052 and coal and natural gasses are expected to last only until 2060 (read more here).
How the pandemic has affected global warming and in turn, slowed down supply chains
Global logistics industry leaders, EY, conducted a survey on the impact of Covid-19 on the industry and its effects on the job market. The report comes as no surprise that only 2% of companies surveyed stated they were fully prepared for the pandemic. 72% of those affected reported experiencing serious disruptions, while 17% reported significant disruptions (55% reported mostly negative effects). The graph provided by EY illustrates this finding.
Although many employees were requested to work remotely, others – especially in factory settings – had to make new arrangements to ensure physical distancing and were required to wear personal protective equipment (PPE). High-tech industries and industrial products manufacturers are investing heavily in technology to limit employee exposure to COVID-19. Additionally, 47% of all companies reported workforce disruptions due to the pandemic. These are just a few examples of changes affecting supply chains across various sectors. Thus it’s unsurprising that more logistics companies are looking to further empower their labourers through reskilling to help the workforce readjust to the new normal the pandemic has forced the industry into. A Price Waterhouse and Cooper report from April 2020 suggests that there has been a global decline in transport activity and this in itself has forced many workers in the supply chain to be jobless for months on end due to lockdowns. However, in 2021 it is evident that the demand for at-home deliveries has increased.
The Covid 19 pandemic has put immense strain on the world’s resources. Solar energy production has not been spared. We are already in a race against time to reverse global warming. We must seek ways to shorten supply chains by sourcing locally available materials to create renewable energy sources that are sustainable and more robust against something as unpredictable as a global pandemic. Who knows when the next one could hit.
July 2020 – Is there a place for high-budget TV ads – the kind where crowds of hundreds clink glasses as they dance together in a small space? Or is the future of marketing looking a lot more low key?
Connection, connection, connection.
If there is anything that emerged out of the coronavirus pandemic, it’s the insight that humans crave connection above all else. It’s what makes them willing to risk their health, and that of others, in their pursuit of activities and pastimes that make them feel that they are part of a greater whole. That’s why the brands that have either reflected or sought to create connection are the ones that have done well during a period that’s been exceptionally trying for brands.
Inevitably, these trials have been passed on to their marketers. According to a Marketweek survey of CMOs, 65% of marketers are expecting to see their annual marketing budgets cut, and 86% predict that their marketing goals will be that much harder to achieve.
Digital marketers, on the other hand, must be enjoying a secret smile, if the survey respondents’ belief that SEO has become more important than ever is anything to go by. Indeed, since most consumers have little option but to bond with their laptops, social media is enjoying a boom, and many brands are taking advantage of this new captive market. There’s a caveat, however: consumers don’t want to be reminded of how things were. According to Forbes.com, they’re more likely to respond to an ad that reflects our current reality, no matter how second-rate that reality is. It comes down to the principle of authenticity: we can’t pretend that life is glamourous when most of us are sitting in our tracksuits – any brand that ignores this is tone-deaf.
On the other hand, brands that point out that this is something we’re all affected by may well win. Forbes.com singles out Nike’s Covid-19 ‘Play inside, play for the world’ campaign as one which does this especially well. From a local perspective, who can forget the SA Tourism’s appeal to put the brakes on travel now, so that we can all travel later? If such a message is backed by an action to ease the collective suffering (like the offer of a payment holiday or donation to a cause), so much the better – but, again, only if it is authentic and transparent.
Since marketing budgets are a lot more slender than they were at the beginning of the year, marketers have to do a lot more with a lot less. That’s nothing new – in essence, they’ve been trying to make their spend go further and further since the recession of 2008 – but this time around, the need to create a connection is so much greater. The accent is on quality content that can add value to consumers’ lives: overseas, brands have found a way to interact with their consumers through interactive classes, videos and webinars on platforms like Zoom or IGLive, for example.
The ultimate takeout? The way we buy and spend has changed, probably forever. Of course we’ll reach a stage where consumers have greater freedom, but by then, online habits may have become entrenched. As always, marketers who have missed out on an opportunity to entrench their brands due to short-sighted cost-cutting will feel the brunt when spending returns to normal; those that have adjusted their strategies – by creating relatable, relevant content and serving it on a platform that speaks to consumers’ needs for convenience and efficiency – may hang on to their niche. It’s nothing new – we simply have better data at our disposal to help us choose where to feature that content, and how to execute it.
BRYAN SUN, managing director of Nielsen Africa, gives insights into the new African consumer.
The COVID-19 pandemic has given rise to a new kind of African consumer who is already displaying fundamental shifts in consumption and purchase behaviour driven by factors such as heightened health awareness, a focus on quality and safety, a renewed desire to stay at home and a tight wallet squeeze.
A recent Nielsen industry webinar, Navigating the New Normal, discussed the realities and effects of this rapidly evolving outlook. Nielsen Africa outlined the consumer evolution since the onset of the pandemic and the fact that crisis-buying patterns have accelerated the adoption of permanent behaviour change.
As the prospect of looming lockdowns first hit, consumers realised they needed to stock up which saw a spike in store visits, stockpiling of shelf staples and growing basket sizes. However, as restricted living became more commonplace, there was a change in behaviour with consumers seeking out products without putting their health at risk.
We have therefore seen growth in online shopping, declining store visits and a rise in out of stocks. Supply chain challenges have also driven consumers to be less price sensitive on high demand packaged goods or those that guarantee hygiene standards.
The expectation is that once quarantines lift and consumers return to ‘business as usual’ they will continue to operate with a renewed consciousness about health, which will remain for a long time. There will also be shifts in the way consumers perceive products with the increased importance of safety and efficacy claims, and a willingness to spend more on hygiene needs and healthy foods.
Nielsen’s recent COVID-19 syndicated online survey, conducted in over 70 countries across the globe, produced interesting comparative data and insights for Sub-Saharan Africa (Kenya, Nigeria and South Africa) as compared to the rest of the world.
75% of SSA consumers are now more concerned about their families versus the global average of 48%. In addition,
83% said they were following information multiple times a day – significantly higher than the global average of 75%.
51% of SSA consumers said they were cooking more at home versus 39% globally, and significantly more said they worked more at home versus the global average.
46% SSA consumers said they are visiting malls less often versus the global average of 32%.
Despite perceptions that Africa lags behind in terms of online behaviour, it has in fact seen incredible behaviour changes with major increases in the use of social networking, online reading, listening to music and video streaming.
As countries move from restricted living to precautionary living, Nielsen has also created an in-depth view of current and future SSA consumer mindset and purchase patterns based on learnings from other markets:
Heightened health awareness will drive consumers to be less price sensitive on high demand packaged goods or those that guarantee hygiene standards as food safety becomes paramount to consumers.
The renewed desire to stay at home and the preparation of home meals might require brand extensions and a need to address declining store visits, growth in online and proximity shopping.
As consumers are impacted by less income and smaller purchasing wallets, value for money offerings and more aggressive promotions – over that of just in-store promotions – are needed.
eCommerce growth has reached double digits in many countries with Italy at 82%, China 50%, and Korea 30% where older shoppers are trying eCommerce for the first time. Technology catalysts are driving behavioural change and will penetrate the market despite previous scepticism around this platform.
Looking to the future, the path to recovery means retailers must urgently look at factors such as pricing mechanisms and brand relationships in order to maintain and strengthen consumer trust in their brand.
Successful retail regeneration across the continent, following the impact of COVID-19 on the African consumer and retail landscape, will rely on an agile and innovative response that sets the groundwork for a future unlike any we have ever known.
BIO: Bryan Sun is managing director of Nielsen Africa. Nielsen Holdings is a global measurement and data analytics company that provides the most complete and trusted view available of consumers and markets worldwide. Our approach marries proprietary Nielsen data with other data sources to help clients around the world understand what’s happening now, what’s happening next, and how to best act on this knowledge.
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Current disruptions have brought to light the fragility of our supply chains, says MARZIA STORPIOLI. And the volatility is set to continue for quite some time. What to do?
There’s not doubt volatility, turbulence and uncertainty will continue, and probably increase in the decades ahead, and the ‘business as usual mentality’ will need to be replaced with business seeking stability in the face of disruption.
Current disruptions have brought to light the fragility of our supply chains. For the past 20 years, the focus has been on cutting costs along each link in the chain. Unfortunately, this has also expunged any flexibility or resilience (the ability to withstand shocks to the system) in supply chains.
The question now is, how do we retain cost efficiency but reintroduce flexibility and elasticity into supply chains?
Supply chain suppleness – revisited
Just In Time (JIT) has been seen as the model of supply chain superiority, but this is no longer the case. The disruption of supply chains by the coronavirus pandemic showed that this method of inventory control, which brings material into the production process, warehouse or customer just in time to be used, has its limitations.
Some elements of JIT are good and should be translated into the reshaping of the new models for supply chains, but many of the ‘credos’ of JIT will need to be redesigned and new thinking brought into supply chain management.
One of its weaknesses (and other similar methodologies) was that the environmental impact of JIT changes to supply chains was not considered or measured. This is no longer feasible. Consumers are no longer willing to accept ‘due to internal considerations….’ as an excuse for out-of-stock situations.
What will the supply chain of the future look like?
Firstly, the supplier base must be widened to include more suppliers for key/critical items. There should be reduced focus on cost reduction and a move to find a balance between acceptable costs and acceptable inventory levels. This should be done –with customer in mind, rather than the company’s bottom line only.
There should be greater visibility and sharing of information between and among supply chain members e.g. greater trust less ‘protectionism’.
We need to rethink strategies on essential goods and services. For example: chemicals used in sanitiser products – should they be imported because the supplier is cheaper, or should we manufacture the lion’s share in South Africa to reduce reliance on globalised sources?
More joint ventures are required to leverage off each other’s strengths. In other words, we need less outsourcing and more capacity sharing.
A move to on-shoring production of critical items (items critical to national security, health, economic prosperity) is needed.
For example, Sasol has always been able to produce chemicals – world class – why shouldn’t they be incentivised to develop their production to encompass chemicals currently being imported from China (due to some economic cooperation agreement between South Africa and China)?
The South African textile industry has a track record of producing high quality material. Why are we destroying that capacity by importing textile products from China?
Again, South Africa is capable of producing medical quality personal protection equipment. We shouldn’t need to import PPE from abroad.
A trend is developing where businesses collaborate with their competitors, leveraging each other’s unique strengths, buffering their weaknesses and moving closer to becoming ‘demand chains’. This means focusing on customers (outward looking) rather than focusing on internal business efficiencies (inward looking).
There must be a change in relationships with suppliers. It is no longer rational to keep adversarial relationships going, and more important to work on collaborative relationships – the ‘we are in this together’ mindset, as opposed to the traditional ‘beat suppliers down to the lowest price without a thought for their sustainability’.
And that’s just to start with…
BIO: Marzia Storpioli is Lecturer: Supply Chain Management and Programme manager: BCom International Supply Chain Management at the IMM Graduate School.
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There’s no doubt the 2020 sports calendar has been upset by the turbulence caused by the coronavirus pandemic. MISHA SHER has advice for brands on how to handle it.
It’s safe to say that the sports marketing industry is living through unprecedented times. Never before has sport come to a complete halt across the world (with a few minor exceptions like Belarus), depriving billions of people of a much-loved emotional outlet and daily passion point.
Brands, which were predicted to spend £37.5 billion on sports sponsorship in 2020, are facing some tough choices. What do they do now that nearly every event has been postponed or suspended? How can they continue to engage passionate sports audiences?
Questions have been raised about the merits of ‘hibernation’ style strategies – freezing all activity in order to protect budgets and wait out the storm. Such strategies offer a false sense of security and threaten to undermine brands’ hard-earned relationships with sports fans. Instead, a new playbook is required that offers brands alternative strategies for how to continue leveraging those relationships and sustain growth.
In what is undoubtedly a very challenging situation, it’s crucial that brands look at ways in which they can provide value to fans. Sponsorship is at its most powerful when it enhances the fan experience – and it’s more important than ever for brands to do that now.
Fully explore the potential of gaming
The biggest winner in the current situation has been the gaming industry. Even before the crisis, it was growing faster than any sport and now with everyone spending more time at home, it’s no surprise that live gaming is booming. A recent report by Captify shows that with mass live sports cancellations, consumers are looking for their sports fix elsewhere. Consumer interest for sports games saw a 1054% search uplift since 1 January 2020 with the top indexing audience being sports fans.
Clearly, there is an audience that craves sport and sees gaming as an alternative.
Brands already associated with competitions that are suspended are showing agility and hosting esports versions. And the numbers have not disappointed. Santander, the title sponsor of La Liga, headlined a FIFA 20 tournament comprising players from each club team. The Santander Challenge, livestreamed on Twitch, drew 1 million viewers and gave fans a more intimate and personal experience with their favourite players than they are used to. Nascar, NFL, NBA, F1 and others have started their own versions, in many cases featuring their current league sponsors. Admittedly, these virtual tournaments may not deliver the same scale of audience exposure brands are used to, but they allow sponsors to continue engaging with fans, staying top of mind and demonstrating a commitment to the sports that have helped them grow their businesses.
For others, there are opportunities to explore the possibilities created by in-game advertising offered programmatically by platforms such as Anzu.
Unlock the potential of sports talent and use it for good
In a crisis that has underlined the critical importance of interpersonal relationships to all of us, talent and influencer marketing is demonstrating its potential as a powerful media channel. There is an opportunity to leverage talent unlike ever before. Brands should be looking at ways in which they can authentically engage sports talent to provide fans with the access and entertainment that they crave.
A great example of this is Red Bull, which actively leverages extreme sports events to connect with their consumers. To continue engaging with their audience, Red Bull launched a new 10-part What Does It Take podcast series hosted by Matthias Dandois. The BMX star and eight-time Flatland World Champion interviews fellow Red Bull athletes and extreme sports stars from around the world, exploring not only what it takes to get to the top, but also how to stay there. Red Bull then uses a mix of its own and its talents’ social channels to distribute this content to fans.
As an Olympic Partner (TOP), Visa is taking a slightly different approach. The sponsor has quickly created a content series with its athletes called Do Your Part Like An Olympian showing them performing feats of sporting prowess, juxtaposed with easy COVID-19 safety measures like handwashing. It is engaging and informative, and contributes to vital communication efforts to encourage people to take the right steps to tackle the coronavirus crisis. Visa was one of the first major brands to confirm that it would stick with its Olympic partnership and stand by its athletes. Visa is now being seen as a socially responsible brand, utilising its sponsorship assets for the greater good. It will undoubtedly generate consumer goodwill.
Drive engagement by tapping fans’ creativity
If there is one thing we know about sports fans, it is that they want to be participants in the sports experience, not just spectators. For brands, it’s therefore key to engage people in a way that genuinely creates utility, rather than in an attempt to sell more product. GoPro have done just that by launching their #HomePro challenge. Knowing that people are likely to be suffering from cabin fever, the brand created a competition encouraging people to share whatever weird and wonderful activities they’re getting up to at home for a chance to win their latest performance camera. The beauty of the competition is accessibility. You don’t need to own a GoPro – footage can be recorded and shared from any device. The campaign effectively taps into emotions that people are likely to be feeling and offers them a creative outlet within the confines of critical social distancing measures.
Dick’s Sporting Goods have done something similar, launching the #LongLiveSport campaign across its social channels encouraging everyone to share how they’re playing their sport at home. The campaign is true to the brand and celebrates the creativity of sports fans and athletes.
Other brands can and should be asking themselves how they can harness the creative potential of their audiences in a way that helps build brand affinity.
Amid all the uncertainty, it is more important than ever to spend some time thinking about the future. Right now, sport seems like one of the most inconsequential things to worry about. But things will eventually return to normal – albeit perhaps a new normal – when the crisis has passed. Sport will return in a major way. When it does, the world will see a celebration of humanity and connection.
There is a chance that, at least initially, sport will resume in empty stadiums and arenas. If so, sponsors will have an opportunity to play a major part in the way people access and experience sports events. We’ve seen Heineken shrewdly demonstrate how to leverage such an opportunity when it paid for the rugby world cup final to be shown on South Africa’s state broadcaster so that people could watch on terrestrial TV rather than shielding it behind a paywall. It happened in what now feels like a different time, but nevertheless demonstrated how major event sponsors can transform the sports experience for millions of fans. Now is the time for brand sponsors to start thinking about the role they want to play when sport eventually resumes.
This is an unprecedented time, but brands must see this as a chance to play a bigger role in consumers’ lives, rather than a time to scale back. How they react to this crisis could dictate their relationship with consumers for years to come.
This story is published with the permission of WPP.
BIO: Misha Sher is Vice President of Sport And Entertainment at Mediacom. Mediacom Sport & Entertainment is part of The WPP Sports Practice, the global entry point to all of WPPs specialist sports marketing capabilities. Find out more about how The Practice brings together the best talent from across WPP to help brands, rights owners and events hosts.
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