Boom and Bust
Adapting is definitely the new normal: Chapter three
Supermarket shelves are stripped bare. Flights are grounded. Workers have been laid off or furloughed. Many parents transformed into primary school teachers. A Conservative government has nationalised the railways and is paying people not to work. And this was only by week two. In less than a fortnight, Britain has experienced the kind of social and political upheaval that normally only comes when you guillotine some royals, or storm a winter palace! Some companies are experiencing strained supply chains due to exponential demand for their products; others sadly have already had to shut up shop.
The surge in demand for home food delivery is well documented. Delivery services like Deliveroo and UberEats are all experiencing increased demand for their services and have taken steps like offering contactless delivery to protect customers and delivery drivers. This trend towards contactless delivery has created a unique opportunity for delivery robot companies to put their technology to the test. Driverless delivery startup Neolix Technologies recently announced it has raised nearly $28.7 million to mass produce its self-driving vehicles.
The pandemic has caused massive disruption in the global shipping of goods. Ports need to screen incoming goods more carefully, leading to delays. Wooden pallets from China are being destroyed rather than reused, for fear of contagion, creating a sudden demand for that resource. With online retailers shipping goods directly to customers, businesses must expand their infrastructure for trucking, warehousing, parcel delivery, fulfilment centres and security. Warehouse workers must stay on the job and even increase the workforce; Amazon said it is hiring 100,000 new workers to beef up its shipping operations, but many of its orders will still be delayed.
With hospitals overstretched by the crisis and mild cases of COVID-19 treatable with paracetamol and other common drugs, pharmacies and other retailers will have to keep well stocked. Also, other health problems don’t stop for a pandemic, and people have all the same diseases they would ordinarily have, with the same demand for pharmaceuticals.
As consumers prepare for weeks of isolation many are stocking up on packaged foods and companies like Ocado and Tesco are reinventing the customer experience to cope with demand in a more sophisticated way. Nielsen reported that “comfort food” sales are spiking, with pastry purchases in the US up almost 20%. Thanks to Coronavirus, a new dawn of supermarket logistics is at hand. Old rivals are going to have to finally scrap 40 years of ‘Operation Checkout’ and kickstart a new system that involves working together to keep the country fed.
High Street retailers, who were already in a fragile state seem to be the hardest hit. Those who had immature e-commerce setups are definitely feeling the most pain. Laura Ashley, Debenhams, Cath Kidston and Beales have already brought in the administrators.
Next up is casual dining. Again, an industry already squeezed, C19 has probably just accelerated the inevitable. Zizzi have furloughed 6,500 employees, meanwhile Carluccio’s has appointed administrators leaving 2,000 people at risk. The Restaurant Group, which includes Wagamama’s, is desperately trying to prevent the Chiquito brand heading for insolvency.
New car sales in the UK have already plunged by 44%, so it’s hard to imagine that there won’t be casualties in the transport industry. Interestingly this is a combination of differing supply and demand challenges. Commercial rental has seen a surge as pharmacies, couriers and cleaning firms are among those organisations that need to rapidly upscale the number of vehicles they operate in order to meet increasing demand from customers. Toyota and Lexus are offering free roadside assistance to all key workers who drive one of their cars or vans, regardless of its age. The firms have teamed up with The AA for the initiative, which will be available until further notice. Collaborative partnerships like this that once might have seemed hard work to pull off are now creating not only essential services but much needed survival lines for businesses otherwise withering. Who would have foreseen a relationship blossoming between WHSmith and Sainsbury’s less than 3 weeks ago — they’ve teamed up to offer a range of fresh food in hospitals. Other companies are completely pivoting in the hope they will still exist in a few months time.
This is chapter 3 of 4. Check out ‘Pivot or Die’ to read on. If you’re interested in joining our Fluxx Exchange: C19 Business Recovery Guide Breakfast on the 22nd April 2020, get in touch with hello@fluxx.uk.com.
Jenny Burns is an Executive Partner at Fluxx, a company that uses experiments to understand customers, helping clients to build better products. Find out more about our work with Zopa, Vogue, Nationwide and Croydon Council, or email Jenny Burns at jenny.burns@fluxx.uk.com.
