When a crisis hits, it can feel like the whole world changes in an instant. And, in some ways, it does. Early on, companies have to focus on the health and safety of their employees and the world at large. But as the initial shock of a crisis wears off and new routines become regular habits, brands have to start strategizing about what happens next.
There’s no crystal ball that can reveal the future. That doesn’t mean what comes next should be a complete surprise. Instead, some fairly simple strategic thinking combined with straightforward data can help you figure out how the situation will impact your brand and products. Read on for three steps businesses should take when the initial shock of a crisis is over and it’s time to strategize about what comes next.
Step 1: Identify high-level factors that impact consumers
When a crisis hits, consumer behavior changes. From what they’re buying to how they’re buying it to how much they want to (or can afford to) spend, consumers’ purchasing habits are going to shift in the near term, if not permanently.
For example, with movie theaters shut down because of social distancing, consumers literally can’t go to the box office. At the same time, though, individuals stuck at home are looking for entertainment that’s accessible from their couches. Shifting to at-home digital releases makes sense for both filmmakers and audiences precisely because it addresses a high-level environmental change in an effective way.
Identifying the high-level factors that are likely to impact consumer behavior can help you anticipate the changes you’ll see at the register...and in your revenue.
Step 2: Consider how your products fit into the “new normal”
When a crisis-level event hits, consumers’ priorities are affected in all sorts of ways, whether because they’re tightening their belts during a recession or they’re focused on staying healthy during a global pandemic.
In some cases, helping customers adjust to a new normal, even if it’s a temporary one, could simply mean increasing production to meet increased demand. But it could also mean creating content that helps consumers learn new skills—like King Arthur Flour’s Isolation Baking Show on Facebook Live—or changing your product mix to meet new consumer needs.
Target’s response to the 2000 recession is a great example of this kind of thinking. Along with a variety of other investments, the retailer began working with popular designers to create budget-friendly fashion for increasingly cost-conscious consumers.
Focusing on how you can serve your customers as they adapt to a new normal has multiple benefits. First, it prioritizes empathy, with sales happening as a result of actual consumer needs, not just savvy marketing. Second, this way of thinking provides brands a measure of protection as they strategize for the near term rather than moving forward with plans that no longer make sense in the face of a developing crisis.
Step 3: Plan for what comes next as the crisis evolves
As initial upheaval transitions into new ways of living, some products simply won’t be as relevant as they once were. Brands that get ahead of those shifts can adjust their plans to avoid ending up with excess inventory that lingers on store shelves or in the warehouse.
A good starting point is to think through which of your products benefit from seasonal lift that could be disrupted by long term changes in consumer behavior. But even more revealing are the use occasions associated with your products. If consumers aren’t participating in those occasions, the associated products and categories are likely to take a hit.
In contrast, as consumers adopt new use occasions, products that are strongly aligned with those behaviors may see increased revenue despite slow sales overall. Doubling down on those products could create opportunities for companies to flourish as consumers create a new normal.
If you’re wondering what this step looks like in action, check out some of the work we’ve put together around the coronavirus pandemic. We started with the question, “Which products stand to lose the most if social distancing extends into summer?”
Swimwear is an obvious answer, especially if beaches and pools are still shut down. Likewise, non-essential services like pedicures would necessarily be off limits.
But we weren’t satisfied with the obvious. Instead, we analyzed the potential impact of shelter-in-place orders on products that are highly reliant on social gatherings and off-premise occasions that might be out of bounds this year. Click here or on the button below to take a look.