The first case of COVID-19, aka the coronavirus, was identified in Wuhan, Hubei Province, China, on November 17, 2019. In just four months, the marketplace has turned upside down. The WHO declared a global pandemic on March 11, 2020. Businesses are struggling to adjust to a new reality of quarantines, lockdowns, and closed borders.
This pivot in fortunes has caught most companies flat-footed. This checklist provides an actionable framework that brands can use to benchmark their responses to the disruption caused by the spread of the coronavirus.
This checklist draws on the considerable amount of work published by Kantar since it became clear in January that COVID-19 was going to trigger a worldwide economic challenge. Additional Kantar research and analysis is underway and will be reported separately. This checklist is the starting point for keeping a tight rein on rapidly unfolding changes and contingencies.
This checklist is adapted from standard crisis management guidelines about keeping a company stable and productive during events that interrupt normal business operations. By adding to that the findings and takeaways of research conducted by Kantar over the past few weeks about the commercial impact seen so far, this checklist provides a set of guidelines best suited for the current situation.
There are seven major steps to be taken:
1. Ensure the health, safety, and productivity of employees.
- To the extent possible, this should include partners and vendors as well.
- This ensures adequate resources and commitment to address the challenge at hand.
2. Put a rapid response team in place.
- This should be cross-functional, with unambiguous lines of authority.
- This creates a mechanism for fast, agile decision-making and responsiveness.
3. Take stock of the commercial situation across retail, marketing, sales, digital.
- Calibrate where the situation stands before recalibrating where a brand needs to go.
- This provides a comprehensive overview of gaps and opportunities.
4. Minimise business exposure.
- Shore up threats or weaknesses, like bottlenecks, and implement all new necessities.
- This secures and shields the basic position of a brand.
5. Capture immediate business opportunities.
- Move quickly to be the first to seize every growth opportunity that emerges.
- This requires a mindset and a willingness to take risks to turn disruption into advantage.
6. Monitor and update in real-time.
- Events are changing daily and there is too much uncertainty to lock into fixed plans.
- This means a comprehensive, detailed tracking and evaluation system tied to decisions.
7. Plan for now for the recovery.
- Start looking ahead now because the recovery will arrive as abruptly as this disruption.
- This involves futures-based planning to anticipate all possibilities and outcomes.
These seven steps are standard protocol for any brand experiencing a major disruption of its business. But as Kantar research shows, the coronavirus poses unique challenges and unlocks special opportunities.
Step 1: Ensure the health, safety, and productivity of employees.
- First and foremost, take all steps necessary to keep employees safe. Follow guidelines of local authorities. Coordinate activities with client policies. Insist that employees who feel sick stay at home and see a doctor. Require frequent handwashing and provide protective equipment as needed. Prohibit large gatherings. Limit outside visitors. Restrict unnecessary travel. At least daily, sanitise all facilities thoroughly. Make mental health support services available.
- Take steps to help employees working in new situations get access to resources needed, such as childcare, health care, and additional technologies.
- Train employees on all new skills needed and for all new systems and tasks required.
- Benchmark all of these efforts. What is the objective? What are other companies doing? Where do you stand? What needs more attention or incentivisation or organisational discipline?
- Give special attention to line managers who must simultaneously keep the business operating while keeping the doors open. Provide them with open, unfiltered lines of communication. Move immediately when help is requested. Be very clear about expectations and resources.
- Communicate with internal staff frequently and in detail. Introduce a special line of communication for questions to be asked and answered promptly.
- Get rid of as much legacy bureaucracy as possible. The marketplace is changing rapidly, so decisions must be made in hours not weeks. Push authority down as much as possible, but step in to fix things in real-time.
- Create look-alike teams to back up all key functional areas. Where possible, split these teams across geographic locations or have them work on alternate days in one location. Have them meet daily to keep all activities visible and coordinated. Implement a similar backup plan for all key managers and senior executives.
- For most employees, working from home is a new routine that comes with its own challenges — childcare, secure access to company networks, virtual interaction with clients and colleagues, and so forth. If not in place already, develop and train employees in work-at-home skills and protocols. Install dedicated, accessible problem-solving resources and help desks.
The organisational performance practice of Kantar is experienced in helping companies build and train new systems and processes. One of the speciality areas within this practice is real-time planning that facilitates agile, constantly updated decision-making and market responsiveness.
The health practice of Kantar is deeply knowledgeable about all issues related to health contingencies and their implications for corporate strategy and business practices.
Step 2: Put a rapid response team in place.
- Dedicate space such as a separate floor or a connected suite of offices as a war room. Relocate a cross-functional team of C-suite and senior executives to this location. Dedicate this team to managing the business through the COVID-19 disruption, start to finish. Define the role and purpose of this team in operational terms, not strategic or executive.
- Put this team in charge of responding to all breaking developments in the marketplace and give it unimpeded access to local, retail and brand business leaders to work on recovery and renewal plans for lines of business affected by any disruption. Local units should be directly tied in, especially in geographies where business disruption is most severe. For these markets, meetings should be weekly, if not more frequent.
- As a first step, have this team develop a clear charter, approved by the CEO, that specifies areas of business responsibility and functional oversight. This charter should cover communications (external and internal), key metrics, monitoring and tracking, and all emergency responses.
- Anticipate that this team will be in place for at least the better part of a year. In early March 2020, Kantar China interviewed business leaders in China and found that 23% expected negative impact on the business to be over by the end of April and another 29% said by the end of May, with 13% saying the end of June. The start of commercial impact in China was December, which makes the length of disruption somewhere between five and seven months. While there are lessons to be learned and applied from what happened in China, it remains likely that disruption everywhere else will take six months or so to undergo and at least that long to recover.
- Depending upon the difficulty in controlling the pandemic, McKinsey forecasts anywhere from a 20% to a 60% decline in 2020 global GDP growth. Forecasts for the U.S. and Europe are worse. In the Kantar research in China, just 40% of executives thought they would be able to attain at least 90% of their original 2020 plan. Updated figures out of China report that industrial production in January and February fell 13.5%, well above the 3% decline expected, and retail sales dropped 20.5% versus an expected decline of 4%.
- Conduct detailed and comprehensive stress-testing, especially finance and supply chain. Develop and rehearse in-depth contingency plans. Work with finance to stay on top of cash management and all business issues arising from tighter control of cash flow.
The organisational performance practice of Kantar has worked with many companies on contingency planning structures, practices, and leadership training.
The futures practice of Kantar has conducted numerous scenario-planning and projection workshops with senior management teams to plan for disruption and rapid change.
Step 3: Take stock of the commercial situation across retail, marketing, sales, digital.
- Weathering the impact of societal and governmental responses depends on where a brand stands with respect to five factors. Taking stock of these will dictate what a brand can do next, and how.
- Strength of brand. Kantar’s Chief Global Analyst Nigel Hollis has noted that brands with strong equity as measured by Kantar BrandZ recovered faster from the financial crisis and performed better thereafter. But strong brands cannot take this for granted. All brands in a category are affected by the same forces, so the issue is how well a brand performs relative to competition. As a result of this disruption, consumers will be experimenting more than ever with new solutions and offerings. Weaker brands will be able to gain an edge by exploiting experimentation while strong brands will do best by leveraging their strengths to reinforce existing habits and preferences.
- Category exposure. In an extensive report published in February, industry and channel analysts in the China Kantar consulting group identified winners and losers during the coronavirus. The full analysis is valuable, but too detailed to discuss in full here. Bottom line, spending decreased for most categories but increased for those tied to cleaning, health, medicine, food, insurance, and online entertainment. The degree of impact varied a lot, though, with some categories and channels more vulnerable than others. Looking ahead, luxury products face the hardest recovery.
- Type of channel. Omnichannel, online channels, and delivery made significant inroads during the quarantine period in China. The loss of traffic put additional pressure on struggling brick-and-mortar retailers. But online versus offline is not the only factor involved. Safety has become more important, if not of primary importance. Consumers want outlets that can assure safety and health. This is a big difference from the financial crisis, which elevated affordability. The channels that fared best were price-driven outlets. As Kantar’s leading authority on retail futures, David Marcotte, has noted, going forward, downscale outlets offering brands of ambiguous sourcing will be viewed with misgiving, which could hurt discounters and even Amazon. Big name retailers may be able to leverage this to their advantage, with accompanying pressure on brands to measure up to new demands for safety and cleanliness.
- Type of consumer. A Kantar segmentation of consumer financial profiles finds that contrary to common belief, downturns do not necessarily favour generics and discounters. Cash-Flow consumers living from paycheck to paycheck cannot trade down, so they must trade out by buying less frequently or by not buying at all. Middle-class Income Statement consumers often continue to pay a premium, but on a less frequent cycle. When they do trade down, they do so with a higher set of expectations. Upscale Balance Sheet consumers are most vulnerable to stock market declines, which they respond to by postponing high-end discretionary purchases without any corresponding increase in discount shopping. But however these dynamics play out, there is no one-size-fits-all response by consumers. Rather, the impact on a brand will be a function of the mix of shopper types within a brand’s franchise.
- Geographic footprint. The impact of the coronavirus is actually a succession of impacts. Geographies are being affected one after another, not all at once. So the threat to a brand is a function of where it is concentrated. Different markets will have different degrees of disruption. Brands in multiple markets will experience disruption as an ongoing, multi-layered challenge whereas brands in one or a few markets will go through it quickly.
- Depending upon the commercial situation across these factors, brands will face a number of key decisions: Simplification of SKUs. Concentration on high-demand categories and products, with a corresponding de-emphasis of slower lines of business. Changes in format and packaging to fit best-performing outlets. Redesign of products and service lines to better fit in-home consumption. Shifts in production to avoid interruptions due to logistical interruptions. A reallocation of marketing mix to match new lifestyle habits and buying preferences.
The strategy practice of Kantar utilises a structured, validated framework to identify and forecast demand spaces that match a brand’s profile against the distribution of preferences in the marketplace.
The syndicated tracking work within Kantar such as RetailIQ and MONITOR provides a long-term baseline for identifying unique features and business risks associated with this disruption versus prior disruptions.
The human and cultural insights practice of Kantar can reveal otherwise hidden dynamics and perceptions that affect the standing of a brand during this disruption.
The Kantar Cultural Streetscapes network consists of on-the-ground observers of what is happening in real-time in cities around the world.
Step 4: Minimise business exposure.
- Make hygiene the number one priority for all business operations, including all partners, suppliers, and third-party vendors. Ensure the highest standards of safety, cleanliness, and health across all aspects of operations. Kantar research conducted from late December to early February in Singapore, Indonesia, the Philippines, South Korean, Japan, and Thailand found that consumers now put safety and security at the top of all considerations in deciding what to buy, including categories like insurance and banking. Absolutely nothing is more important than hygiene to minimising exposure to the risk of disruption.
- Put contingency plans in place to ensure against interruptions of supply, labour, transportation, and access to cities. Points of greatest weakness should be given highest priority — these are likely to include workforce safety, raw materials, labour to handle shipping and warehousing, and access to short-term loans for inventory management. Scheduling of work and production shifts will have to be closely monitored.
- Work closely with governmental authorities so that lockdowns can be anticipated. Update transportation and delivery plans accordingly. Add more logistics suppliers for more resiliency.
- Curtail in-person events. Not only do these entail health risks, they are subject to abrupt cancellations due to fast-moving, unanticipated governmental restrictions.
- Cash is king during disruptions. Every aspect of the business must be managed within the overarching need to conserve cash. Only spend on mission-critical priorities and needs. Reconsider deep promotional discounting. Accelerate cash conversion. Assess all factors that could impinge on cash flow and model a range of scenarios to identify the potential impact on liquidity. Sources of instability in cash flow should be addressed and stabilised. No decision should be made without explicit consideration of its impact on cash management.
- At the same time, it is important not to jump too quickly to layoffs and furloughs. Cuts that are too deep are a risk. Strong, motivated talent will be needed to meet this challenge effectively, and the recovery will arrive swiftly when control of the pandemic turns the corner.
- Supply chains must be stabilised. The weakest links should be immediately addressed. Supply that is sourced in areas experiencing a surge of coronavirus cases must be sourced elsewhere in real-time. Lead times should be closely watched. Pay special attention to your suppliers’ suppliers. Critical components and parts should be rationed. Freight capacity should be pre-booked. Manufacturing should be split across plants and locations to whatever extent possible, as well as more forward deployment of inventory. For high-demand products and categories, outsource production. Stop using supply and inventory algorithms that were developed for previous market realities. Support for supplier restarts should be provided. Ensuring long-term resilience and diversification in the supply chain should be made a top-level strategic priority.
- Bottlenecks are a recurring theme in the business situation now facing companies. Some economists even worry that these choke points could become self-perpetuating feedback loops that make a post-COVID-19 recovery difficult, lengthy, and costly. Immediate attention should be given to alternative avenues of supply, delivery, and sale. In many cases, co-investments to build new capacity will be needed. Degradation of quality and hygiene must be carefully watched and avoided. Diversions of inputs and access will be costlier and less efficient. Some cutbacks of production may be necessitated by the need to carefully protect quality and safety.
- Trade negotiations between retailers and manufacturers will be more tense. Interactions are likely to be more transactional and less strategic. This shift in objective will be complicated by a parallel shift away from in-person to virtual meetings.
- There will be dramatic, unprecedented declines in traditional categories of demand. And not just because consumers are staying home, but because many consumers will no longer be drawing a paycheck. Service sector workers are going to be without jobs for an extended period of time. Many small businesses will shutter. Many large companies and educational institutions will be forced to lay off or furlough employees. Anxiety and fear will add another layer to the decline in demand as people hoard savings. There will be no workaround for this. Companies will have to make dramatic adjustments in their offerings to fit a much more constrained demand-scape.
- In many cases, the decline in demand will just be delayed demand. But this is hard to predict. Most observers expect long-lasting changes in consumer behaviour. Staying on top of a potential bounce-back in demand will be critical.
- The Kantar China team has coined the term “Stay-at-home Economy” to describe the new marketplace unleashed by the coronavirus. In this marketplace, there is a new mix of lifestyle activities. Topping the list is watching videos, both long and short. Learning activities are more important, as well as social interaction with friends, relatives, and children. These will be new pockets of demand for brands to investigate.
The retail practice of Kantar has worked with many companies to optimise channel strategies, to maximise the return on trade relationships, and to develop an in-depth understanding of shopper needs and habits.
Our trade optimisation modelling utilises a proven model and real-time interface to realise the highest returns on channel strategies and trade promotions.
Step 5: Capture immediate business opportunities.
- From the experience in China, a number of high-potential opportunities are clear:
- Digital commerce. This is the clear winner from the coronavirus disruption, particularly platform apps like WeChat. Categories with low digital penetration have been forced to shift in that direction. Beyond retail, this means a greater emphasis on digital media, too. This shift will persist.
- Contact-less commerce. This goes beyond digital. Consumers want product and service options that involve no contact by other humans. Some restaurants have already begun to insulate meals from contact by preparers and servers. This will extend to medicine with a rise in tele-medicine. This will affect schooling with a rise in distance learning. This will affect fitness with a rise in livestreaming training and exercising. And so forth.
- Vending. Closely tied to contact-less commerce will be vending that provides a new form of retail and delivery by offering consumers a way to browse and buy without the health risks associated of in-store interactions. This has potential in a number of categories.
- D2C. As consumers look to avoid public situations that expose them to health risks, direct-to-consumer platforms will become more popular. In a related vein, physical malls are likely to suffer as online malls become more sophisticated and experiential.
- Social engagement. There was growing interest in more social engagement prior to the coronavirus. Social distancing will increase the need for social connection and social interaction. This will increase the demand for robust video-calling platforms as well as higher speed internet connections. This will be the catalyst for more livestreaming events such as online gaming and online physical fitness activities.
- Deliver entertainment. Basic goods will continue to be in demand, albeit at lower levels. Many other brands will fall out of the consideration set entirely, but these brands can still engage consumers with various kinds of entertainment, particularly short-form videos. This is basically a boost in content-based marketing. This is new ground for many brands, but it is now essential for staying visible with consumers.
- Brand reputation. While many brands will be unable to jump into many of these new opportunities, they can still boost their long-term prospects through reputation-building. Now is an ideal time to invest in strengthening goodwill and trust.
- Purpose. Kantar foresees the future of marketing as the Era of the Public in which consumers will expect brands to assume more responsibility for building a better society. The coronavirus is ushering that era in more quickly, particularly with the weak response of many governments to this threat. Companies must move fast in this direction.
- There will be many opportunities for brands willing to think outside the comfort zone of business as usual. As it is described by Kantar, growth will now be found in uncomfortable places.
The trends and futures practice of Kantar closely tracks breaking shifts in demand and values.
The strategy practice of Kantar is experienced in locating new demand spaces for brands in rapidly changing marketplaces.
For media, Kantar offers close modelling and evolutionary tracking of media spending with audience usage and engagement.
Step 6: Monitor and update in real-time.
- Stay up-to-speed on the status and location of coronavirus outbreaks.
- Keep track of employee health, with constant reminders for employees who feel sick to stay at home. Make sure that support resources are accessible and helpful. Provide employees with training and coaching on new ways of working.
- Stay current on governmental restrictions and regulations.
- Maintain strict oversight of cash management.
- Closely monitor the changing retail situation in local markets.
- Step up competitive surveillance to stay closely connected with category activity and its impact on consumer expectations and perceptions.
- Increase the frequency and depth of consumer tracking. Attitudes will matter more than behaviours in this environment because behaviors will be constrained by broader restrictions. Pay special attention to sub-groups, particularly vulnerable groups that may have very specific perceptions and needs.
- Monitor how people are adapting and innovating in order to cope. Track changes in product usage. Look for evidence of lifestyle shifts that represent permanent breaks with past habits. Expand the field of view to include things happening in other categories and other geographies.
- Track the progression of the coronavirus outbreak in other markets to get a better idea of how commercial evolution is progressing and what early opportunities for recovery will be available.
- Simulate and then plan against potential outcomes. For finance, run business outcome simulations. For operations, run contingency planning simulations. For marketing, construct alternative futures scenarios. Prepare for worst-case scenarios.
Our Brand Health Guidance offer provides continuous monitoring of key brand metrics and consumer attitudes and behaviours.
Our global consumer panels provide in-depth, ongoing tracking of consumer shopping and buying behaviours.
The RetailIQ and MONITOR services of Kantar provide regular updates on consumer shopping and lifestyle preferences and values.
The health practice of Kantar is constantly monitoring the status of health needs and medical responses.
Kantar also provides ongoing tracking of media spending and audience size.
Step 7: Plan now for the recovery.
- In a business disruption, companies are focused primarily on immediate needs and priorities. But they must keep an eye on the future as well. The recovery will arrive with as much speed as the coronavirus.
- Perhaps the biggest lesson of COVID-19 is the fragility of supply chains. As the recovery takes hold, companies must take a second look at the resiliency of their production and transportation networks. In the Kantar survey of business leaders in China, only the decline in offline store traffic was cited as a bigger business challenge during the coronavirus outbreak than production and logistical disruptions. As a result, developing new channels is the number one priority for these business leaders in their post-pandemic business planning.
- The shift of consumption to online channels has been significant, and a confluence of factors will make this a lasting shift. Expanding online presence will be a key step in preparing for the post-pandemic marketplace. Omnichannel will remain important, but the offline component is likely to be less important than before. Experiential retail will have to rethink its entire model of engaging with shoppers.
- Companies must adjust their planning to take stark marketplace disruptions more seriously. These are often referred to as Black Swans but that is misleading because these are not events so unlikely that they cannot be predicted. Disruptions like the coronavirus pandemic are not unpredictable. In fact, a pandemic exactly like this one was forecasted to happen by the Kantar futures team, and clients that incorporated this scenario into their business planning have been able to grow during this disruption. If manufacturers of hand sanitizers had built a scenario like this into their planning, they would not have missed out on the sales they lost from constant out-of-stocks during the spike in demand.
- Future planning is not just about disease pandemics. It’s about disruptions of all types — terrorism (9/11), financial (2008), disease (COVID-19). For a long stretch after the end of WW2, these sorts of disruptions were less common. But the evolution of the marketplace has returned to normal, and normal is disruption. This is the reality that companies must adapt to and plan for in the future.
The futures practice of Kantar offers senior-level strategic guidance through scenario planning and management consulting.
The analytics practice of Kantar specialises in predictive model and outcome simulations to project future likelihoods and returns.