Every day I read business analysts/academics forecasts for the “New Normal” in their respective industry of expertise. Insightful! However, I anticipate most experts fail to acknowledge how interconnectivity will impact the future of our planet. They need to step outside their industry box and further analyze the “Interconnectivity Impact.”
A great quote regarding our planet’s interconnectivity:
“So, a virus-laden bat bites another mammal in China, that mammal is sold in a Wuhan wildlife market, it infects a Chinese diner with a new coronavirus and in a few weeks all my public schools are closed and I’m edging six feet away from everyone in Bethesda.” – Thomas Friedman (American political commentator/author)
My industry of expertise? The US food-away-from-home channel. When will business bounce back? Great question. I know some restaurant industry optimists believe 2022. When I engage with my peers to better understand the foundation of their predictions, I realize a majority are not factoring in the interconnectivity impact for other areas of economic recovery that will require more time. To name a few:
- Business Travel – COVID-19 Domino Collapse – Miles & Points.
- Hospitality – Delivering safety will be a priority as the hospitality industry reinvents itself. Thanks to social distancing protocol, absolute occupancy numbers will be down. Less guests/travelers equates to reduced foodservice restaurant dollars offsite. On site, the revenue foodservice generated by selling the hospitality industry food & beverage for free breakfast buffets, coffee in the lobby, happy hour, etc. will evaporate.
- Big Cities – As more people continue to work from home and productivity remains sustainable, there might be a shift away from densely populated metropolitan areas (e.g., New York, San Francisco, etc.) to smaller cities. In concurrence, the skilled labor pool might be reconfigured. Consequently, the foodservice ecosystem will be impacted.
- Multigenerational Households – The Pew Research Center reported that in 2018, 64 million Americans were living in multigenerational households, the highest number on record. That number most probably will increase as Millennials and Gen Zers struggling with gainful employment, day care, cost of living, etc. move back in with their parents. Add to the mix seniors not wanting to opt for senior living given a large percentage died from COVID-19 in senior residences. Numerous pandemic research studies indicate consumers plan to partake in more home cooked meals. An increase in multigenerational households will equate to more cooks living under one roof diminishing the need and expense of eating out.
Back in a May post titled The World Ahead? I projected a new world where one size does not fit all. Everything in business, education, entertainment, etc. will be taken apart and put back together in fresh variations. Adapt to the new world. Nevertheless, acknowledge how interconnectivity will continue to impact the future of our planet.
Airline analysts are forecasting a slow revival for business travel. Business travelers comprise 10 percent of all passengers, but account for 55 to 75 percent of major airlines’ profits worldwide. Other travel business lost revenue – lodging, car rentals, food & beverage, etc. What about the impact on family vacations?
What is the correlation between business travel and family vacations? Accumulated frequent flier miles and lodging loyalty program points. Most business travelers revealed they have enjoyed being off the road and spending more time with their family. But, until business travel regains traction again, business people will not recoup the benefits they otherwise would have received for frequent travel during the pandemic. Under normal circumstances, most of these benefits are put against their family vacations. Consequently, another COVID-19 Domino Collapse will diminish family vacations – lodging, meals, rental cars, recreation revenue, etc.
One more COVID-19 Domino Collapse – Disneyland visits!
Kudos to Chipotle Mexican Grill. Known for being a technology innovator, they are leveraging their digital expertise to launch Chipotle Virtual Farmers’ Market. The eCommerce platform will create a new revenue stream for their supply chain partners by facilitating direct sales to consumers. Great move Chipotle. A Cut Above!
I have been closely monitoring consumer behavior throughout the COVID-19 health crisis via numerous sources. For starters, according to the International Food Information Council’s (IFIC), 85% Americans made changes to how they eat. Specifically, IFIC’s survey revealed consumers will no longer rely solely on restaurants for good food – 60% plan to partake in more home cooked meals. Another major shift was a spike in online sales primarily driven by two demographic groups: Millennials and higher-income consumers. They will continue to adapt to the convenience of digital technologies. eMarketer projects 7.4 million new digital buyers in 2020. Bottomline, this is a great time for Chipotle’s suppliers to sell consumers directly via an eCommerce platform.
One closing thought. The COVID-19 pandemic has made our planet look like a shaken snow globe. Everybody is re-evaluating everything searching for the silver linings. Back in late April I wrote about one silver lining, community, community, community – “To build a better world, start in your community.” Innovative community initiative by Chipotle. They will provide the technology resources and cover their suppliers hosting fees for two years. By doing so, they will help their supply chain partners generate new revenue paths, thus stay the course of sustainable farming practices to better navigate the uncharted road ahead through the new coronavirus world.
Chipotle, A Cut Above!
Over the weekend, I was reading an article about the numerous bankruptcies large and small companies are experiencing. Reminded me of an old post (7/2/18) referencing a quote by Donald Rumsfeld as we transform in the New World.
As I gear up for the second half of 2018, this morning I reflected on what has happened YTD – family, business, world turbulence (a.k.a. geopolitics), technology, etc. Candidly, I am trying to make sense of everything, thus reread a quote by Donald Rumsfeld to guide me on the road ahead.
“There are known knowns.
There are things we know that we know.
There are known, unknowns.
That is to say, there are things we know we don’t know.
But there are also unknown unknowns.
There are things we don’t know we don’t know.”
Conclusion: The second half of 2018 will be an unresolved mystery.
So will the unknown challenges of the “New World” where one size does not fit all.
I usually toss the luxury watch supplement I sometimes receive when I purchase the New York Times International. I use my smartphone to keep time. Makes we wonder, who buys and more importantly, why buy a luxury watch. Status? A recent article piqued my interest – Small Brands at Risk.
The COVID-19 pandemic crisis has shaken the fault lines, thus the economic future of almost all commercial sectors. Add the Swiss watch industry to the list. By the numbers: After a decade of growth, analysts are projecting a 25 percent decline in 2020 exports. From January to April, exports were down 26.3 percent by value versus the same period in 2019. The top two markets, Hong Kong and the United States collapsed 83.2 and 86.4 percent respectively. China accounted for one-third of Swiss exports in April for a 16.1 percent decline versus YAG. Detailed below are the key reasons for the COVID-19 domino collapse of Swiss luxury watches:
- Retail store closures.
- Lost sales to top-end brands like Rolex, Patek Phillipe, etc. These brands benefit from solid financing and distribution where they eliminated wholesalers (vertical integration). Top-end brands also have been growing their sales via e-commerce.
- Strong competition from smartwatches.
- The top-brands have resumed their manufacturing returning to normal leaving the smaller brands desperately trying to catch-up to replenish their supply pipeline by summer’s end.
- Reduced travel! Two examples: A.) Analysts project the Chinese will travel less. Consequently, there will be a shift from their spending excessively during foreign travel, to spending their money on domestic purchases with weighty import duties; and B.) The shortfall in Europe’s tourism will result in reduced sales. Note: Think about the COVID-19 domino collapse across the board as a result of reduced global travel.
- Cancellation and the uncertain future of the Baselworld fair, the oldest (103-year-old) and largest global watch show.
How much time will the Swiss watch industry need to rebound?
Short-term, the COVID-19 pandemic altered consumer behavior. In McKinsey & Company’s consumer sentiment pandemic tracking surveys, 2/3’s of consumers indicated they are uncertain of their future; 50% are going to be careful and cut back on their spending. Consequently, marketers are proceeding with caution, while strategizing for economic recovery.
Online marketing gurus (a.k.a. consultants) are posting a plethora of advice on how best to adapt to the new marketing challenges in a coronavirus world. In this post, I chose to simplify the best of their clutter.
- Online sales increased significantly, especially grocery sales during the shelter-in-place phase of the COVID-19 pandemic. Note: Total online U.S. sales increased 25% on average mid-March compared to early March; grocery 100% (source: Adobe Analytics). The spike in online sales was primarily driven by two demographic groups: Millennials and higher-income consumers. This will not be a temporary shift in consumer buying habits as more consumers continue to reduce their in-person activities and further adapt to digital technologies to shop for household essentials, food-away-from-home delivery, etc.
- Online sales represent a plethora of data points about consumers’ purchase journeys. Marketers will benefit from the utilization of AI to mine the new treasure trove of pandemic online data.
- Brands are utilizing social media platforms to communicate their empathy for the stress consumers are enduring during difficult times. They are also finding new ways to support communities and front-line workers (e.g., virtual streaming events). Some fashion and apparel brands are still relying heavily on influence marketing (a.k.a. brand ambassadors). However, moving forward it would behoove smart marketers to solicit UGC (User Generated Content) to best communicate brand authenticity.
Are you prepared to adapt to the new marketing challenges?
I was talking to my brother who lives in Maine. He shared with me the state’s four-stage gradual reopening plan, specifically the impact it will have on tourism and the state’s economy. Reminded me of what is happening here in Cannes without the film festival, a total COVID-19 Domino Collapse!
By the numbers:
- An estimated 28 million tourist visited Maine last summer. Note: State population 1.338 million.
- Total expenditures for tourism, $6.2 billion at last count (2018).
- Tourism supports approximately 110,000 jobs; 16% of the state’s employment.
- Average stay 3 to 4 nights.
Governor Janet Mills announced as part of the state’s recovery plan, a 14-day quarantine for all out-of-state visitors. Obviously 2020 is not going to be a banner year for Maine’s summer tourism. All I can think about is the COVID-19 Domino Collapse that will result. Below are a few potential economic blows:
- The hospitality industry – Lodging revenue, businesses that supply hotel & motels with linens, cleaning materials, etc.
- The restaurant industry – Lost F&B sales, businesses that support restaurants like equipment, cleaning materials, waste removal, etc.
- Local food supply chain – The decline in primary and secondary distributor sales, local signature specialties like produce (e.g., Maine russet potatoes, blueberries), lobster, seafood, etc.
- A reduction in the discretionary income spent on necessities (e.g., groceries, personal care, etc.) by all the unemployed or furloughed workers due to the decline of the three industries mentioned above.
- Recreational rental revenue – Boats, canoes, kayaks, bicycles, etc.
- Tours – Cruise ships, buses, fishing, New England Clam Bakes, etc.
- Camping related revenue – Campsite fees, camping paraphernalia and supplies, etc.
- Reduced outlet sales (e.g., L.I. Bean) in Freeport.
I could go on and on and on. Do you have any Maine tourism dominoes to add to the list?
Moving forward, whenever anyone talks about the macroeconomic crash of a business sector impacted by our current health crisis, like Maine tourism, I will continue to analyze the microeconomics resulting in total COVID-19 Domino Collapse.
Lockdown ends today here in France. Every nanosecond crept by. I ate and drank well, basked in the Mediterranean sun on my balcony, worked, read and wrote. During my lockdown, I was able to regularly engage via technology with family, friends and business peers.
- As the pandemic began to unfold, everyone would share their concern about getting sick, the COVID-19 statistics, social distancing and how the outbreak would impact their personal life. Perspectives about a post-pandemic world were myopic.
- The #1 overused cliché: “It is, what it is” meaning we all have to deal with the COVID-19 outbreak, a challenging, frustrating situation that cannot be changed. Most people indicated we just have to deal with it.
- As the curve began to flatten and details emerged about re-opening the world, people were buzzing about a vaccine being the solution without recognizing the geo-politics, time line and dollars associated with global vaccines.
- Everyone understands we are going to witness major global transformation (social, economic and political) and experience the “New Normal.”
“New Normal?” The definition of normal – conforming to a standard, usual, typical, or expected. A standard day? A typical week? I do not accept the concept of the “New Normal.” Instead, I believe we now live in a “New World,” a world where one size does not fit all. Example: The different ways three countries handled the outbreak – Sweden with herd immunization, France with strict lockdown rules and the United States with mixed messaging resulting in chaos.
Over the past few weeks, I have published numerous posts advocating “to build a better world, start in your community.” As I get ready to leave my apartment later this morning, I am prepared to face the unknown challenges of the “New World” where one size does not fit all.
Recently I posted an article on LinkedIn titled Where is the Silver Lining Ahead? I advocated how the power of community initiatives will lead global transformation post-pandemic. Below are two great transformation tales.
- A Food Waste Tale – Needless to say, being a veteran of the food-away-from-home business, I was appalled when I first learned about the pandemic food waste problem – farmers dumping milk, smashing eggs, letting produce rot in their fields. The reason being their primary market, foodservice shutdown and evaporated overnight. Consequently, they did not have compatible retail size packaging or the proper “go-to-market” logistics in place. Quickly, southeastern grocery leader Publix step up to the plate with a solution. They announced at the end of April they will be purchasing milk and produce in their region to donate to Feeding America food banks. A total win-win: food banks can help families in need of food while farmers receive some financial support during the Covid-19 pandemic.
- A Toymaker Tale – In mid-April, global toymaker Lego based in Denmark, announced that they were going to join humanitarian forces with frontline healthcare workers fighting the Covid-19 outbreak in Denmark. They committed to producing 13,000 face visors a day. In addition, they will be donating half a million Lego sets to children. Community, community, community.
“To build a better world, start in your community.”
Mark your calendar, 3/17/2020 was a significant day in French history. It was the date the country locked down and observed confinement to level the curve of COVID-19. More importantly, it was the day France’s cultural etiquette morphed.
Below, a quote from Thomas Friedman’s New York Times op-ed “Our New Historical Divide: B.C. and A.C. – the World Before Corona and the World After”:
“So, a virus-laden bat bites another mammal in China, that mammal is sold in a Wuhan wildlife market, it infects a Chinese diner with a new coronavirus and in a few weeks all my public schools are closed and I’m edging six feet away from everyone in Bethesda.”
Edging six feet away from everyone in his hometown Bethesda, MD is known as the practice of social distancing. The etiquette of social distancing will vary around the world. However, here in France, 3/17/2020 was the day “Faire La Bise” better known as cheek kissing became extinct.
What will be the significant cultural etiquette change in North America?