Pivot or Perish: Success Strategies From the Pandemic
When the COVID-19 pandemic began, in-home eating demand surged. On cue, PepsiCo launched two direct-to-consumer websites — PantryShop.com and Snacks.com — to meet the shift in demand enabling buyers to order PepsiCo and Frito Lay products directly from the company. This feat was accomplished in barely four weeks with a minimalistic site design and a setup for fulfillment and last mile delivery. In a similar fashion, hygiene and personal care brands such as Unilever and P&G prioritized their surface cleaners and personal hygiene products over items like skincare that had sliding demand.
While many companies managed to stay profitable while retaining customers, not every enterprise could balance the pandemic and maintain growth. According to a McKinsey survey, 79 percent of executives surveyed believe that the pandemic is likely to have a lasting impact on their customer needs in the next five years. In the same survey, less than 30 percent of respondents indicated that their companies can address that change and sustain profitable growth. Only 10 percent felt that their companies were equipped to pursue new growth opportunities, including the adoption of the inorganic route.
Consumers are cautious to step out of their comfort zones and pick up their previous shopping habits. High-touch industries like retail, consumer packaged goods (CPG), travel, media, and education have faced the brunt of this behavior shift. With toplines declining and cost pressures mounting, innovative companies looked beyond survival by tweaking their offerings and even pivoting their entire business model. For these businesses, the change involved establishing new employee roles by using consumer-centric thinking and industry analytics.
Pivot 1: Revenue Growth Strategies
Every consumer-facing company offers a product (retail, CPG, manufacturing) or a service (media, telecom, utilities, banking) as its core offering. Historically, we've seen product-focused companies offering a service like free home delivery or installation services as promotions to incentivize shoppers. During the pandemic, these promotions served as a way for companies to differentiate between products. Gas station Shell offered home delivery of essentials using local delivery partners or free car washes and oil changes as a service to its customers.
During the onset of the pandemic, frontline workers faced shortages of personal protective equipment (PPE). Apparel companies began producing face masks and PPE to fill the demand. Hanes retrofitted factories to produce millions of masks each week. GAP Inc. launched a B-to-B product program focused on offering large organizations high-quantity reusable cloth face masks for employees returning to work.
Several major airlines, including SWISS, faced uncertainties when ticket sales plummeted. To get grounded aircraft back in the air, the airlines shifted to cargo services by modifying some of their passenger planes for the short-to-medium term. In fact, Lufthansa has gone ahead and named it “preighters.”
By using the same technology in innovative ways, companies opened opportunities in other industries to create new growth avenues in the mid to long term.
Pivot 2: Customer Experience Strategies
While offering innovative but easy to implement solutions is one way to pivot, some companies focused on experiential offerings to bring customers back and enhance engagement to gather useful behavioral data or generate brand recall. Walmart announced two new experiences to help families make memories together with “can’t forget” experiences. The first was a free star-studded virtual camp that brought the fun directly to customers’ own backyards. Walmart hired celebrities to serve as virtual camp counselors and keep participants entertained through interactive videos. The second was a drive-in movie theater tour that transformed parking lots into outdoor cinemas.
The ingenuity and innovation extended not just to corporations, but to governments, communities and even individuals — sometimes working altogether. Airbnb re-examined its business approach with its community of property owners by offering them a way to connect to their guests. Now, Airbnb hosts can offer online events around cooking, yoga, art therapy, magic, etc., which users can join for only a modest fee. This evolving approach helped Airbnb transition from a business model that facilitates a connection between hosts and guests to a more lasting and multitouch lifestyle platform.
Telecom companies like Jio and Airtel offered annual subscription packages of over-the-top (OTT) platforms along with SIM card registrations to acknowledge the massive rise in streaming. Williams-Sonoma added a host of services and functions like virtual chat and enhanced virtual designs, which helped the retailer maintain its margins compared to other competitors.
A Way Forward: The Disruption Strategy Matrix
What is it that all these companies did differently? When we distilled the actions of the global corporations that pivoted to the pandemic, we found some distinct patterns emerging along two dimensions — were the strategies built around products or services? Were they focused on revenue growth or customer experience? When we plotted the strategies along these two axes, the resulting Disruption Strategy Matrix illuminated the strategic moves from these companies that offered either new products or new services to drive revenue growth or enhance the customer experience.
Disruption Strategy Matrix
As businesses are working to thrive despite the pandemic, what are the options viable for you to adopt? Aligned to the above matrix, here are three strategies:
- Clarify your objectives. Are you looking at fueling revenue growth (or minimizing shrinkage) OR providing your customers with a unique experience to stay in touch with your brand?
- Assess your capabilities. Which current capabilities and skills can you leverage to offer a new product (e.g., face masks) or service (e.g., waiters at table-service restaurants doubling up as home delivery personnel)?
- Test and iterate. Beyond cultural nuances, many challenges and opportunities could be local, regional or country-specific based on lockdown rules or spread of the pandemic. A drive-through COVID test offered by a pharmacy in the U.S. may not have many takers in places where public transport is preferred (e.g., London or Tokyo).
These cases are replicable regardless of a business’s current positioning, country of operation, scale or customer base. Consumer behavior and engagement with products, brands and channels have evolved so much that innovation is crucial to deliver results. When organizations are agile and flexible, they can swiftly augment their offerings or, if needed, completely pivot as well.
Many businesses that couldn’t keep up with the constraints of the pandemic lost out. Not just on growth, but also on customer loyalty. The companies that weathered COVID-19 anticipated change, clarified their core competencies, and kick-started their innovation pipeline. The lessons from creating unique experiences and offerings should prepare them for any shocks down the road.
Gopi Krishnan is the global head of industry domain and consulting services practice for consumer at Wipro, which serves clients in a range of consumer-focused industries including retail, distribution, transportation, CPG, agribusiness, new age, media and education, travel and hospitality, and public sector.
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Gopi is the global head of Industry Domain & Consulting Services practice for Consumer which serves clients in a range of consumer-focused industries including Retail, Distribution, Transportation, CPG, Agribusiness, New Age, Media & Education, Travel & Hospitality and Public Sector. He has 25+ years of industry experience as a practitioner and leader across various functions of Supply Chain, Retail and Logistics around consulting, implementation, program management and practice leadership. Gopi is responsible for delivering better business outcomes and measurable impact for clients through Industry/Domain competency and Business Consulting offerings. He is part of the Wipro senior leadership team. Apart from enabling change with customers, Gopi is devoted to the cause of content-driven differentiation and influence-based leadership in the corporate workplace. He is an acknowledged thought leader with over two dozen publications to his credit, with retail, omnichannel/supply chain and business management being more frequent.