Article: Could this be the Perfect Storm… or does the storm have a silver lining? by Richard Burrell
How our industry behaves during the CoVID19 crisis will determine its fate afterwards.
All of us can remember crises experienced in the course of our lives, whether it’s the oil crisis of the 1970’s with its petrol rationing; the brutality of the IRA bombing campaigns in the 1980’s, 9/11,7/7, or hurricane Katrina. But things have changed. Once upon a time, disasters obligingly arrived one at a time with a respectful pause in between which allowed us to recover. Not anymore! Now crises appear in unruly packs, running into each other as one thing follows another. To quote the old UK saying they have been “like London buses, nothing for ages and then they all turn up at once”.
In the course of the last few years we have seen the US/China trade war, Brexit and its surrounding uncertainty, Climate change storms and weather events (which we should have seen coming), the rise of urban terrorism, and now, possibly the most insidious of the lot, the Corona virus: as I write this in London in mid-March the corona virus CoVID19 is sending countries into lockdown and economies and share prices tumbling. One analyst has suggested that the powerful Chinese economy may shrink by 20% or more in the first 6 months of the crisis. An unthinkable prediction only a matter of a couple of months ago. People are dying and even the governments of rich developed countries are struggling to cope.
Back at the end of 2019 the industry in Europe was trying to understand the implications of Brexit with its impact on supply chains and mobility of skilled staff. Climate change was gaining some traction as a serious issue, at least in Europe, although many businesses were dealing with it by studiously ignoring it, or by making cosmetic changes and overselling them. Bush fires had been burning in Australia all year but for many that was a world away. And then came storm after storm with unimaginable levels of rainfall leading to flooding across northern Europe. The world economy felt battered. But it was all going to be OK wasn’t it?
Then in February this year CoVID19 exploded out of China and across the world eclipsing everything that had gone before. I won’t go into detail about what it does to people and countries and economies because we’ve all heard it. By the time this is over, whenever that will be, there is likely to be the recession to end all recessions. Some predict US and European unemployment of between 20% and 30% with all that implies for the retail economy. Supply chains will be chaotic and there will be shortages everywhere. Costs will rise and margins will shrink. And, to put not too fine a point on it, there will be less of us on the planet when this is done with. In particular, there will be less of the older people, and less of the stay at home folks. In other words, less of our customer base to sell to.
Poor supply chain, lower margins, less and poorer customers: It does sound like the perfect storm for the home shopping industry. There will be failures, and it won’t just be small companies who go to the wall.
So, what can we learn from past crises to help us shelter from the perfect storm? And where are the glimmers of opportunity shining from within the clouds of doom?
We need to take account of all our stakeholders when we react to things like this, suppliers, customers, staff, investors. Because we will really need them to be onside and supportive when the time comes to out the business back on its feet.
The celebrated writer and poet Maya Angelou once wrote:
I've learned that
people will forget what you said, people will forget what you did, but people
will never forget how you made them feel.
Maya Angelou
Which means they will remember whether they feel they can trust you. If they don’t that legacy will stay with you forever, like Gerald Ratner’s smug comments about his cheap jewellery business selling “total c**p“, to “idiots” which sank his company; or Hillary Clinton’s comments about “the despicables” in the 2016 presidential campaign.
Some do’s and don’t’s *
Staff will be worrying about whether they have the virus and what will happen if they do. Will they be able to pay the mortgage, put food on the table, how will they cope if they need to self-isolate?
This is not a time for macho management to masquerade as leadership. It is not a good idea to tell staff who need to self-isolate that they are “inciting panic” and will be fired for absenteeism, nor are team members who ask what the company’s policy is if one of them catches CoVID19 “weak and cowardly”. Shocking, but I have heard both those reported from company bosses in London in the last 2 weeks.
Suppliers will struggle to meet delivery clauses and fulfil orders, and they will worry and worry more about when and whether they will get paid. This is not a time to throw the details of the contract at them or they may not be there when you need them again.
Investors and shareholders will worry about the value of their investment and whether the company will survive. They may need to think about making a further cash injection if they have the funds.
In short, we will only get through this and have a business on the other side if we do this together.
But it need not be all doom and gloom. Our customers’ behaviour will have changed in the face of the crisis. They will all be worried about how they will survive the crisis and how they will continue to get access to the essentials. They will need some distractions from the stress and worry that the crisis brings to all of us. They will also be at home more, in some countries under lockdown and curfew, with no option of going out so they will spend more time on-line and in front of the TV.
The home and TV shopping industries are ideally placed to address the needs and desires of this increased viewing time audience. Our companies already have the infrastructure and delivery networks to cater for it and benefit from it.
So, think about your programming, think about what you are selling. Travel goods are out as nobody is going anywhere right now. Entertainment goods are a good plan for customers who are at home with time on their hands. And, of course there is huge demand for cleaning products which have been a staple of the industry for years. It may also be possible to bundle household goods and dry groceries in a way which will grow loyalty among those customers who are finding it hard to get these from more conventional routes.
However, we must resist the temptation to jack the prices up to profiteering levels as has happened in the US state of Tennessee where two brothers have been prosecuted by the state attorney general for “price gouging”: They had bought up as much stock of hand sanitiser across the state and were subsequently offering it on line for upwards of $50 a bottle. The legal action will not be the only problem they have created!
And Finally...
Is this the deepest crisis to hit the developed world since World War 2? Yes, it is.
Is it affecting everyone right around the globe? Yes, it is.
Can our industry come through this? Yes, it can.
But only if we keep our stakeholders and our staff with us and react swiftly to a very much changed and changing world.
Richard Burrell, London UK, March 22nd 2020. In self isolation.
* Please note: The views and opinions included in this article belong to their author and do not necessarily mirror the views and opinions of ERA Global.
Richard Burrell has deep experience in TV and digital retail.
Currently Chair at Holm and previously a member of QVC's senior management for more than 20 years prior to his retirement in 2017, Richard Burrell has deep experience in TV and digital retail in 6 markets across the world. Prior to joining QVC, Richard's career has spanned the BBC, Thames Television and various television news organisations.
Originally an engineer by training, he has also served as a council member of the Digital Television Group (DTG) Since retirement Richard has taken on the role of chairman at digital styling software company Holm (www.myholm.com ) and is also involved in occasional consultancy projects.
