When are companies restarting their business activities?

As per a McKinsey report of 5^th May 2020, 44 percent of consumers in France plan to reduce their discretionary spending over the next two weeks, compared to 34 percent in Italy, and 28 percent in Germany. The same report says that consumer pessimism is high in countries like Spain, France and Italy while it is less in countries such as China, Germany and US.

In the B2B segment, the effect is profound on commercial airspace, air & travel, oil & gas, fashion and consumer services. On the other hand, the pandemic has benefited industries such as healthcare supplies and distribution and pharmaceuticals while its effect is less in sectors such as telecom and personal and office goods.

With this information in hand, the first inference we can take is that the companies will respond very differently when it comes to B2B vis-à-vis a B2C. In the event of B2C, maintaining the safety and precautions at the end customer touch-point becomes so important that this can be a selling point for the company. Zomato for example gives the body temperature of the delivery person when he is picking-up the parcel. Swiggy provides the precautions that restaurants and the delivery person is taking and uses it as a selling point. Similarly e-commerce companies are also doing the same.

Staple B2C companies like a HUL or ITC does not look like using this safety issue as a marketing tool. They have got core issues to handle such as manufacturing and supply chain. These companies and thousands more that supply the staples across India remain at the core of maintaining the food supply to our citizens. They must have done deep market research to realign their product portfolio as there was news in the market that FMCG companies are pushing high margin products during the lockdown which are considered as essentials. We can assume that the activities in these companies are almost back to Pre-Covid 19 levels. Market Research activities are also expected to pick-up as companies will try to gauge the consumer demand and plan their marketing activities accordingly.

Restarting the industrial and services sector will have a wide variance. The variance will depend on the size and scale of the company, the amount of funds that they can deploy to restart operations, mobility of staff, safety precautions etc. In advanced economies and to some extent even in India, the Government has stepped up collateral free funding at very less interest rate for small and medium businesses. This is helping many businesses from the verge of collapse and helping them to restart their business activities. At this point injection of capital is the single most important factor that is helping companies to restart the wheel.  

A successful restart will require addressing a large number of interdependent issues simultaneously. Some of the core operational issues here is the clarity in decision making and speed of execution. The restart will also depend on some genuine challenges that companies face on the ground. If the company area falls in a containment zone then there may be challenges to make people move in and out.

The key focus of companies lie in regular situational assessments and taking tactical actions based upon them.  Market assessment and taking tactical decisions can make or break a company in this scenario. I am taking a few examples from the Small and Medium Industry in India. A pharmaceutical company with product line-up in areas such as pain relievers, adult diapers and vitamins made a sudden pivot and started marketing sanitizers in large quantities to fulfill the market demand. This immediately led to wiping out the losses that it had incurred during the lockdown. Similarly the agricultural machinery segment both in the primary moving machinery such as tractors and hand tractors and implements such as rotovators are in great demand because of the robust monsoon in India. However, there are instances where I have seen a report in a business news channel that manufacturers making industrial machinery are suffering losses because customers who had placed orders by paying a 10% advance have not taken delivery of the same thereby blocking capital. These are unfortunate scenarios wherein capital injection is the only way out of the situation.  Therefore, companies should have a pulse of the market in order to ensure that they stay ahead of the situation.

A recent Accenture report states 5 very important points on what companies need to do at restart. These are communicating with the workforce with compassion and confidence to help the workforce get rid of their anxiety, care about employees problems, build trust with people and prove that with purpose and turn furloughed workers into flexible workers.

Returning to work will not be as easy. It will not be determined by market demand alone, but by readiness and confidence of employees. The organizational need to reopen will be just one factor. As we move to the new normal employers need to move with confidence but with utmost precaution. There have been multiple instances in industrial areas wherein companies with 100 + employees have been sealed because of a single employee testing positive for Covid 19.  

We are working with SME’s to ensure product offtake and enable them to keep their cash registers rolling. If you are looking for a well meaning report that can help your firm to press the restart button drop in a line at info@intelligentq.co.in