Fifty years from now, when history books look at 2020, they will have a hard time analyzing the economic data from these pandemic times and the battle Main Street vs Wall Street. How can we, at the same time, have over 30 million unemployment claims due to the crisis started by the coronavirus and have the NASDAQ index with positive returns year-to-date? At first sight, it just does not make sense.
On the positive rebound we’ve seen in the stock market, this is due to the fact that a lot of technology companies weren’t really affected by the quarantine, actually, some became household names during this period, such as Zoom. Another aspect that must be considered is four companies (Amazon, Apple, Google and Microsoft) represent more than 20% of the S&P Index. So, if they are doing well, the stock market goes on the same beat, even if Main Street is struggling.
To understand the impact of these 4 brands on the market, in the first week of May, Amazon published their quarterly results and the stock price decreased 7%. That loss equals the entire market value of a company like Boeing!
On the other hand, in this K-shaped recovery, when we look at the “real economy”, there are many somber economic projections for the coming months. The Bank of England published a forecast that the economy in Britain would fall by 14% in 2020. And we believe the bigger impact is on small and medium-size businesses. On the bright side, the institution also forecasts a 15% growth in 2021, so, as a small business owner, you have to prepare your company strategy to reap the benefits of the economy recovery.
As we mentioned above, in today’s market, technology is king. That does not mean that you should leave your current business that you’ve spent years (or decades) building to try to develop a startup. But you should definitely understand that time has come to embrace technology. Even if your business depends on direct contact with consumers, there is a way, and more than that, there is a need to build a technological structure and store ideas that can better serve your customers.
Take as an example the change in consumer behavior in the food business. For grocery shopping, consumers in large cities that before went to small markets or bodegas, now would prefer to not be in a crowded environment, so they love having the option of making an online purchase in an app or even using instant messaging such as WhatsApp or SMS to place an order, pay with their phone and have their order ready for pickup.
When we focus on restaurants the paradigm shift is even greater. With consolidated delivery aps like Grubhub, Doordash and Uber Eats already in the market, this trend accelerated sharply during quarantine, as people couldn’t leave their homes. Many analysts believe this behavior change is irreversible, at least in the short term, as a large group of people will be afraid to eat at public spaces, at least until we have a more robust structure of testing, tracing and, hopefully, a vaccine.
Regardless of the size of your business, you can expand your online presence from a simple website and social media profiles to an active platform applying marketing strategies for small business that includes shopping, payment, and delivery options to expand your reach. For a bar that will only be able to allow consumers from 30 to 50% of its capacity for the coming months, a great way to recover lost revenue is to create delivery promotions on Instagram Stories linked to sporting or TV events, and serve at home that customer that would watch a game before at your establishment. In addition to diversifying your contact channels, you are maintaining a healthy relationship with customers that will return to your physical store when they can in the future.
Diversified supply chain
Facing the unfortunate reality that many businesses will not survive this crisis, it is important that you analyze in detail your supply chain, to identify any weak links that could leave you without products to serve your customer base. Also, this is the perfect time to do some research and see if other suppliers can offer you better prices or payment terms to give you more flexibility.
If your business sells physical items from other countries, you should really pay attention to economic indicators, retailer data, and trade restrictions. For example, if a strong dollar makes your imports more expensive, you may have to look for local alternatives or adjust your prices for end consumers. Another issue could be additional tariffs on Chinese products, for example, especially in a polarized political environment during an election year.
This also can create an alternative for changing or expanding your offerings, as your research can show trends that you were not aware before. Ask your key customers for their feedback on what they are seeing in the market and they would like you to offer.
The Number (s): 14% and 15%
The Action: The economy has been and will always be cyclical, as well as the battle main street vs wall street. Yes, this pandemic caused an economic crisis like our generation has never seen, but things will come around. So, study the technology options that you can adopt to expand the contact channels with your customers and find other ways to generate revenue. Omnichannel is not a term just for large corporations anymore, your SMB needs to embrace this idea too.