‘Pay attention’, ‘transform’: Pandemic shifts business landscape, strategy

first_imgTopics : COVID-19 has swept through the global economy in an unprecedented way. Businesses have been affected to various degrees depending on the sectors, but the bottom-line tips for survival are: pay attention to consumer behavior and accelerate digital transformation, new reports show.Consumers are staying home more than ever before, forcing businesses to cater to the new stay-home economy and lifestyle. Sectors that require mobility and travel are being battered, such as tourism, airlines and transportation, but businesses that relate to health, hygiene and digital media are booming.“Constant changes in attitude and behavior are unrelenting,” market research firm Kantar Indonesia wrote in its April 14 briefing titled COVID-19 Impact on Indonesian Attitudes & Behaviors: Learning for Brands. “Pay attention and adapt to the changes as soon as possible.” “In times of crisis, stronger brands will prevail,” Kantar Indonesia’s briefing reads. The government is preparing tax breaks for 12 business sectors ranging from manufacturing to food and beverages and tourism and transportation as COVID-19 deals a heavy blow to Indonesian businesses.Read also: COVID-19 impacts across Indonesia’s business sectors: A recapIndonesia’s economic growth is expected to plunge to 2.3 percent, the lowest in 21 years, and under the worst-case scenario it is set to contract by 0.4 percent, according to government estimates. The government is also preparing tax breaks, loan relaxations and cash transfers for Indonesia’s small and medium enterprises (SMEs), which contribute 60 percent to the national GDP.New business landscape: BeneficiariesIn the wake of the coronavirus, there is noticeably higher awareness in relation to hygiene and health, according to consumer activity data gathered by the Mobile Marketing Association. There is also an increase in the consumption of products perceived to be healthy such as fresh food and dairy products, according to a report by McKinsey and Company.More than three out of four consumers are currently focusing on boosting their immunity through more exercise and healthy eating, according to the McKinsey survey of 5,000 people in seven countries in Asia, including Indonesia. The finding excludes consumers in China and Japan.Read also: Consumers drawn to hygiene products, online fitness as pandemic spreads“In the long term the pandemic will serve as shock therapy regarding the importance of health and sanitation. So, customers will tend to care more about their health,” Center of Reform on Economics (CORE) director and economist Mohammad Faisal said.As regional governments in Indonesia implement large scale social restrictions (PSBB), products selling out among customers are not limited to germ-killing products, but also those associated with people staying home. These include personal care and home care such as detergents and dishwashing products, according to Kantar research.“After entering the recovery phase, in 2021, the customer’s focus on basic needs won’t change. But it will take some time for people to start purchasing secondary and tertiary needs outside the basics,” Faisal said.The digital economy, including digital media, is thriving. McKinsey data point to a surge in customers’ use of digital channels to purchase groceries.Online grocery platforms like Sayurbox and TaniHub have seen a significant surge in demand since the government encouraged citizens to stay in. The survey on customers’ intentions shows that the trend might continue beyond the time of the pandemic.Read also: Online groceries thrive as customers avoid supermarketsThe use of digital channels during the stay-at-home period also extends to other platforms such as fitness apps, digital entertainment, work from home software, as well as online education, with as many as 70 percent of customers surveyed in MMA data trying out a new digital category during the pandemic.Research firm Statqo Analytics notes that web meeting app Zoom has seen its number of users jump by 183 percent in March alone, while learning platform Ruangguru saw a 77 percent surge in active users in the same month.“The COVID-19 [pandemic period] is going to shape our future digital economy, because people are forced to adopt and adapt with the current digital ecosystem,” Institute for Development of Economics and Finance (INDEF) researcher Hanif Muhammad said, noting that there will be a speedy digital transformation going forward.The government should gear up for the future digital developments, especially regarding data privacy, digital infrastructure and digital interaction readiness, Hanif added.“This is the first step, whether after the pandemic passes, the online service can still be provided. If the [customers’] experience during the pandemic is pleasant, it’s not impossible that it will continue forward,” Indonesia ICT Institute executive director Heru Sutadi said.Stay home economy: Business negativeThe universal public health advice to stay home, as well as the travel restrictions, is bad news for the tourism and transportation sectors. So far, the COVID-19 pandemic has left tourist destinations across the country empty of visitors, while 1,266 hotels have temporarily halted operations, according to the Indonesian Hotel and Restaurant Association (PHRI).Read also: Tourism will take at least a year to recover from COVID-19 outbreak: EconomistsThe International Air Transport Association (IATA) predicts that Indonesia’s aviation industry might see a 37 percent decline in passenger demand and revenue impact loss of US$6.4 billion.The pressure on the transportation sector has also had an effect on demand for oil, while at the same time, oil prices have tumbled to levels not seen for years because of the pandemic and a price war between Russia and Saudi Arabia.Read also: Jet fuel consumption drops as airlines reduce, halt operations due to COVID-19Meanwhile, the retail sector, excluding grocery sales, is also suffering from the blow. Publicly listed retailer PT Matahari Department Store closed all of its stores in Indonesia in March and April in its attempt to reduce salaries and cope with the impact of the pandemic.Indonesian Retailers Association (Aprindo) chairman Roy Mandey said that the four types of modern retail outlets namely minimarkets, supermarkets, hypermarkets and department stores, would still exist, but he acknowledged that department stores would be hit the hardest by the COVID-19 pandemic.“The retail food sector can’t be merely seen as making more profit [than other types of retailer], because they need to employ extra efforts in their operations too. We have to prepare additional manpower to meet people’s needs through couriers and deliveries,” he said.He said that the pandemic had affected the purchasing pattern for tertiary needs such as clothes and footwear, especially nearing the Idul Fitri holiday, when sales usually surge. The changing pattern of purchasing behavior might further hit retailers nearing the festive season.center_img Apart from paying attention to changing consumer mindsets, behavior and lifestyle, businesses will also need to accelerate digital transformation, strengthen digital platforms and adopt new digital commerce tools, the document shows.The briefing document uses anxiety meters and consumer behavior to track consumers’ psychology so brands can adapt. During the short-term “disruption” stage in which lifestyle changes to quarantine, helping and supporting consumers to adjust are crucial.In the medium-term “confusion and uncertainty” stage of the prolonged lockdown, brands should be a catalyst of productivity, while during the “acceptance of the new normal” phase, they should evolve with consumers.last_img

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