How are businesses surviving the crisis?
Without exception, the months-long epidemic situation has affected all economic operators, directly or indirectly. Some were swept away like hurricanes, others were luckier and their sales skyrocketed. Others have also adapted to the new situation and are just barely staying afloat, trying not to drown in the sea of problems caused by the coronavirus. It is therefore no exaggeration to say that all businesses (large or small) are currently as one, watching and following market trends and hoped-for improvements with a keen eye.
There are companies within certain sectors that can survive on the back of ice. Unfortunately, however, this is not a relative majority in industries that have mostly seen a decline. But what were the areas where performance declined?
Let’s look at how different sectors around the world performed during COVID. ContentSquare’s comprehensive e-commerce research aims to show the changes in online traffic caused by the coronavirus, with:
It will come as no particular surprise to anyone that the industry that suffered the biggest downturn was tourism, with online sales down by no less than 72.9%. Tourism was followed by the luxury goods, jewellery and recreation trade, although the combined decline in these areas has not yet reached that of tourism.
Of course, in some areas the opposite is true. The websites of supermarkets that (also) sell food (e.g. Tesco, Auchan, Kifli.hu) saw a 135% increase in traffic, and the websites of electronic goods retailers (e.g. Extreme Digital, Media Markt) also saw a 128.5% increase in traffic. There was also a significant increase in interest in telecoms and various media surfaces , but furniture and decorative products and sports equipment also saw strong growth during this period.
And when is the situation expected to improve?
No one can say for sure. However, the question is what would count as a real improvement? If the restrictions were lifted, would the economy magically recover?
“Abracadabra, if only the crisis would stop!”
Unfortunately, the situation is not that simple. While I will not draw any huge and far-reaching conclusions about the future, several experts agree that the consolidation period is likely to last for several months after the lifting of restrictions (including Login
on this point).
Some businesses are more severely affected than others, so adaptation is the key to their survival. But how do these firms adapt and what exactly is their strategy?
Adaptation is mandatory!
The ability to adapt in the classical Darwinian sense is not only a key to survival for animals in their natural environment, but also for businesses, in our case in a changed economic environment.
The ability to react adequately and quickly is very important, but opinions are divided on how to react. Based on our own and our clients’ experience, we have gathered the strategies and approaches that are most commonly used by businesses.
Many people are at a stalemate, because although they have been affected by the crisis, they can take one of two paths: they can decide to go ahead (for example, with improvements) or they can choose to be cautious in every decision. In this case, the latter idea dominates.
Some have been specifically forced to cut expenditure and temporarily operate more cost-effectively.
Business is now slow for many firms, orders have dried up and suddenly a huge amount of labour capacity has been freed up. Some people see this period as an opportunity and, rather than minimise spending (say through redundancies), use the time and resources “freed up” to improve areas of their business where they may have been lacking or to address non-prioritised issues that have been on their To Do list for months.
Markestic COVID-19 Questionnaire Results
The difference between the three strategies is striking. Of course, the way we respond depends to a large extent on the industry we are in, the type of marketing we use, and a number of other factors.
However, to get a better understanding of the motivation and thinking behind the choice of different methods, Markestic has prepared a
to find the answers to this question.
One of the central questions of the questionnaire was what strategy businesses are adopting for the next 3-6 months.
As could be expected, the majority of respondents (47.22%) apply the principles of cost-cutting and prudent and cautious operation. A quarter of respondents said they would wait and see, while 19% decided to move forward and develop their company or focus more on areas that have been neglected. Although 8% of respondents experienced an increase in turnover, overall two thirds of respondents experienced a decrease.
Another cardinal question was how pessimistic businesses are about the situation. The question was:
“What are you calculating with? How many months will the epidemic have an impact on your industries?”
We were surprised to find that 74% of respondents thought the economic impact of the epidemic would be felt in their industry for less than six months, and only a quarter of respondents thought the crisis would last longer.
Among the responses, the factors most likely to influence the decline were mostly:
Reduced opening hours
Changes in consumer preferences in certain product categories
Decreased average basket value
Lack of tourists
Lack of face-to-face meetings
Logistical difficulties, transport problems (both buying and selling)
In fact, domestic and international restrictions have fundamentally changed the supply and demand balance. While demand has increased for some product categories (e.g. pharmaceuticals, furniture, household and home decoration), it has decreased for others (e.g. cars, air travel, accommodation), and restrictions have also created huge logistical challenges for general sourcing and transport solutions.
“Looking back, what would you focus on more in online marketing?”
In response to this question, more than a third of respondents said they would spend more resources on online marketing or on strengthening their company’s online presence, or on social media (Facebook, Instagram) and search advertising (Google, Bing).
With many businesses forced to operate exclusively in the online space due to the Coronavirus, many may be realising the potential of digital marketing and the shift to online operations.
In times of crisis, the joy in the void is that there is so much to rethink for individuals and companies alike. Starting with cost structure, day-to-day process management, business focus, chosen strategy.
Obviously, digital agencies can and have chosen different strategies in these weeks.
Everyone has probably experienced customer losses and contract cancellations during this period. We at Markestic responded by running forwards.
We’ve added new business legs to help our existing and future partners in more areas. Whether it’s wordpress, email marketing or even reporting automation.
We have opened up to strategic partnerships to cover areas of knowledge that we do not have in-house.
We have increased our focus on foreign projects to reduce country and exchange rate risk as much as possible.
We are focusing more actively on targeted customer acquisition alongside organic growth. While many have put on the brakes, a good number are also looking forward and are now strengthening their online presence.
Although Markestic is not included in the list of respondents to the questionnaire, it is perhaps worth mentioning that our team has adopted the development strategy.
And why did we do this?
We believe in healthy competition based on competence and we believe that the post-crisis period will be even more competitive than the current one. We have therefore concentrated our efforts on improving and refining our work to provide an even better and wider range of services to our partners.
Was the man with the chips right when he said that there really is nothing left of the good old days…?
You could say it’s easy dancing for the lucky ones. However, the businesses that have grown have not only grown because of changes in demand caused by the crisis, but also because they have provided the right online outreach (Website, Facebook/Instagram page) and used search and social advertising to drive traffic.
It can be seen that, although there have been declines in some areas and increases in others, it can be argued that the industry balance has changed completely (albeit presumably only temporarily).
What’s more, the situation has forced businesses to shift to digital operations, so driving traffic online has become key. Although there were a lot of negatives to the situation caused by the Coronavirus, it did highlight that online presence and advertising can be a lifesaver in times of crisis.
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