Pandemic lockdown: time for a business model refresh?

By Dr. Gordon Fletcher

COVID-19 continues to draw out the creative, humorous and innovative side of individuals as a panacea to boredom . At the same time many businesses have been busy reinventing themselves by introducing innovations and even entirely new business models. CovidInnovation.com is endeavouring to track these new ideas and responses to COVID-19 as they emerge.

Considering these innovations by category reveals some interesting trends and offers insight for every business irrespective of their (current) sector as they negotiate the current situation and prepare for the volatile and complex aftermath.

Apparel & Fashion

Retailers of fast fashion on the high street have been hit hard by the lockdown. Up the supply chain the apparel wholesalers are also feeling the pain. Business in this sector are producing a variety of responses. Some have simply moved more heavily to an online offering. But the more innovative have added further value to the online offering by letting consumers customise their own products or by adding the services of a personal stylist.

The rise of the sharing economy can be seen with a number of brands donating items to key workers for every consumer item that they sell.

The biggest change for the apparel sector is the introduction of an entirely new item – the face mask and its sturdier cousin, the face visor. Businesses are developing new ways of manufacturing and finding new materials (including ‘smart’ fabrics) for these items. This also means that some businesses are also entering an entirely new sector for them – even it only temporarily. Of course, the face mask is also not immune to the customisation trend by selling masks with consumer prints and messages.

Architecture

Architects are already planning for a post-lockdown world. The expectation is that social distancing will continue for an extended period of time and even permanently in some form. This does not require a new business model for architecture but rather new design principles. Their challenge will be to design public space where the human need for being in a group can be safely achieved while also keeping individuals separate and safe. A quick examination of any public space reveals how this has not informed previous thinking. The early signals are designs with lots of transparent materials and greater attention to the use of the home space as a longer term work space.

Automotive

As fuel hits its lowest retails prices in decades and the decline in personal travel has brightened the skies and improved our air quality the automotive sector has undertaken a repurposing of its role in the economy. Many of the manufacturers are currently building ventilators. It turns out that pumping fuel into an engine to generate forward motion is a similar technology to keeping a pair of human lungs functioning. Others have made use of their existing fleet to deliver essential items or turned over their properties for use as a field hospital. The challenge for the sector will come after the lockdown. The car manufacturers will face the potential choice of trying to convince everyone back into their cars or by recognising the many potential new and useful applications of their intellectual property and technologies will they explore entirely new sectors? The saving grace for the automotive sector may be the return of the drive-in theatre, drive-in disco or drive-in concert. As portable social distancing devices, the primary purpose of a car may be re-imagined as a safety unit rather than for transport. That is also a challenge to the architects.

Beauty & Wellness

The beauty and wellness sector are at a crossroads with lockdown. With people stuck at home the need to put on makeup, stick to old haircare regimes or even maintain a regular shower routine has declined noticeably. For a sector that benefits from many of the technologies also found in the healthcare sector many business have found a response in moving more consciously in this direction towards the production of sanitiser and other health consumables, mental health support or protective wear.

Construction

Although construction has continued on some sites during lockdown there has still been an overall decline of activity. The construction sector has, however, picked up on a longer term trend to support the immediate demands for higher levels of medical support and infrastructure. Modular construction techniques that have helped speed up the build times on projects such as high-rise residential blocks are now being used to create temporary hospitals and medical spaces in the locations where they are needed. One Chinese company has gone even further by 3D printing quarantine rooms within a hospital to meet this very specialised demand.

Consulting

The consulting sector is surprisingly reliant on traditional face-to-face contact. Some early signals from recent UK business closures during the lockdown also suggests that this is a sector that is particularly suffering. Lockdown has forced a shift from face-to-face to online consulting, tools and guides. There resource have rapidly emerged in recent weeks as accessible and free materials. The shift online has unexpectedly also changed the business model of consulting temporarily to the use of the freemium. The hint in this approach is that these consultants are planning a rapid return to their previous practices post-lockdown. Whether their business clients will also be willing to simply move back to this previous business model is much less certain.

Education

From the primary level through to higher education there has been a collective rapid ramping up of the skills needed to deliver teaching in a virtual environment. Some governments have recognised the challenge of home-schooling primary aged children by attempting to ‘train the trainer’ – the parent delegated teaching responsibilities for the day. With people furloughed or temporarily laid off the employees of some companies have been helping stressed parents by acting as a remote teacher. Home-schooling has also taken on a wider meaning with other businesses using the time to educate children about how to do more mundane chores around their home. With a much broader spectrum of people suddenly developing their expertise in video conferencing and other online learning tools the classroom, seminar space and lecture theatre will probably never be the same again.

Electronics & Robotics

In the technology sector there has been less a need for new business models as a demand to accelerate existing projects. Drones, robots and tracking apps have all suddenly gained a further reason for being. Drone deliveries have moved from being a niche application to a legitimate solution for short-distance logistics in an era of social distancing. Where robots were previously seen as a poor second choice to human interaction they are now often the more desirable option. National governments are sanctioning the widespread deployment of tracking apps in order to identify the source and spread of infections. As is often the case with the technology sector, many of the solutions now being offered were already well-formed before the questions were even being asked.

Financial Services

Funding is at the heart of finding a vaccine for COVID-19 and many financial services business have been using their networks to enable public donations to reach the projects that most need it. Businesses affected by enforced closure during lockdown are also finding support through crowd-funding networks. A longer-term trend in the financial services sector has also been accelerated during lockdown as more people find payment alternatives to cash. There is already evidence that the decline in the use of cash in the UK since the beginning of the year has reached a point that was previously predicted to occur in 2025. An unexpected outcome from the lockdown will be an increasing rarity of cash machines.

Food & Beverage

Food and drink have been prominent during lockdown. Alcohol consumption has increased and the pressure on supermarket supply chains has come under scrutiny. Similar food waste reduction charities such as Fareshare have also been more prominent for the ways they are supporting the vulnerable and key workers. The takeaway food gig economy has surged as, for example, upmarket restaurant explore delivery services. Craft brewers are exploring direct sales to their most passionate fans as their usual outlets are temporarily shuttered. Food and beverage companies have also recognised their usual items can be supplemented at the point of delivery with denser and longer form print materials such as quiz night kits and boredom buster guides. There is no one theme of innovation in this sector but rather the broader recognition of the important (strong and essential) link people have with food and drink – and their brands – and how this can be supplemented and infused with additional value.

Health & Fitness

As with technology, the health sector that has had to focus its attentions rather than shift its business models. Earlier projects around disease control are now concentrated on tackling COVID-19. Tools for screening and detection including trained sniffer dogs are now well-primed for tackling the virus. In the urgent need to balance out the excess consumption of food and the drink the fitness sector has re-discovered the televised aerobics workout (Mr Motivator? Jane Fonda??). But post-lockdown the gyms will be now competing to regain the attention of a nation full of newly discovered runners and cyclists.

Home & Garden

While everyone is at home (and for the lucky one still working) this space has redoubled its importance as the hub for reinforcing our own wellbeing as well as that of our neighbours. Individuals are finding ingenious ways of connecting themselves with people who live only metres away. Some businesses are also exploring these opportunities by, for example, enabling online street parties. Hyper-pampering and extra-protection are the order of the day for home innovation from online personal coaches to hygienic door handles. These are innovations that will survive post-lockdown and only continue to expand.

Information Technology

In the IT sector the name of innovation has been platforms. New platforms are being delivered for any combination of categories that build communities around protecting against the virus or responding to the consequence of the virus. The challenge is to get the right people to connect through the right platforms. Many of these platforms will remain relevant for only short periods of time but in many ways building and disbanding focused project teams is what the Web was originally designed to deliver.

Marketing

Marketing is ultimately about persuading people and changing behaviours. COVID-19 has produced a type of solidarity in this competitive sector as agencies seek to encourage the key changes in behaviour that will minimise the casualties of the virus – social distancing, wearing a mask, working from home. As a competitive sector there has also been a wide offering of free support and advice to small businesses to help them weather the hard times of lockdown. As might be expected even in the worst adversity there is always humour. Most notably the Singapore Tourist Board has covered over its iconic Merlion statue as, in line with most of Singapore, it is now working from home.

Media & Entertainment

Streaming media services are in peak demand and debates rage as to the best box sets to watch and which classic films to finally catch up on. Somewhat more modestly museums and lifelogging apps are seeking to capture a snapshot of life in lockdown during the COVID-19 pandemic. Few historic moments are of such significance or duration to be able to be intentionally captured live and there has never been so many recording devices simultaneously on. Hopefully we can all turn away from watching Ozark, Tiger King or Gangs of London to be able to contribute to this collective memory.

Retail

The challenge for retail is one that has been present for many years. Getting the shopping to consumers rather than the other way around. This thinking has seen the introduction of home delivery services by every major UK retailer. Yet current demand shows this scale of provision still falls short of demand with long queues at the physical supermarkets. One response has been the creation of apps to find any available delivery slots across all of the retailers. Some retailers have turned the floor space of conventional supermarket into fulfilment centres. Other apps are connecting consumers to more local services, markets and suppliers. The scale of activity in this sector hints not so much to a range of successful innovations but rather a desperate need to find more improvement in the entire business model of retail.

Transportation

In a similar way to the food and beverage sector, the importance of transportation has been highlighted during the lockdown. Innovation has similarly come in many forms. Passenger transport that is still operating has recognised its capabilities to convey additional information and messages. Similarly the categories of tickets have been revisited with key workers on some systems travelling for free. Other passenger services have moved to transporting goods. In effect, their innovation is to reverse the flow of peoples to goods by taking the goods to the people. The transport sector has also recognised its role in helping to screen people for symptoms as an integrated aspect of buying a ticket or checking-in.

Travel

As one of the most affected sectors Travel has also proved its ability to whet people’s appetites for post-lockdown freedom. Virtual reality technology and the ability to experience theme park rides, world heritage sites, museums and parks have all become options to ‘get away from it all’. Hotels have discovered a world beyond its four walls by offering room service to residents in its neighbourhood. Hotels have also become (temporary) homes for the homeless and temporary offices for home workers struggling to work at home. The Faroe Islands has taken things one step further by enabling visitors to its tourism website to remotely ‘control’ a resident around an island. The share the experience with a video stream. As with the innovations in Home and Garden these are all innovations that will almost certainly continue after lockdown.

If you have any comments on this post, please contact us. You can also get 20% off the Strategic Digital Transformation book and find out more.