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17.04.20 Weekly Business Briefing

Harriet Nicholson
Harriet Nicholson
Head of Strategy 17 Apr 202011 minutes read

A round-up of the most important insights and what they mean for your business.

cut through the noise

With the news cycle on hyperdrive, we know it’s difficult to stay on top of the Covid-19 latest. It’s even more difficult to unpick the significant insights for your business. The Business Briefing is your one-stop shop for the most important insights, with valuable analysis and opinion from our Etch experts. We’ll take you through this week’s latest on the economic outlook, emerging consumer behaviours and the implications for organisational and cultural change. 

WEEKLY DIGEST

Welcome to the latest Etch business briefing. In this snapshot of the week, we wade through the melee of Covid-19 updates, articles and thought pieces so you don’t have to.

Preparing for longer-term social distancing and economic fallout

In a week that has seen several European neighbours ease some social distancing restrictions, Britain’s lockdown has been extended for at least three weeks. Although England’s Chief Medical Officer, Professor Chris Whitty, has indicated that we’re nearing the UK’s peak, don’t expect the wheels of commerce to start spinning at pace again any time soon. A paper published in the journal Science this week predicts that social distancing measures may need to be in place intermittently until 2022.

This week saw some dire economic warnings from the Office for Budget Responsibility (OBR) and the International Monetary Fund (IMF). The OBR warns that Britain’s economy could contract by 12.8%, with joblessness hitting 10% by the end of June. Comparatively cheery in comparison, the IMF forecasts that the ‘Great Lockdown’ will see the UK economy shrink by 6.5%. They predict the global economy will contract by 3% this year, with all major advanced economies plunging into recession. This would make the ‘Great Lockdown’ the worst global decline since the 1930s Great Depression.

When pressed on the anticipated shape and nature of post-crisis economic recovery, former Bank of England Governor Mervyn King replied, ‘In honesty…we don’t know,’ on BBC Radio 4’s Fallout: The Global Economy programme. According to show’s analysts, the UK’s future economic outlook depends on the nature of the crisis, the success of social distancing, the availability of a vaccine or treatment and the effectiveness of the government’s policy response. That said, any hope of a very rapid economic ‘bounce back’ is probably over-optimistic. Recovery could be protracted, with sectors like travel and hospitality affected for much longer periods. Social inequality is likely to deepen, with social distancing measures disproportionately hitting lower income earners’ ability to work. The Economist’s Editor-in-Chief forebodes that the economy after Covid-19, ‘is not going to be the same as the economy before Covid.’

Understanding rising personal financial fears and anxiety

Anxiety is mounting as UK consumers grapple with financial worries, health concerns and weeks spent in social isolation. According to GWI, 46% of respondents are worried about their country’s economic situation. According to Brandwatch, one in three work social posts this week have discussed unemployment and related challenges. They are growing calls to waive financial fees, not least for late mortgage and credit card payments. ‘How to claim 80 percent of wages’ is the second highest ‘how to’ Covid-19 question trending in the UK on Google this week.

In a position paper published this week in the medical journal The Lancet, psychologists and psychiatrists described the potential impact of the pandemic on mental health as ‘profound’ and called for more urgent research into the crisis’ psychological effects. The rising anxiety is reflected in consumers’ digital behaviours. Over the last month, Google searches for ‘free mental health courses’ have increased by 300%. Last week, meditation app Headspace recorded a 19 fold increase in active users. Amid the pandemic, mental health app Clarity has launched to track moods and connect users with cultural events, while personal care brand Hims and Hers have just started offering free online group therapy and guided meditation sessions. 

Providing comfort through nostalgia

Under heightened anxiety, deprived of agency and control, we’ve noticed an uptick in consumers taking comfort in nostalgia. Data from music streaming service Spotify reported a 54% increase in users creating nostalgia themed playlists between April 1-7th. Music from the 1950s saw a larger increase in listens than any other decade. According to market research firm NPD Group, sales of boardgames and jigsaws soared 240% in the first official week of lockdown, with traditional titles such as Monopoly Classic, Cluedo and Scrabble emerging as firm favourites.

This nods to a behaviour that we saw during the 2008 banking crisis, where consumers sought comfort in childhood memories and a rose-tinted past. Consumer brands capitalised on this with great gusto. Burton Foods went so far as to relaunch Wagon Wheels in older, iconic 70s packaging. Premier Foods released its ‘Go on lad’ campaign, a cinematic love letter to 122 years of Hovis heritage. Nostalgia affected fashion trends, with Topshop at the time noting increased appetite for ‘English vintage’ looks. Nostalgia fosters social connectedness and consumer psychologists have linked that sentiment to higher propensity to spend. As social relationships are challenged under distancing measures, it’s no wonder that consumers are harking back to a more connected past. Given that nostalgia can encourage consumers to part with money under challenging economic circumstances, it’s also no wonder that nostalgia becomes a key marketing play during a recession.

Creating virtual services as standard

With both mental and physical healthcare needs rising and in-person medical visits actively discouraged, we’re witnessing the rapid digitisation of the healthcare industry. Data from GWI this week reveals that 41% of UK respondents would definitely consider using a digital health service. Remote health assessment and consultation technology provider Doctorlink is now available to 11 million NHS patients across the UK. As well as notable examples in mental health, we’ve seen more unlikely healthcare providers embracing virtual technology. Our favourite is Dental Monitoring, which allows patients to undergo remote orthodontic monitoring and assessment via a smartphone. 

Now consumers have had a taste for the heightened convenience of virtual health consultations, the prospect of taking time out of a working day to sit in a doctors’ waiting room seems laughably antiquated. As consumers across every age group become more accustomed to virtual interactions, we see consumers post-crisis expecting virtual services as standard – and we see this transcending remote health services.

While we anticipate rising consumer expectations around virtual healthcare appointments, we also expect heightened expectations around virtual interior design consultations, virtual fashion consultations and even virtual property viewings. As consumers visit museums and zoos from the comfort of their own home, we believe this will change travel research behaviours. Consumers will want to validate their holiday choices by firstly conducting virtual walkarounds of attractions, hotels and restaurants. For a glimpse into the virtual retail services future we envisage, take a look at John Lewis’ Instagram personal styling service, launched this week. Consumers receive free remote fashion inspiration and advice via video call. To register, consumers just need to direct message their preferred John Lewis stylist on Instagram.

Building imaginative workplace cultures

Throughout this crisis, China (notably Wuhan) has been treated as a crystal ball. We look to Wuhan for indications of the effectiveness of healthcare measures, consumer behaviour and commercial performance. An interesting case that crossed our desk this week was Wuhan cosmetic company Lin Oingxuan. Forced to close 40% of stores under Covid-19, the company retrained its store beauty advisors to become online influencers, using tools such as WeChat to engage customers and increase online revenue. Remarkably, the company achieved 200% sales growth in Wuhan compared to 2019.

It's difficult to predict which consumer behaviours will stick post-crisis...

But what is clear is that habits, attitudes, and needs are changing and doing so at remarkable speed. Companies who have the ability to flex and adapt very rapidly are going to be better placed to maintain performance now and accommodate new behaviours and market dynamics in the future. Doing so requires agility, bravery and importantly imagination. Under pressure, it’s easy to dismiss imagination as fanciful, impractical and even a little self-indulgent. But thinking imaginatively, rather than reactively, now about your business’ future and shaping new opportunities can create real commercial value. According to a stellar Harvard Business Review article published this week, in recessions and downturns, 14% of companies outperform both historically and competitively, because they invest in new growth areas. To quote the authors,

We couldn’t agree more.

 [Accurate as of midday Thursday 16th April]

A FEW QUESTIONS TO ASK YOURSELF:

THIS WEEK'S LISTENS AND READS:

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Every day we will be sharing key business insights on our social channels. Each week we will round up our daily posts into a pivotal weekly digest. And if that’s not enough, we’ll be hosting regular webinars to talk through what it means for your customers, your sector and your business. So, keep an eye out on our social channels for upcoming webinars.

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