2020-08-10

Speeding up the structural change? – An interjection!

Speeding up the structural change? – An interjection!
 
Author:
Managing Director Media Concept Schweiz AG

In the beginning of March 2020, many economic research institutes predicted far reaching structural changes in the commercial landscape. Our “green sector” was supposed to experience this as well. What happened to these predictions? Where do we stand after almost five months of this Corona-state of exception? Will this virus be an accelerator of structural change? Please find an interjection in our blog…

The last five months and also the time ahead can be classified into four stages which we’d like to have a look at from the point of view of an entrepreneur:

Etappe 1

Stage 1: Enforced freezing
After the lockdown, the companies were busy defining their own path for the next few days. The sales activities at the point of sale had to be "frozen". You could see the shock in everyone’s face. What about the ongoing costs for staff, rent, etc.? How do I apply for short-time work? The customer and the generated sales were out of focus for one or two weeks. Corona left lasting traces in this initial phase.

Etappe 2

Stage 2: Online runs by itself
The end consumer rushed on the online offers and the delivery services can hardly provide enough capacity. Some online retailers have to take their shops offline on a daily basis because they cannot cope with the large number of orders. The sales figures for high-priced goods such as household appliances and garden articles are growing in double digits. At the same time, the textile industry experiences a disaster.

In our “green sector”, companies that already operate online shops have an advantage. With pick-and-collect or collection offers, many companies are able to generate at least 10-20% of their usual turnover in the lockdown phase. Many decisions for online activities are made under the pressure of Corona. It is invested in web shops and websites. In the online sales world, “no stone is left unturned”.

Etappe 3

Stage 3: After the lockdown - the return to stationary retail
Many retailers of seasonal items complain about full warehouses and offer their goods at high discounts. This doesn't really help, because e.g. in Germany, shopping is only allowed with a mask and not everyone is in the mood for a long stroll with this “fashionable accessory”. Nevertheless, there is overall satisfaction in the “green sector” with the course of the season. Consumers have available budgets as trips and events have largely been cancelled or reduced. These free funds are invested in the home and garden. The result is good! Our industry benefits in the areas of commercial horticulture and retail.

Etappe 4

Stage 4: The transformation
We want to define the term transformation in two directions:

From stationary to online trading
Will investments in online trading activities increase further? This certainly applies to many areas of retail. Digitization will experience a significant PUSH and this will benefit consultants in the social media area and IT service providers; ultimately, of course, also the companies that sell more.
The trend towards regional shopping and regional products is not a contradiction to online trading. The challenge for smaller companies increases because knowledge and professionalism in online trading must increase.

From uncertainty to security
It would be desirable to be able to say for sure when Corona's influence on economic development ends. This would define the time of transformation from uncertainty to security. However, since there are no reliable assessments, the large number of companies remain in "security mode". Will consumers invest so much money in plants and gardens again in spring 2021? Will you still have enough money in your pocket? Are the boundaries opening again and are journeys fully possible? (... with the effect that less is spent on home and garden).
The duration of the transformation from uncertainty to security is most likely the greatest unknown in the near future.

Summary
We end this interjection with the assessment that everyone involved in our “green sector” recognizes the unprecedented acceleration of structural change. At this point in time, however, you still have no answer - how?

At the same time, we are experiencing a great deal of uncertainty right now when we are thinking about consumer behavior in 2021.

The structural change, which is now accelerating, will have winners and losers. We are convinced that the creative, active and courageous actors will emerge stronger from the crisis and structural change.
Our industry is often described as the “winner of the crisis”. This may be correct «as of today». However, those who boldly invest in the next steps will retain a leadership role. With this in mind, we look forward to many exciting discussions with you, our partners.

 

Author:
Robert Wacker
Managing Director Media Concept Schweiz AG
Robert Wacker has been working in the green industry since 1980. For 20 years, he has been developing marketing and sales concepts for breeders, producers and retailers. As Managing Director of Media Concept Schweiz AG, he regularly writes articles for this blog.