eCommonSense Comment: Q4 2020

Andy Scothern, Managing Director eCommonSense is BMBI’s Expert for Website & Product Data Management Solutions.

Finally, there are signs with the vaccine roll-out that we are coming out the other side. This will create much-needed hope for many builders’ merchants. So what should merchants be doing to emerge in the strongest shape possible and take advantage of the opportunities to make sure that their business thrives during 2021?

Research and case studies examining recent recessions and their impacts on companies help provide the answers. The most interesting findings focus on four areas of difference between success and failure: debt, decision making, workforce management, and digital transformation. The main message running through all of them is that recessions are a high-pressure exercise in change management and those that emerge the strongest need to be flexible and ready to adjust.

During the recessions of 1980, 1990, and 2000, a Harvard Business Review article* showed how 9% of companies didn’t just recover in the following three years, they flourished, outperforming competitors by at least 10% in sales and profit growth. The reason was down to one factor: preparation. Firms that made contingency plans or thought through the possible scenarios, fared best. Those who make deep cuts and switch to survival mode in recession are the slowest to recover.

History shows that downturns encourage the adoption of new technologies, but many merchants are asking if they should invest in new digital technologies when money is tight? One reason is that digital makes companies more agile and therefore better able to handle uncertainty. For merchants, digital creates more flexibility around product and volume changes and, importantly, it opens new markets.

One example that supports this strategy has been the emergence of strong growth in retail spend which is predicted to continue with many households holding excess cash for home improvements as they get ready for the post-lockdown party. Most of this spend has come through online and those with high-performing, optimised eCommerce operations have fared the best.

McKinsey warns that investment in digital transformation can create wide performance gaps between companies. Merchants who fail to invest in digital transformation may find those gaps insurmountable.

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