The Speedboat or the Oil Tanker?
Moonpig announced a stellar reaction from investors to its IPO at the start of the month with shares closing 17% up on the initial offer price. This came off the back of a January trading announcement revealing 137% growth as Moonpig and other online players were able to capitalise on changing consumer habits during the pandemic. Elsewhere in the gifting sector, Etsy’s shares continue to boom ahead of their trading announcement at the end of February.
If any reminder were needed of the stark differences in fortunes between digital players and traditional High Street players, in the very same week Paperchase announced it had managed to seal a pre-pack administration deal, fortunately safeguarding 1,000 jobs and Card Factory was given a month’s stay of execution to negotiate with lenders, having announced that it was likely to breach covenants on a £200m bank loan.
This stark difference in fortunes between traditional high street players and the newer digital kids on the block is not restricted to the gifting sector is not alone of course; digital powerhouses ASOS and Boohoo have both set about acquiring the brand assets from the failure of Arcadia and Debenhams respectively. Inevitably this has sparked fresh clamours for the introduction of an online sales tax with rumours suggesting the Chancellor is particularly keen on the idea given the size of the furlough-shaped hole he needs to plug.
Without doubt, online retailers have been in a hugely advantageous position and smaller retailers in particular need support from the treasury in order to sustain a healthy High Street. However, it feels too simplistic an argument to put this trading success down to ‘right place, right time’. This undermines the significant efforts that retailers have made throughout the pandemic to adapt and continue trading safely when permitted and, perhaps more importantly, it masks some of the underlying root causes behind some of the High Street casualties.
A brand like Next has been able to weather the storm more successfully despite store closures due to investment in its digital experience and a constantly evolving offer whereas Debenhams feels like a dinosaur by comparison. Despite losing almost all footfall from its core segment of office workers, Itsu has been able to preserve a revenue stream, benefitting from a 59% rise in sales of its supermarket lines whilst others in the casual dining sector have had no such diversification to fall back on.
Whilst high profile store closures and the inevitable accompanying job losses have rightly grabbed the headlines, it feels right to highlight organisations who have shown huge creativity in adapting to these challenging times. Nothing crystalised this better for me than the recent story of Lou Macari’s homeless shelter. For some reason, the fantastic work Macari and his team have carried out since 2016 to provide shelter for the homeless of Stoke on Trent had completely escaped me, perhaps because he is forever cast in stone in my head as swashbuckling Manchester United player in my Panini album.
However, when faced with the threat of having to close the doors on his shelter when dormitory accommodation was deemed unsafe, Macari worked with the local council to shift his shelter to a warehouse and install individual pods for his residents. The results are astounding – not only has he provided a Covid safe environment but he has simultaneously been able to instil a sense of pride into each pod owner. It’s a truly heart-warming tale of how refusing to be beaten has actually ended up with a better result.
Then there was the story of Huge Ma. Faced with a situation where New York’s vaccine appointment booking websites were failing to function, Ma developed TurboVax in under two weeks, harvesting data from across the three state owned systems and posting real time updates to Twitter. Despite allegedly costing less than $50 to build, the feedback has shown that it provides a far simpler experience than official routes.
In my local city of St Albans, there are countless examples of small businesses being just as entrepreneurial. Our leading gastropub has taken the battle to Deliveroo through weekly cook at home boxes and even partnering with a local comedy night to offer pie and virtual comedy Friday nights. They have even got together with a more conveniently located ‘competitor’ pub to use them as an outlet to sell breakfast baps on a Sunday morning for people out on their daily exercise. For all the McKinsey strategy presentations which those dreadful portmanteaus like frenemy or coopetition, this is innovative partnership in action not in PowerPoint.
They’re not alone of course, our independent charity gift shop opened a website so they could continue selling and raising money for cancer charities whilst the chain stores remain closed. A local independent chef took to Instagram to build an online recipe following and private chef business when his events business and corporate contract fell by the wayside. We’ve seen similar examples at an individual level too - I’m constantly humbled by the various stories of pilots and cabin crew, for example, who have re-trained (often to key worker roles) in order to keep their income going throughout the pandemic.
Whilst it is inevitably easier to be more agile as a smaller business or an individual forced into a stark career crossroads, it is again too simple a characterisation to think that corporates can’t adopt a similar market facing attitude. From my own customer experiences , I’ve been staggered by the wide variation in response across businesses in all sectors. From shops, to banks, to car dealerships, whilst some appear to have shuttered their doors and avoided all communication, others are developing new approaches that will no doubt stand them in good stead after the pandemic. You could even argue this will allow them to rearchitect a better customer journey in the long run - why can’t buying a car be a completely remote process anyway?
Whilst there has been much political debate over the past week over the semantics of whether we need to ‘build back’ or ‘build forward’ after the pandemic, one thing I would hope all sides of the spectrum can agree on is an opportunity to build better. It’s great to see small businesses leading the charge but it will also be interesting to see how many bigger companies can also grab the bull by the horns….
PS I have included links to the local examples - please take a moment to take a look at support these great, local businesses