After lockdown business institutions have started functioning in bits and pieces. As the situation around coronavirus pandemic will improve, the government regulations around businesses will dilute accordingly. Right now, the critical thing after lockdown is that the process of running the business as normally as possible has begun. As a result, many business persons have started their operations after lockdown. 

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As the businesses start functioning, there is a possibility that the customer who will come at business after lockdown could be a changed one. The changes in customers may not be visible on the first day or in the first week after the opening. Initially, the priority of customers would be to purchase the things they were unable to do during the lockdown. Hence immediately after lockdown any change in customer behavior will be limited or masked.

The difference in the customer’s behavior will start becoming visible when

(a) The customers have met all of their pending requirements after lockdown.

(b) Their purchasing has come in routine after lockdown.

Then the critical question is, what could be those changes? What should a business person do and should not do in such a time, and what strategy can a business person use to counter those changes? There are many such questions that a business person may have to combat in the coming days and months. In this blog, we will try to search the answers for these questions by trying to understand the following points

• Impact of coronavirus pandemic on the global economy.
• Impact of coronavirus pandemic on India.
• Changes in consumer behavior due to coronavirus pandemic after lockdown.
• Reason for changes in consumer behavior after lockdown.
• Steps and strategies a business person should take to counter the changes after lockdown.

Impact of Coronavirus Pandemic on the Global Economy

No country is untouched due to the outbreak of coronavirus pandemic. Hence we see complete or partial lockdowns in many countries of the world. Because of which the movement in the economic wheel of those countries has slowed down drastically. As a result, there is a slowdown in the economies of all nations. Thus resulting in the recession which at this point of time is not as severe as the great depression of 1930s. Experts believe that this slowdown in the global economy will be there for some more time to come. The declining stock market and the decrease in the price of crude oil worldwide, confirms the fear of experts about the economic slowdown in the international market. 

Impact of Coronavirus Pandemic on Indian Economy

Like many countries in the world, India is also facing a lockdown. The effect of lockdown in India is similar to that seen around the globe. As a result of this lockdown, the economic wheel is moving very slowly. Hence causing the Indian economy to shrink, and it will remain so for some time to come. 

But this is where the similarities between India and the rest of the world end as India will be among the few countries whose economy is predicted to grow by IMF in this financial year. In contrast, the economy of other countries will go down.

So this was the problem that affects the economy at the international and national levels.

Different franchise models explained in this blog

The above mentioned problems in economy lead us to our next point which is

Changes in Consumer Behavior Due to Coronavirus Pandemic & After Lockdown

Now let us understand the symptoms that customer may show due to the impact of economic slowdown and recession after lockdown. The forecasted change in consumer behavior is based on historical anecdotes. First and foremost these symptoms are to be understood completely; otherwise, applying the right solution will be difficult. Secondly all signs are not visible in all the customers, some customers will show some symptoms, and others will display some other. Above all the following symptoms are not in any particular order.

Same Quality in Less Price

 One of the symptom that a business person can encounter is that after lockdown the customer could be interested in getting similar quality at a lower price. Moreover this symptom would make a customer go towards economical brands which it perceives to meet its quality standards.

Less Quantity in One Go 

Another symptom is that after lockdown the customer may not take the same quantity in one go as it used to do in the pre-coronavirus pandemic era. Which means that the customer may start purchasing in small portions. For example, if the customer used to purchase 10 kg of flour earlier, now it would buy 5 kilograms at a time. Such a customer would not mind coming multiple times to match the purchasing with the probable requirement.

After Lockdown Customer Opts for Inexpensive Luxuries

Next symptom that the customer could display after lockdown is that it may opt for inexpensive luxuries instead of regular luxuries. Here the customer may like to experience similar luxurious, which is used to experience earlier but at a lesser cost. For example, a customer may order food online instead of eating at a restaurant. Or watch a movie on the cable instead of viewing it in a cinema hall. 

After Lockdown Preference for Repairing Will be High 

The changed customer after lockdown would prefer to repair the products rather than throwing them away to purchase a new one. This is especially true for electrical and electronic products. The reason behind this behavior is to ensure that there is no significant outgo of money.

 After Lockdown It’s all About Deals for Customers

After lockdown the changed customer would prefer to shop from where they can get the best deals. Such a place could be a regular shopping outlet or any other outlet.  Overall the loyalty of customers towards any brand or an outlet is negligible. It should be noted that customers try their best to get the maximum bang out of their money.

Attracted to Lower Price Points 

In changed times after lockdown, the customers get attracted to the lower price points. Differing from their past shopping standards, when the customers preferred to shop at a higher price point before the coronavirus pandemic. For example, if a customer used to purchase soap worth rupees 20 then, now it may like to buy a soap costing around Rupees 15.

 No Wasteful Expenditure 

In the time after lockdown, customers would ensure that they do not indulge in any type of wasteful spending. Clearly, the customers purchase only that which they have come to buy. In addition, the customers will ensure that they are buying only those products and in the quantities which it requires. For example, if earlier, a customer would purchase a product because of a gift with it even when there was no actual requirement, then in the current scenario, the customer may not get attracted by the gift on a product.

 Significant Impact on the Middle Segment

 Whenever there is a recession, the effect on the luxury segment which is the top segment and the mass segment which is the lowest segment is negligible. Never the sale of luxury products is affected in tiring times as its customer is above recession and inflation. While in the case of a mass segment as there is nothing below it. Hence, its customer has nowhere else to go except postponing its purchase until the time it is possible. Ultimately, that customer makes the purchase. Where as it is the middle segment that gets impacted the most as some customers delay their purchases, while some take a step down and buy in the mass segment. In this way, the middle segment shrinks, and the mass segment gains some share from it. 

Reasons for the Change in the Customer Behavior After Lockdown

Let us understand the three reasons that cause a change in customer behavior during a recession period and will be visible after lockdown

• Some customers might have lost their source of earning: When ever there is a slowdown or a recession in an economy, people loose their businesses and jobs. As a result they are not left with any source of income.
• The income of customers might have decreased: It is not unusual for people to have a reduced income in their businesses and jobs during economic slowdown or a recession.
• Some customers suspect that their earnings may reduce in the coming times: In coming days when people will go back to their businesses and jobs after lockdown they will realise the extent of their losses. But many people would have an inclination now, of what is about to happen.

If we look around ourselves, we will see some examples of the above mentioned reasons.

Additionally we do not have to go far to confirm the change in customer behavior. We are all customers, too, and if we look at our shopping pattern in the last few weeks i.e. during lockdown and then assess the planning in the coming times i.e. after lockdown, we will feel a difference in ourselves. Do you think that you will see some changes in your shopping pattern in the immediate future? Please leave a comment.

What Should A Business Person Do After Lockdown?

After understanding the cause of the slowdown and the change in consumer behavior now, let’s come to the real issue, what should a business person or an entrepreneur do after lockdown? 

When the economy shrinks, or there is a recession, it is not as easy to do business in comparison to when the market is booming. Not only anybody can earn by doing business when the economy is booming but also the market dynamics are such that the demand is very high, so it becomes easy to sell. 

But the reverse of the economic boom happens in the recession. At this time, the demand is less, and the supply is more. Hence it becomes difficult to sell. Therefore only those businesses survive who know the do’s and do not’s of business concerning the slowdown and recession.

To become business ready for the changing economy and customer following steps should be followed. It should be noted that all the steps do not apply to all the business persons. Furthermore among the following steps some steps will be important for one business person and another step for someone else.

 So let’s start with the first step.

After Lockdown Keep New Stock According to the New Customers Demand

 As we have understood in the earlier part of the blog, there will be a change in the consumption pattern of the customers after lockdown. Hence a business person should restock according to the new demand of the customers. Also, a business person should not keep slow-moving or dead stock.

Sell Goods Within the Credit Period

Try to make full use of the credit period given by the supplier, distributor, or company. Moreover try to rotate the goods within the credit period. If a business person can do this, then its working capital requirement will be reduced to a great extent. Importantly the reduced working capital requirement will save interest costs.  Besides if a business person has invested their own money, then it will be able to withdraw it. Consequently the business person would have similar or more money towards its disposal even under the tiring circumstances after lockdown.

After Lockdown Keep Optimum Stock Strictly

Rationalise the quantity of stock and try to keep as minimum as possible stock while ensuring not running out of it before the arrival of new stock . If earlier, a business person used to keep one month’s stock, now they should keep 15 – 20 days stock.

There is a prevalent business management technique for stock management, which is called just-in-time. It started in Japan, as the Japanese manufacturers put this technique to optimum use and became competitive around the world. 

Under just-in-time technique, enterprises keep as minimum stock as possible without impacting their sales or production. Enterprises order the required stock in such a time frame that the new inventory arrives just before the old stock gets replenished. 

So every business person should take advantage of this technique and gain maximum out of better stock management especially after lockdown. 

After Lockdown Give Excellent Customer Service

In the period after lockdown, it is essential to provide the customer with excellent service. Undoubtedly it is the customer service that separates one business from the other. When everyone in the market is playing on the pricing, then service will attract the attention of the customers. Also, in a situation where the loyalty of the customers is only towards their savings, there an excellent service can bind the customer. In contrast, a poor service will make sure that the customer does not come back. As a result the customer service will be a differentiator at such a time.

No Increase in Working Capital

When a business person needs to increase its working capital, it has two options

(a) That business person has to go to the bank for additional credit limits. As a result the interest cost goes up. 

(b) The business person has to put its money, as such extra money gets stuck in business. 

Three things are required to be done for not increasing the working capital requirement

(i) It is essential to reign in the expenses.

(ii) Stock levels are not high.

(iii) Ensure that money not stuck in market.

After Lockdown Focus on Turnover, Not on the Margin

A business person should focus on turnover more than margin. The result of an obsession with high margins is that it could push away the customers. As a result, a businessperson may become uncompetitive due to the customers’ price sensitivity. On the other hand, if the business person focuses on turnover, that person will be able to sell goods quickly, thus enabling the quick rotation of the cash. Furthermore high turnover and low margin will that a business person makes sufficient money. This will keep a business person competitive in the difficult times after lockdown.

After Lockdown Deal in Cash and Carry

During the time of slowdown or a recession which would be there after lockdown, cash is the king. Hence to improve the level of cash a business person should do two things 

1. Work on cash and carry as much as possible
2. Take back the credit which is due, on time. 

When we say cash, as mentioned here it means a sale which is not on credit and there is full payment against it. The payment could be in currency, card, UPI or any other form.

Reduce Expenses After Lockdown

A businessman’s profitability gets affected by expenses. Hence the effort of a business person should be to reduce their costs as far as possible. For example, the rent is a significant expense of any business. Therefore an attempt should be made by a businessperson to either negotiate and reduce the rent or go to a new location where the rent is less. 

Whatever saving that happens, will help any business person in reducing its operating expenses. Let us remember the saying that’ every penny saved is every penny earned.’ After lockdown every saving will matter a lot.

Rearrange the Workplace According to Social Distancing and Hygiene Norms After Lockdown

A business person will have to rework the business place according to social distancing and other precautionary norms after lockdown. Importantly, removal of the lockdown does not mean that the threat of coronavirus is gone. Hence until the government makes an official announcement about the threat getting over, all business owners should maintain precautionary norms in their business.

Increase Sales Promotion After Lockdown

If somebody thinks that sales promotion is an expense, then that person should be ready to get corrected. Without a doubt sales promotion is not an expense but an investment. Besides we have often heard that, what gets seen is what gets sold. Hence, if an enterprise gets visibility, then only it will be able to sell especially after lockdown. 

Furthermore, it is not necessary to invest money in sales promotion. In the following two ways, sales promotion activity gets done without spending a single penny.

1. If any business person has a Facebook page or an Instagram account, they can start the interaction with their customers. 
2. This is even easier than the last point. If any business person has contact details of their customers on mobile, then they can also stay in touch with them through WhatsApp.

Through Facebook, Instagram, or WhatsApp, a business person can inform its customers about the status of their business operation and also can do the sales promotion. Simultaneously, share any helpful information about coronavirus pandemic with the customers. The advantage of this initiative is that when businesses open, the customers will come.

But an important point to remember is that there is a small difference between sharing information and spamming. So it has to be ensured that only the relevant information is shared and no spamming happens.

Increase the Productivity of Employees 

After lockdown, every businessperson would like to have only as many employees as required. Hence some employers may have temptation to lay off some employees to reduce the salary cost. Alternatively, this situation has another angle. A business person can increase the productivity of its employees and impart new skills by training the workforce otherwise, some of them could become redundant.

Removing people from a business should not be the first option. Alternatively a business person should help its employees in such difficult times. 

Improvement in employee productivity can happen by first identifying the skill gaps and then providing the training for skill improvement. If a business person can increase the productivity of its existing workforce (which will not be an easy task), then even in such dire times, then the business will grow. Thus the incremental business due to the increased productivity will be a bonus and a well deserved reward.

So now we come towards our final point which is

 Reduce the Credit Amount and Lending Period After Lockdown

This point is critical because if a business person does not bring back the given credit or lend for a very long period, then it will directly impact its capacity of doing business in future as it will impact the cash rolling.

A high credit amount and prolonged credit period will increase the requirement of working capital. If a business person brings the additional working capital, then it will increase the interest costs. If a business does not raise the working capital, it will affect its ability to do business. Inadequate working capital will push any businessman out of the business. Therefore it becomes essential that a business person tries its best to reduce the credit amount and credit period after lockdown.

Conclusion:

We can summarize above mentioned 12 strategize in the following words, ‘cut the flab and become a lean and mean machine.’  Therefore, if a business is fit, then that business is hit. In other words, if a business person 

reduces all its wasteful expenses, 

increase productivity and 

become an agile and healthy enterprise, 

then it will benefit significantly in the long term after lockdown.

Summary:

In this blog, we understood the following points

• Impact of coronavirus pandemic on the global economy.
• Impact of coronavirus pandemic on India.
• Changes in consumer behavior due to coronavirus pandemic after lockdown.
• Reason for changes in consumer behavior after lockdown.
• Steps and strategies a business person should take to counter the changes after lockdown.

Disclaimer: This blog is created solely for informational and educational purpose. Ideas and suggestions given in this blog are not substitute for the guidance under the expert. Readers are advised to do own due diligence before taking action based on this blog. This blog is not warranted for content accuracy. Reader’s discretion is required.

Business Success After Lockdown