It is interesting to look at how the pandemic affects various businesses, with some, like the travel related sector, hard hit, while others, such as consumer packaged goods, actually experienced some sales gains. Lessons can be learned from how these changes unfolded.
Some of these impacts are lingering, such as the travel related downturn, especially for business travel. But, some sectors that saw pandemic related gains are finding that those gains were short-lived. Consumers stocked up on food and other essentials during the early part of the pandemic, so companies producing these kinds of goods did well. However, as the pandemic lingers on, but with various restrictions much less severe, consumers are no longer buying these essentials at the increased level purchased when they perceived a more dire need to stock up.
Here are some examples.
General Mills was discussed in the September 24, 2020 Wall Street Journal article “General Mills Aims to Keep Sales Gains Tied to Crisis“ by Annie Gasparro. The article reports that, “General Mills said the easing of pandemic-related restrictions in recent months contributed to the moderating in its sales growth.”
Colgate is another example of this, though info about it goes back a little further to the July 31, 2020 Wall Street Journal article “Colgate’s House Party is Coming to an End“ by Aaron Back. “Makers of household goods like tissues and cleansers have been among the biggest winners from the corona virus crisis,” according to the article. The article also says, “In regions of the world where Covid-19 was early to flare and is now receding, Colgate’s results were less impressive.”
And, it’s not just the consumer packaged goods makers, but also the grocery retailers that are affected. The September 14, 2020 CNN Business article “The great grocery boom is slowing down” by Nathaniel Meyersohn points out that “the height of the boom is over for America’s biggest grocers.”
Yet, as the title of my blog post today explains, changes may not last. And, it looks like grocers are preparing for exactly that regarding the waning of their boom, based on the September 28, 2020 Wall Street Journal article “Grocers Watch Pandemic and Stockpile” by Jaewon Kang and Annie Gasparro. The article said, “Grocery stores and food companies are preparing for a possible surge in sales amid a new rise in Covid-19 cases and the impending holiday rush.” As the article explains, grocers learned the hard way that they don’t want to once again get stuck with product shortages, like they did earlier in the pandemic.
Speaking of learning, what are the lessons here for businesses still trying to define themselves during these unprecedented times? After my 25+ years researching business success and failure patterns, I want to emphasize not to panic during these difficult times, even if it gets really tough. Be selective about if and how to pivot into new areas and choose those that are right for the business. Remember that what is changed today, can sometimes change again in the not so distant future.
So, be careful about pivoting into areas just because others are doing well there. Although some companies can do well by pivoting into an area where others are thriving, many companies will not. Recognize that a trend toward high growth is not necessarily a good enough reason to pursue that area as a new line of business. The start-up efforts for moving into new lines of business must be considered. If it is an area that the business can pivot into somewhat smoothly, then it may be fine. But, attempting to build capabilities in a new area too distant from a business’s strengths may take long and entail step costs. And, the above examples illustrate how high growth may not last. That’s why it is so important to be strategic about any pivoting a business might be considering and to choose areas that are right for the business.