Modern retail - the challenge of our times
In the early 2020 the retail sector was moving steadily not only towards increasing of online sales share but also planning to merge offline and online sales activities gradually. The COVID-19 pandemic situation reoriented consumers to do purchases mainly online in mere weeks. Online sales in some sectors grew rapidly two or even threefold. Companies had to regroup quickly and urgently look for answers to their questions such as how to reallocate resources to strengthen online sales? What should be immediately altered in their operational work and marketing?
Industry experts and representatives of large, medium-sized and small businesses of the North-West discussed these issues on April 28 in the course of the online meeting UPGRADE E-com St. Petersburg.
Vsevolod Krylov, Executive MBA Program Director at Stockholm School of Economics in Russia and one of the invited speakers answered questions of the webinar moderator Vlad Shirobokov, an EMBA Alumni of SSE Russia. They talked about the knowledge that allows a confident and strong leader to move from crisis to crisis and be ready for any adversity and obstacles.
Vlad: This is neither the first nor the last crisis. Which companies bear the decline in purchasing power easier?
Vsevolod: The question is very interesting, because each crisis is unique in its own way and in fact it is always a push for some industry. For some people the crisis is the killer, for others it is the basis for prosperity and growth.
So to answer the question it is better to turn to Maslow's pyramid concept. A person first of all aims for their own and their loved ones survival in the conditions of limited resources. Only then anything spiritual comes. Accordingly, companies that focus on satisfying the higher levels of Maslow pyramid are in the zone of greater risk. Thus, those who sell food will always be in a more advantageous position. This is such a simple model. But it is quite applicable for assessing one's own prospects in any industry and in any crisis.
Vlad: Is it worth for companies to reposition "to the bottom" of the Maslow’s pyramid? What should those companies that, for example, sell experiences or electronics do when only food and security services are in vogue?
Vsevolod: I would like to draw attention to the fact that there is de facto a really striking social stratification in the world. And Russia is no exception. So companies that meet the needs and expectations of the better-off population segments also have an advantage, because people with higher incomes, and those with more influence - they are slower to abandon their buying habits. Hence, the falling incomes are usually less critical for those people’s consumer behavior. Companies that serve wealthier segments of the population usually suffer less during a crisis.
Generally speaking, those companies that are as diversified as possible in terms of both products and markets are more likely to survive.
Vlad: But it’s expensive to support ten products, five solutions, as well as to be both in the premium and in the economy segment at the same time, and to avoid the middle class, which is probably gone for now...
Vsevolod: Here by diversification I mean not only expensive products and cheap products. Phillip Kotler’ model related to product levels can help us. The consumer needs are only the basis for a relationship with the customer. Then comes the form in which the product is offered. But our relationship to the product is formed by its unique characteristics. In this sense, the product in the store, and the product one gets delivered to one’s home are essentially two different products, because they have different characteristics for the buyer. It is also called diversification when we add some not typical extra features to the existing product. So we sometimes create not only a new product, but also possibly a new market. The ability to jump to these new levels gives companies an advantage.
Vlad: Are you planning to organize internal trainings for students and newcomers, non-students of Stockholm School of Economics in Russia on the subject of repositioning, restructuring of marketing strategy, selection of tools and tactics in the next week or three months?
Vsevolod: We, like many schools, have had to switch to distance learning. We have received multiple requests from students, and we are already making adjustments to the current programs and increasing the number of webinars, with the involvement of professionals who can talk about their points of view on what is happening, to give their situation assessment and to share some specific advice.
Vlad: The most popular lectures used to be about the order economics calculation, the product economics, or a basic investment project P&L planning (profit and loss statement). These topics were the most popular for lectures only 6-8-10 years ago, when I first become interested in the Stockholm School of Economics in Russia. Now what do students ask for? What competencies are they looking for?
Vsevolod: People are asking for the same things now, and more and more emphasis is placed on modern technologies. This also includes digitalization, which has a significant impact on business, making it more efficient and personalized, as well as design thinking, which involves the creative process in previously purely analytical areas.
We are launching a series of workshops for our students and Alumni on how to manage to keep employees motivated and in control remotely, as it turns out that the presence of a supervisor in the workplace can be less effective than remote interaction if you approach planning correctly and take into account psychological nuances. It sounds like a cliché, but such a simple move as informing your employees about the time when you will be available to communicate with them can have a much more positive effect on them than a dozen motivational speeches. These are exactly the topics Annika McCree, managing partner of BonVent Holdings, Holdings (San Francisco, USA) will touch upon in the upcoming webinar.Back to news