Marketers are typically an optimistic bunch. But this year, they must be careful not to expect and plan for a rapid COVID-19 recovery. According to economists, infectious disease experts, and data modelers, we won’t truly be in recovery and a return to normal (or “new normal”) for some time. Before then, we will likely experience several quarters of ambiguity and difficulty. Gartner for Marketer’s new scenario-planning framework can help marketing leaders prepare.
There are two reasons marketing leaders should expect a lengthy period of uncertainty and not a rapid return to business as usual:
- The ongoing battle we must wage to prevent COVID-19 from surging again, and
- The way the pandemic will affect consumer and customer attitudes and behaviour.
Planning for the Ongoing COVID-19 Battle
Once governments lift the current stay-at-home (SAH) orders, we will still have restrictions. If we didn’t and simply returned to business as usual, then we’d see COVID-19’s short doubling period return–every 4 to 7 days, infections would double. That would mean just 5,000 infections would grow to become 1 million new cases in less than two months. Having been through what we have in recent months, it should be evident we will not and cannot rapidly return to our normal everyday social behaviours, business operations, and mobility.
COVID-19’s doubling time is not a constant–it varies in different populations with different density and behaviors. All of our efforts to improve social distancing have been successful in increasing the doubling time (and thus decreasing the growth rate of COVID-19.) Some efforts will be required to keep this doubling period down until a vaccine is developed or herd immunity is achieved (which typically doesn’t occur until 80 per cent of a population is immune to a disease.)
So, what can we expect in terms of post-SAH rules? Reuters last week reported on a document that shared Germany’s post-SAH plans. They included bans on private and large gatherings, face masks in public places, and continued social distancing. And on Tuesday, CNN reported that California Gov. Gavin Newsom “warned that Californians should prepare to enter a radically different realm where residents continue to wear masks, and where they may be greeted at restaurants by waiters wearing masks and gloves with disposable menus in venues that have half as many tables.”
Researchers are studying and predicting what we can expect in the US starting in May or June. The American Enterprise Institute offers a vision of periods of increased social distancing and “massively scale(d) contact tracing and isolation and quarantine” requiring 750,000 tests per week. To put this into perspective, in the week from April 5 to 11, all CDC and public health labs in the US ran fewer than 70,000 tests. The Center for American Progress envisions air passengers required to use contact-tracing mobile apps, mass transit at 50 per cent capacity, continued telework, and gatherings of more than 50 people banned. A new study by Harvard infectious disease experts notes that absent “New therapeutics, vaccines, or other interventions such as aggressive contact tracing and quarantine… surveillance and intermittent distancing (or sustained distancing if it is highly effective) may need to be maintained into 2022, which would present a substantial social and economic burden.”
CDC Director, Dr. Robert Redfield summarized the situation succinctly this week when he said, “I think we’re definitely going to have a second wave… and what we need, for sure, between now and then is we need the American public to stay with us on the thirty days to slow the spread of the coronavirus and stay with this mitigation. And some aspects of this are going to continue beyond that, because we don’t need a second bump right now…. what we don’t need is to have a secondary bump in June or July because certain areas of the nation relaxed their mitigation strategies too quickly.”
The thing to remember is that neither we nor governments will, in the end, determine the post-SAH rules; COVID-19 will. If the controls are too loose and infections rise, we’ll be back social distancing in our homes (an outcome that some studies, such as the one by the Imperial College London, foresees). Even with effective restrictions, we still may see another surge this fall–in one recent survey of infectious disease experts, the consensus was of a 73 per cent chance of a second autumn peak in COVID-19 cases.
As a result, the post-SAH period will be a global experiment. Every nation, state, and city may set different rules, and public health professionals will monitor COVID-19 data to find which set of regulations are most effective. We may see factories, where workplace distancing is typical, come back faster than open-office workplaces. Large gatherings and sports may not return, at least at full capacity, since events like a health care conference in Boston, a 40th birthday party in Connecticut, and a party on a Tokyo party boat have been “superspreading events.” And, to the extent different regions experience different levels of infection at different times, global companies must plan for uneven and variable experiences and restrictions throughout 2020.
One thing on which almost everyone agrees is that we can come closer to “normal” with extensive testing and rapid action to quarantine those infected and the people with whom they were in contact. The weaker the testing (or adherence to testing), the more governments will need to rely on mobility restrictions and social distancing for everyone.
Planning for Another Wildcard: Consumer Attitudes and Behaviour
The efforts of governments and the natural threat posed by COVID-19 infections are one thing. Consumer reaction is another thing altogether.
In a year where the threat of infection and illness hang over every public activity, to what extent can we expect consumer attitudes and purchase behaviours to return to normal? Will shoppers patiently queue in well-spaced lines to enter stores operating with limited density requirements? Will people be keen to head back into restaurants, bars, and other enclosed spaces that increase risks of exposure? And how many will opt to battle an airplane seatmate for the armrest if every cough or sneeze makes us recoil? Even if the physical risks may be low, the emotional barriers may remain for many.
And none of that even addresses the impact of layoffs and furloughs that reduce discretionary income and impact willingness to spend. A Gartner Consumer Community panel run on March 20, 2020, found that “Nearly half of consumers told us their household income has already been affected by COVID-19 in the form of layoffs, reduced hours and closures.” Gartner clients can access the full report here (subscription required).
Much of what we can expect from consumers depends on their jobs, incomes, and the speed of economic recovery. Economists are debating whether the recovery will be V-, U-, or L-shaped. A V-shape is the most optimistic, assuming the rebound is as swift as the slump, but as Bloomberg notes, the V-shaped recover “was the favoured trajectory early on, but now more (economists) are starting to worry about a U-shape.” A U-shaped recovery is one with a longer period of economic suppression; the South Korean Deputy Prime Minister for economic affairs recently predicted, “a U-shaped recovery for the next two years.” An L-shaped recovery is one where growth plunges and does not recover for some time, a risk that Reuters says is unlikely. And, in what may be good (or bad) branding for Nike, many are now talking about a recovery that looks like a “Nike-shaped swoosh.”
The impact of the economy on consumers and consumers on the economy remains difficult to predict, and forecasts vary widely. The head of the International Monetary Fund recently said, “We anticipate the worst economic fallout since the Great Depression.” The World Trade organization offered two opposing scenarios–its optimistic scenario foresees trade recovering by 2021 or 2022, while its pessimistic would mean “a more prolonged and incomplete recovery.” And, Fitch Ratings revised its forecast for US GDP to decline by 3.3 per cent this year, which would be the worst slump the US has seen in over 50 years.
So, what can marketers expect from consumers once restrictions are limited? Some predict a wave of pent-up demand, but that seems not to be the experience of nations who were on the leading edge of the COVID-19 pandemic. For example, some stores in Italy are reopening but are finding shoppers in short supply. NBC News interviewed the owner of a 100-year-old shop in Rome, and on his first day, he had one sale. He’s now anxious about his store’s future.
China, which underwent a surge of COVID-19 infections and restrictions two months before the US and most of Europe. The Wall Street Journal notes that China is “tiptoeing back” and that “Hopes for a speedy recovery in the West once the epidemic peaks may also be misplaced.” China recently lifted restrictions in Wuhan after ten weeks of quarantine, but the New York Times reports this “won’t end hard times, wariness or confinement.” While Wuhan businesses are trying to return to normal months after its COVID-19 peak, only 60 percent of employees are on the job, and electricity consumption is one-fifth less than what it was this time last year, suggesting a sluggish return for the region’s economy.
AlphaSense has collected guidance from businesses operating in China. They continue to forecast decreased performance in April and May. A real estate firm notes that 80 per cent of tenants have resumed operations but that most entertainment tenants, such as cinemas and gyms are still closed. Apparel retailer PVH indicates they are operating down around 30 per cent and that “in April, that minus 30 per cent will move to minus 20 per cent. And then we get into May, minus 20 per cent will move to minus 15 per cent or 10 per cent.” Months after China attained control of its surge and lifted many restrictions, consumer demand is returning slowly. And, if China experiences a new surge in COVID-19 infections, then this gradual recovery will pause or reverse (and that nation just reported three consecutive days with new infections over 80 for the first time since early March.)
Another way marketers can learn from China isn’t just to monitor its economic recovery but to observe what marketers in China experienced during the early- and later-stages of its pandemic. Many found that consumer attitudes and openness to brand messaging changed over time. Gartner members can access a report on these marketing experiences (subscription required).
Gartner for Marketer’s COVID-19 Scenario-Planning Framework
The rest of 2020 will be a period of uncertainty. The ongoing risks from COVID-19, the certain but unknown restrictions on consumers and businesses, populations’ willingness to follow strict testing and monitoring procedures, the incalculable impact on the economy, and the unknowable consequences to consumer attitudes and behaviours will demand agility, constant monitoring, and careful pre-planning for all likely scenarios.
Smart marketers won’t bank on a single scenario and won’t bet on rapid recovery. Instead, planning for 2020 requires marketing leaders to be prepared for a wide range of outcomes. The Gartner for Marketers team has new research that shares an approach marketers can use to define scenarios and plan for the upcoming phases of this pandemic (subscription required). These phases will be influenced by the B2C consumer sphere, the B2B business sphere, the marketing department sphere, and the culture sphere.
The way to get ahead of the ambiguity and challenges ahead is to prepare for all likely scenarios. Being agile requires you to foresee a range of possibilities, know how to identify when conditions will change, and be ready to transition as needed. The marketers that emerge from the pandemic in the best shape won’t be the ones with the most foresight but the ones most ready for whatever may come.