While the changes brought about by COVID-19 on public life have been thoroughly discussed, the changes that have been made to how small businesses operate are also remarkable.
For many, the crisis has been a make-or-break moment, where your business must change or risk financial devastation. Changes that had previously been considered impossible or far-fetched are now moving at warp speed. The fundamentals of every business — what to sell, who to sell it to, how to sell it, and how to get paid — have been scrutinized for every company.
Here, we take a look at a few of the trends that have emerged in the flurry of entrepreneurial creativity, and what to consider to integrate them into your long-term strategy.
With social distancing measures and closures of many venues like retail stores, restaurants, and hotels, entrepreneurs were suddenly tasked with finding a way to make their products portable, either for takeaway or delivery. For some, the learning curve was higher than for others, but pure creativity drove nearly every industry forward.
For example, the trend of canned and bottled cocktails has been a direct product of the crisis. Drinks to go have been a nascent part of bars’ business (for instance, selling growlers of beer), but beginning in 2020 bars began releasing single-serving or two-serving cans and ornate bottles containing a mixologist’s cocktail designed for take away and consumption at home. For instance, Bushwick-based High Low NYC offers “batch cocktails” for delivery or takeout from their space in Brooklyn.
Cocktails to go were legitimized when earlier this year, New York and other states allowed establishments with on-site consumption licenses to sell alcohol to go. Those rules are expiring but there is debate about extending them.
Long-term strategy: Making more products available for takeout and delivery is a movement that has staying power. In general, Americans are choosing to make more of their retail purchases online than in stores – the COVID-19 crisis just exacerbated this.
As restrictions loosen; however, some offerings “to-go” simply don’t compete with their in-person counterparts. For example, a $20 cocktail served in a restaurant, freshly made right in front of you, with the ambiance of a bar, and with the interaction with a skilled bartender is worth more than a cocktail delivered to your home.
If your product or service is “high-touch” (meaning that it involves precise attention to detail and lots of customer interaction), the appeal for your COVID-era delivery alternative will likely wear off as venues reopen. For companies in this type of situation, you should consider making two-tiers of your offerings. One tier is for in-person service and the other tier, at a lower price, is available to-go or for delivery.
Live stream shopping, selling products through social media video sessions that are broadcasted live for a limited amount of time, has been a normal and regular means of doing business in economies outside of the U.S. for many years. It’s now being learned and adopted by retailers domestically.
Live streaming creates a regular opportunity to have an interaction with a person who can explain the product, build up hype, demonstrate its usage, and provide perspective of the product’s size and appearance around a person. Live streaming can also be used to manipulate demand: by carrying a limited supply of a product and making that product available on a first-come, first-served basis online during the live streaming session, this can prop-up sales.
Unlike many types of products-to-go offerings, live streaming and other live videos will continue to drive retail sales. This trend is validated by the fact that large companies like Amazon and Net-A-Porter are making investments in live streaming tools of their own for their products.
The security that small retailers have in this realm is that live streaming is inherently intimate, giving a large audience facetime with a person, often the business owner themselves, selling the products. Large brands can’t offer the same level of “touch” at scale.
Long-term strategy: Moving forward with this strategy is going to be all about conquering the obstacle of shipping costs. While live streaming gives retailers a leg-up in selling products, they still can’t compete with large companies offering free shipping. As states reopen further, business owners might want to explore alternatives such as offering “pick-up” sites: places spread out through an area where customers can pick up their purchases on a specified date.
The Great Outdoors
By mandate or by choice, many businesses are finding creative ways to operate outdoors. Many live event companies are operating outdoors, and some restaurants have found ways to broadcast films projected in their backyards, alleyways, and the side of their buildings.
Drive-in theaters, such as Skyline Drive-In in Brooklyn have benefitted from the need for social distancing and found larger audiences. Fitness companies and even event spaces have gotten creative too, operating in public parks with carefully marked spacing. The most noticeable example of outdoor use has been restaurants’ construction of roadway seating spaces. These changes are not only good for reducing the effects of the virus, but they also help to make better use of urban geographies. Rooftop and backyard spaces have been historically underutilized in the Northeast and these changes are helping to improve access to them.
Long-term strategy: In the immediate future, businesses will have to face the consequences of colder weather and significantly fewer people will be willing to shop, eat, and sit through shows and entertainment outdoors. That shouldn’t deter you from trying to maintain some semblance of operations outdoor. Restaurateurs are already constructing single-table-sized greenhouses and domes for their guests to eat outdoors while maintaining a safe distance from other guests.
With the future uncertain, it’s important to adopt a flexible approach for your business: if you’re going to make use of your outdoor space, make sure that all of your furniture and fixtures are modular, and can be expanded and contracted. Indoor seating will expand in the future, but that could easily be expanded or rolled back as the situation changes daily.
Though the future is uncertain, look to these trends for long-term strategy
While we can’t say for sure when business will feel “normal” again, it’s safe to say that some trends from the pandemic-related shutdowns are here to stay. Find ways to integrate these trends into your strategy to ensure you’re meeting your customers where they’re most comfortable.
Steven Cohen is President of Pursuit Community Finance, the Community Development Financial Institute (CDFI) affiliate of Pursuit. Pursuit helps New York, New Jersey and Pennsylvania small businesses grow by providing streamlined access to business loans and advisory services. Steven has a bachelor’s degree from UC Berkeley and a master’s in public administration from Harvard’s Kennedy School. @pursuit_lending