The coffee queen focused on the customer and the community, the streaming giant responded to the need of the hour, while Amazon broke the market with innovation. What can we learn from those who did it big in 2008?
In Chinese, as is well known, the word “crisis” embodies both danger and opportunity. The current crisis, which was born in China, also contains both sides. There is no doubt that, along with the health tragedy, 2020 will also be recorded as a milestone in the world’s economic history. It will be remembered as badly as 1929 and 2008. But it is not impossible that this time too, just like in previous crises, wars and pandemics, the recession will end in a recovery followed by a golden age.
Last time, from a macro perspective, it took a year or two. In 2010, the markets had already corrected themselves and moved up. But in a higher resolution, not everyone was there to tell the story. Quite a few companies and organizations went bankrupt, were sold at end-of-season prices or simply collapsed under the burden of debt and were forced to close. Of those that survived, 80% took three years or more to get back on their feet in terms of sales volume and profit margin. But there were also those that did it quickly and in a big way.
The strategies were different and varied, the tactics changed as the crisis deepened. Some businesses preferred to cut expenses and lower their heads until the fury passed, others chose massive investments and increased exposure to risks. But one characteristic was common to most of the successful ones: the quick understanding that what was is not what will be – and that you can’t just do more of the same.
Thanks to innovation: Amazon
During the crisis, while the entire market crashed, Amazon recorded a moderate decline. In 2009, it already beat forecasts with a phenomenal annual profit. The e-commerce giant did it through innovation. Luck also played into its hands, as on the eve of the recession it launched a series of products and services that helped it through difficult times: Kindle, the first e-book reader that gained popularity and was simply snatched from the shelves; Amazon Prime, which promised the company a steady monthly income from subscriptions and allowed it to increase spending and investment in technology; and the cloud services platform, which became a powerful weapon that ultimately allowed Amazon to weather the crisis and emerge victorious.
At the right time: Airbnb
It started small – with a few guys in San Francisco, who offered guests of a high-tech conference in the city cheap accommodation on an inflatable mattress in their apartment. In a time of deep recession, the cheap and ingenious alternative turned out to be a game changer in the tourism industry. By 2012, Airbnb was already a global powerhouse worth $2.5 billion. Even in the current crisis, it is showing flexibility and developing in new directions and concepts, such as medium-term rentals for those required to stay in isolation.
Building a community: Starbucks
It seemed like the beginning of a colossal failure. The American coffee queen closed hundreds of branches, laid off thousands of employees and lost a significant share of the market, with customers voting with their cups and flocking to cheaper competitors. Then the management changed and with it the strategy. The sleepy branches became modern hubs – comfortable spaces for meetings and self-work with a laptop. At the same time, a digital platform was launched that invited customers to open a profile and share with the chain suggestions for improving their Starbucks experience. Together with the right social strategy, it worked: the image of “expensive and alienated” became “voice, caring and with added value”. People felt that they had an address, a home, a community and a direct connection to the brand.
A perfect answer to an existing need: Netflix
In times of crisis, the desire to cut back on expenses is almost instinctive. This does not mean that people are ready to completely give up culture and entertainment, quality of life and old habits. They are just looking for cheaper and more accessible means. And that is exactly what Netflix offered them, then – a company that rented DVDs with home delivery, with a streaming service that was still in its infancy. Netflix allowed its subscribers to access quality content from their living rooms. It did this at a price that broke both the video library market and that of cable companies. In 2009, at the height of the crisis, the company’s shares recorded an annual jump of 57%, profits climbed by 24%, and the number of subscribers exceeded nine million. Now, in the days of Corona and social distancing, the demand for this service is only increasing. It turns out that escapism and a little sanity are a kind of essential commodity.
Cheaper, More Available: Walmart, Target, and the Digital Store
Each crisis and its characteristics. It is difficult to predict in advance which industries will suffer the hardest hit. In 2008, luxury brands made a swift comeback, mainly thanks to the rapid recovery in Asia. Many of them underwent a design change: a pretentious and ostentatious look was replaced by a more “folk” and modest one. At the other end, cheap marketing chains like Walmart and Target did their best. Those who were particularly damaged were the mid-range brands. With the growth of the digital store and the D2C market, direct-to-consumer marketing, the classic one-way triangle of manufacturer-retailer-customer was broken, and has not recovered since: e-commerce, which until 2008 accounted for only a few percent of turnover in the US, already accounts for about 15% of sales worldwide. And that’s even before the coronavirus.
2020 Model
The current crisis, like that of 2008 and those that preceded it in the history of the modern economy, is putting brands to the test: How will they navigate and what strategy will they adopt? You can temporarily lower your head below the water line and try to reduce losses. But with vision, determination, creativity and a little inspiration from those who proved themselves last time – through the product, the experience, technological innovation or the customer community – you can also ride the wave and arrive with it strengthened to safe shore.
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