Businesses Embark on Uncertain New World

Businesses small and large – indeed all of society – are finally, keenly opening their doors to a hopeful but uncertain new world. But the shift toward reopening is not without risk.

After a year and a half of living behind closed doors and suspending most commercial and interpersonal relations, businesses and humanity up and down the street are slowly being allowed and encouraged to return to a pre-pandemic existence.

However, bear in mind that what we are encountering today should not be mistaken for what we left behind. We are not turning back the dial on H.G. Wells’ time machine to a specific date before this global COVID-19 catastrophe began.

Small business owners, retailers, restaurateurs and others would do well to tread carefully. As you venture out physically and virtually, look up and down Main Street to see what’s happening. What are consumers, average men and women doing? Are they bravely walking around, entering stores and restaurants and making purchases? Are they wearing masks? Are they cautious and keeping their distance from others?

What are other businesses doing? How many of your commercial neighbors survived? Why didn’t they make it? Did they just give up? How many of them have reopened or will open? What do their interiors look like? Are they adequately stocked with products? Is the supply chain functioning effectively? What about their street perception – grungy or orderly? Certainly, your business neighborhood or marketplace doesn’t resemble Dresden during the war but how has it changed?

As you prepare to open and you must open or else you will fail, you must have a clear plan on how you’ll do that. The prevailing prerequisites for success require the wisdom of King Solomon and the administrative skills of a NASA official. Make a checklist of issues that pertain to your industry, customers, supply chain and establishment. Your preparations now will be more intense than they were when you were planning your launch because of the pandemic and its perceptible and imperceptible consequences.

You may not be able to test the business climate, but you should at least examine the statistics.

According to Charles Schwab, consumers are chomping at the bit. As vaccination rates increase in the country, so do people’s willingness to open their wallets. Nearly half (47%) of people polled by Charles Schwab are keen to live large, and get back to their spending levels before the COVID-19 pandemic. What’s more, almost a quarter (24%) say they want to splurge and make up for lost time, the survey, released this month, found.

However, in May consumer sentiment dropped sharply as inflation spiked and consumers prepared for higher interest rates that will defray the high cost of the government’s pandemic rescue plan. The preliminary estimate of the University of Michigan’s index of consumer sentiment released earlier this month came in at 82.8, a drop of 6.2% from the month ago reading of 88.3. The current conditions and future expectations indices fell, by 6.6% and 6.2%, respectively.

“Rising inflation also meant that real income expectations were the weakest in five years,” said Chief Economist Richard Curtin. “The average of net price mentions for buying conditions for homes, vehicles, and household durables were more negative than any time since the end of the last inflationary era in 1980.”

Nonetheless, Curtin said he expects consumers will continue to spend because of pent-up demand and record saving balances even as precautionary moves ahead of rising prices for goods and services.

That’s the statistical outlook. Even if consumers are running to your door, you have to ensure that they stay, shop and buy once they’re inside. You may even have to explain to them why your prices have jumped.

Despite official guidance, small business owners are left to their own devices in figuring out how to administer new indoor mask guidance based upon a customer’s vaccination status. Some businesses say they will not ask customers if they’ve been vaccinated, and plan to operate on an honor system.

Other places say they plan to ask for proof of vaccination and then segregate unvaccinated people away from vaccinated people. Be careful because this may result in arguments, fisticuffs or even lawsuits.
Even as businesses allow masks to be removed, many customers say they will keep their masks on as a precaution while, as you see, many people still walk around outside and inside with masks.

The savvy business owner will compose a precise, visible set of rules for how patrons must behave in the establishment with a caveat about what will be done for transgressions. Yes, instead of minding your business, you’ll be the corner cop.

Once you’re convinced you’re open for business, walk through your store or restaurant by yourself or with a trusted person and just look around. Is everything in its right place? What are the elusive tells?

Recently, my family and I wanted to eat out but we couldn’t find a restaurant that looked and felt clean enough. The sensation didn’t pertain to actual spotlessness but rather to the business’ intangible impression. Along these same lines, supermarkets also have a shabby look.

Speaking of supermarkets, grocers should note that their sales may be on the verge of growth. The FMI, the food industry association, in its 2021 edition of U.S. Grocery Shopper Trends, concluded that there are three significant ways in which shopper behavior changed during the pandemic. Today, 58% of shoppers report eating more at home and nearly half (49%) report cooking or preparing their own meals more than before the pandemic. When it comes to grocery shopping to support these at-home meals, shoppers have a newfound appreciation for the task, with 42% saying they like or love to grocery shop. You must confirm that you store has an inviting appearance.

“Throughout this past year, American grocery consumers have developed a deeper relationship with their kitchens, increased their healthy eating consciousness, and have learned new ways to shop,” said Leslie Sarasin, FMI’s president-CEO.  “We see shoppers engaging in more stock-up trips to support their at-home cooking, exercising new online shopping skills, and letting their personal concept of being well impact their food and shopping behaviors. Looking ahead, we expect many of these trends to continue.”

Grocers should also note that the Organic Trade Association (OTA) reported in its annual survey that U.S. organic sales soared to new highs in 2020, jumping by a record 12.4 percent to $61.9 billion. It marked the first time that total sales of organic food and non-food products have surpassed the $60 billion mark, and reflected a growth rate more than twice the 2019 pace of 5 percent. Fresh produce is the No.1 seller.

“The pandemic caused abrupt changes in all of our lives. We’ve been eating at home with our families, and often cooking three meals a day. Good, healthy food has never been more important, and consumers have increasingly sought out the Organic label. Organic purchases have skyrocketed as shoppers choose high-quality organic to feed and nourish their families,” said Laura Batcha, OTA's CEO-executive director.

Business owners are also facing a shortage of workers. Restaurant and stores are rapidly raising salaries in an urgent effort to attract more applicants and keep up with a flood of customers as the pandemic eases. McDonald’s, Sheetz and Chipotle are just some of the latest companies to follow Amazon, Walmart and Costco in boosting wages, in some cases to $15 an hour or higher, and offering other unheard of perks such as signing bonuses and retirement plans.

The pay gains are, of course, a boon to these employees. Restaurants, bars, hotels and stores remain the lowest-paying industries, and many of their workers ran the risk of contracting COVID-19 on the job over the past year while white-collar employees were able to work from home. Still, the pay increases could contribute to higher inflation if companies raise prices to cover the additional labor costs, as they’ve done. Some businesses, however, could absorb the costs or invest over time in automation to offset higher wages.

There may not be enough in the budget for marketing and advertising, but business owners should not be dismayed from promoting themselves because right now they are their own best billboards. Your customers and patrons will be impressed by your safe and sanitary look and tell others. Tell them how you achieved such a status. Customers will also spread the word if they don’t feel comfortable. Focus on social media promotions about what you’re doing and build online communities of like-minded entrepreneurs.

Be prepared to pay special attention to training your sales or wait staffs about the new post-pandemic requirements of conveying a feeling a cleanliness and safety.

If you have the capacity, you should examine your online presence because the pandemic has shown that e-commerce enjoyed heavy investment that resulted in historic growth. For example, Ikea, which is best known for its airline hangar-like big box stores, reported a 45% increase in online sales over the 12 months to August. Changing consumer spending habits as a result of the coronavirus pandemic contributed to the spike in ecommerce sales last year, as statewide lockdowns and fear of contracting the virus kept consumers out of physical stores. COVID-19-related boosts in online shopping resulted in an additional $174.87 billion in ecommerce revenue in 2020, Digital Commerce 360 estimates. If it weren’t for the bump in online sales from the pandemic, the $861.12 billion in ecommerce sales wouldn’t have been reached until 2022.

If you don’t, your competitor will do so.

As you prepare to unlock and emerge from the chaos of the pandemic, don’t forget that you’re not alone. There are other businesses and official institutions that you can access for free advice such as the Small Business Administration, the New Jersey Small Business Development Centers, SCORE and others. An important factor in finding your new normal is based on your old and new relationships. For example, restaurateurs, can tap into their back of the house and dining room teams, vendors and foodservice distributors, and ask the question how can we help each other? Supply chain partners that have a broader view should not be overlooked in this quest.

The more you think, plan and share ahead of unlocking your business, the sooner you’ll convert the uncertain new world into a brave and successful one.