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Win Some, Lose Some - Why some companies are still winning despite the global pandemic?

Key Takeaways

  • Certain companies are still thriving despite chaos caused by the pandemic

  • Companies need to look at the importance of the business structure they are built on

  • In order to be successful, companies need to future proof themselves and be able to pivot easily



The pandemic has caused widespread economic and social disruption - every facet of the industry has been brought to a halt but some companies are still increasing their market share, these companies are going against the odds and coming out on top whilst their competition disappears.


The pandemic has shown the true business models many companies were built on to be unreliable and unstable. The companies thriving have been able to easily pivot or adapt. With more than half of businesses closed and 80% having to let go of employees it is evident that they were not built for these circumstances. The company that that has been the most successful during this time has been Amazon with the founder Jeff Bezos set to become the world’s first trillionaire. Amazon is the world’s largest online retailer and since the pandemic the company's online sales soared 24% in the first quarter of the year alone – the fastest growth they have seen in 4 years. The closure of many brick and mortar stores have strengthened the position of the business.


Before the pandemic, 45% of brands did not sell products on the marketplace since then Amazon’s online sales doubled to 30% in March and tripled in April. They have leveraged this position and most recently, having tried for years to become a destination for luxury fashion they successfully made an entry into the market. This is despite their massive reach and logistics network, the marketplace’s utilitarian aesthetics and the presence of knock-offs turned many brands off but that has seemingly changed. They recently launched a collaboration with Vogue and the CFDA called ‘A Common Thread’ which has so far raised $4.3 million US dollars – a fund to help designers that may be struggling during the crisis. They also launched the A Common Thread Shop giving many designers market access and a platform to sell at their own fees with a small commission fee. Amazon played the waiting game, the outcome of the pandemic worked in its favour due to lockdown regulations forcing everyone to stay indoors. You would think less money would be spent but the rise in online shopping soared and with its Prime delivery and consumers with an ‘I want it now’ mentality they were sure to thrive.


Hermes is another company that is navigating this time well even with a 7.7% drop in its first quarter sales it is doing better than its luxury counterparts who have reported 15% or more decline in sales. As China has opened its doors again, their sales there have grown double digits from a year earlier and business is picking up strongly. Even with 75% of stores still closed, the shares in the group have risen by 2.6%. They continue to maintain strategic investments in production capacities and their distribution network is preparing for in them to be in the best possible position post pandemic.


This however, has not been the case of many companies. The likes of Primark with no e-commerce platform went from making £650 million net sales a month to £0. The huge loss in revenue is down to all 376 stores locations in the 12 countries been closed. Its current total of stock (both owned and committed) currently stands at £2 billion. Once stores open again the possibility of heavy discounting could see them lose even more money. This situation should get them to create an e-commerce platform in hopes of future-proofing the business.


The success of these companies has shown the importance of building a business that is responsible. One that plans for long term survival and looks at every aspect of the supply chain. Even with such successes, it does pose the question 'at what human cost are they benefiting from?.'


Action

I recommend you to join the conversation and prepare for the new normal by reading McKinsey’s report on how best to navigate https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/accelerating-analytics-to-navigate-covid-19-and-the-next-normal


Author: Mayward Martindale

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