Kiwi retail businesses are proving how resilient they are despite the on-going disruption caused by COVID, according to new research from 2degrees.
According to the most recent Shaping Business Study from 2degrees, prior to this lockdown 34 percent of Kiwi retail businesses were ‘just getting by’, finding this period challenging and quite stressful, and worrying about the viability of their business in the long term. Surprisingly, while supply chain disruption was one of the main things hindering these businesses from getting back on track (72 percent), not far behind this was customer engagement, or a lack of (65 percent).
This points to the fact that standard ecommerce platforms can’t be the sole answer to thriving during lockdowns, given expert advice and human interaction can be just as important to choosing which product to buy.
The Shaping Business Study surveyed approximately 1,000 businesses across New Zealand in September to gauge how they were coping with lockdown. Here’s a few of the more interesting take-outs:
- Prior to lockdown, 30 percent of businesses felt more optimistic than in 2020;
- This rose to 39 percent of employing businesses;
- Half (51 percent) felt the same about their business as a year ago;
- 19 percent felt pessimistic and that things were a lot harder;
- Those who founded their business one year ago felt significantly more optimistic (58 percent) compared to others. Businesses that were founded 11-15 years ago felt more pessimistic (31 percent) compared to others.
The outlook wobbled somewhat following the arrival of August lockdown, but overall, their pessimism remained surprisingly low.
- The number of businesses feeling optimistic decreased only slightly to 26 percent;
- Nearly a third (31 percent) said they had been optimistic and now felt unsure;
- Fewer businesses (a drop to 14 percent) said they felt more pessimistic than before;
- This was even though nearly a quarter were unable to operate during Alert Level 4;
- This rose to 31 per cent of Auckland businesses.
This resilience may reflect how well businesses were prepared for lockdown. 2degrees found more than two-thirds (68 percent) felt well prepared when lockdown hit, with just 13 percent caught off guard. Admin or support, healthcare providers and education businesses were the best prepared, with manufacturers, personal services, and wholesale trade businesses feeling least prepared.
“However, there is a difference between businesses’ operational preparedness, and the emotional preparedness of their teams,” says Andrew Fairgray, Chief Business Officer at 2degrees.
“More than a third of Kiwi businesses say they were emotionally prepared for lockdown and their teams were still coping well, with 13 percent struggling. That means nearly half of businesses (47 percent) are ‘just getting by’, illustrating a high degree of ‘in the middle’,” he says.
Among larger businesses claiming to be ‘just getting by’ the biggest challenge was supply chain disruption (46 percent), while smaller businesses and sole traders were more concerned about customer engagement. More than half of businesses ‘just getting by’ (53 percent) said insufficient or inadequate customer engagement was the main thing holding them back.
“This shows one of the opportunities for growth for businesses looking to transform their prospects is investment in digital and skills that enable more regular contact and better engagement with customers,” says Fairgray.
Notably, businesses who have had their challenges but who are slowly getting things back on track said improved digital access or skills (26 percent) and better technology (20 percent) had helped them do so.
Interestingly, 49 percent of retail businesses had started doing something new in the past year, compared to 39 percent of all businesses. 50 percent of those retail businesses had made a significant change to their product or service offering, and 35 percent had changed their sales distribution model.
“For all Kiwi businesses battling through lockdown, the results are reason to be proud, demonstrating strong resilience despite the fatigue, and a high level of preparedness for sudden change. We see a big opportunity for many organisations to grow digital capabilities to boost customer engagement. The next time we conduct our study in early 2022, we’d love to see a shift by even more Kiwi businesses,” adds Fairgray.