COVID-19 Crisis: Week 2 Industry Insights
Friday, March 27th, 2020
We hope you have a restful weekend ahead of you. We recommend watching Tiger King on Netflix if you can; it’s a quasi-exotic animal show-and-tell turned true-crime docuseries and a much-needed break from the headlines surrounding our current circumstances. However you decide to spend your weekend, stay safe, and we’ll see you Monday with an update on what happened over the weekend.
As of today, over ⅓ of the world’s population is under some form of “shelter in place,” the 2020 Tokyo Olympics were postponed to 2021, and the U.S. now has more confirmed cases of the novel coronavirus than any nation in the world. Spain recorded its worst day, and Italy and other countries face significant shortages of PPE, calling on the public and private sector to help collect any available stockpiles. In an uncoordinated yet seemingly global joint effort, countless brands — big and small — are stepping up to pitch in and rapidly produce PPE and emergency supplies for health workers.
It’s a truly remarkable demonstration of global solidarity as people around the globe join forces to defeat the virus and protect frontline workers. Most recently, Nike, Eddie Bauer, and GAP were added to the list of retailers doing good. Note that these efforts are made without the use of the U.S. Defense Production Act, which can mobilize private-sector manufacturers to produce equipment in national demand. Just good brand doing good things.
Store closures, WFH measures, and local shelter in place directives are the primary reasons for the consumer behavior shifts that are occurring across sectors. The next immediate economic implication of the coronavirus outbreak for retailers will likely be strains on supply chains and subsequent deep discounting to move inventory while it’s still possible. For some, order fulfillment is already a concern that’s halted seemingly all other business operations down the supply chain.
For technology and B2B businesses, many companies are exercising due diligence ahead of an anticipated recession by cutting costs and nonessential spending. Nearly all brands have shifted marketing message and imagery to avoid overly aspirational tones, and group model photography. Consumer interest is hyperfocused on the outbreak, and as such, advertisers must confront the challenging realities of being a business in a public health crisis. For many, it’s using advertising channels to share messages of solidarity; for others, it’s a media moment of silence and determining if it even makes sense to advertise or share promotions.
After last week’s global panic-buying and nauseating stock market volatility, corporate workers and those not on the front lines seem to be settling down and finding a routine within the new normal as ecommerce performance remains strong. As such, here’s what we’ve learned and uncovered this week.
Many brands are reconfiguring their manufacturing and supply chains to produce PPE, and ecommerce continues to soar, including brands focused on home essentials, meal delivery kits, and other D2C delivery-based goods. Whether it’s the lipstick effect or other psychological reasoning, new customer acquisition and online engagement have increased exponentially for many brands.
For larger companies, maintaining agility continues to be a priority and struggle. Neiman Marcus is currently weighing bankruptcy as it faces coronavirus-related store closures and massive debt. The luxury retail brand is the first major department store to consider bankruptcy in the wake of the outbreak and economic downturn. Neiman’s will continue with online sales but expects its business to suffer immensely due to store closures.
Supply chains will inevitably face pressure, especially those with overseas suppliers also battling a public health crisis. Victoria’s Secret and subbrand PINK was one of the first to delay online orders as a result of internal suppliers but has now shifted supply chain strategies to meet demand. Net-A-Porter, on the other hand, has temporarily closed its distribution centers, and thus its online store, to comply with local shelter in place measures. We’re likely to see more brands announce the same in the days to come.
In light of major Fashion Week event cancellations and retail store closures, many fashion influencers are turning to TikTok to create unique or aspirational content. Fashionistas aboard the trend include Charlotte Groeneveld from The Fashion Guitar, Natalie Suarez, Danielle Bernstein of WeWoreWhat, Kellie Brown, and Brittany Xavier, among others.
Products and content for DIY wellness and beauty are becoming an increasingly high priority for people as they reduce their normal beauty and cosmetic treatments and opt to stay at home. Whether it’s searching for “spa day at home” or shopping for the best manicure kit, customers are eager to find beauty and cosmetic solutions that fit the bill for their current circumstances.
Over one million service workers in the beauty industry are beginning to feel the pinch as shelter in place directives across the nation deem beauty and salons as nonessential; forcing them to close for the foreseeable future. Of course, it’s not only retail and beauty storefronts that are closing.
In recent days, KKW Beauty and Kylie Cosmetics released statements confirming supply chain and logistics challenges that will halt the delivery of online orders for the foreseeable future. As a result of shelter in place restrictions in California, the brands have temporarily closed fulfillment centers, and they are offering the ability for customers to cancel their orders and receive a full refund. The two cosmetics brands are still accepting orders, but disclaiming that fulfillment and delivery will be delayed.
For others, many brands have paused production and are quickly reconfiguring manufacturing centers to pump out PPE and emergency supplies. Meanwhile, Amazon sees incredible ecommerce performance across the beauty and cosmetics categories. Of note, Amazon’s beauty and personal care products are an exception to the shipping policy restrictions announced last week. As a result, this category is up an impressive 70% compared to the beginning of the month.
The long-term effects of the coronavirus outbreak on the beauty and retail industries are near impossible to anticipate, but we may see sustained declines in in-person activities even after things return to normal. As personal finances are impacted by economic volatility, discretionary spending will likely be restricted for millions of consumers around the world. The temporary practice of at-home beauty regimens or online delivery may stick. In some cases, it’s too early to tell. Still, analysts estimate that even the elimination of a routine (beauty) service every other week could result in a 50% decline for businesses and workers.
The biggest news development from this week is the official postponement of the 2020 Tokyo Summer Olympics to 2021. This marks the first time in history that the Olympic Games will be delayed to another year, but organizers have assured that the Games will still be called the 2020 Olympics. The change of plans will result in the renegotiations of over $1.3B ad deals and revenue. Japan reportedly spent $10B preparing for the Summer Games in 2020, and many are analyzing the economic impact this will have on an already struggling economy.
On a lighter note, brands across nearly every industry, including beauty and retail, are moving to Instagram’s social video capabilities to livestream content and better engage with customers. Mentions of Instagram Live (IG Live) surged by 526% in the last two weeks. One noteworthy example was Bobbi Brown’s “Relaxing Skin Care” livestream, which garnered 17k views.
Others popular livestreams this week include:
Beyond Wonderland: Hosted a virtual rave-a-thon that streamed on Twitch, featuring DJs and artists from the brand’s roster.
Bud Light: The brewing company sponsored the “Bud Light Dive Bar Tour: Home Edition” with Jake Owen — a free concert on Instagram Live that encouraged viewers to donate to the American Red Cross.
Chipotle Together: Chipotle is hosting a series of daily Zoom sessions, featuring appearances from celebrity guests.
NuFace: Conducted virtual house calls via Zoom or Facetime with beauty influencers — holding master class calls to teach watchers to use NuFace devices.
As mentioned earlier this week, consumer behavior and media consumption are rapidly evolving as the result of self-isolation and social distancing. Houseparty is making a comeback, livestreaming is a lifeline, and news consumption has become the new pastime for U.S. consumers. Total social media engagement across all U.S. brands, publishers, and media is currently up 9% YOY, while social media content is down 5% YOY, according to Shareablee. In like manner, publishers see high demand and a significant boost in traffic to commerce content, which directs increased traffic to ecommerce sites. According to Digiday, ad spending on publishers jumped from $4.8B the week of 2/17 to 9.6M the week of 3/9.
President Trump’s daily coronavirus briefings are pulling an average of eight million viewers a day, and tech companies continue to donate ad inventory to show PSAs about the coronavirus. Another surprising change since this all began is internet culture. As everyone shifts to primarily digital channels to stay connected, the internet has become — dare we say — kinder. The New York Times does a great job of examining this phenomenon in a recent episode of The Daily. Entertainment production shifts span across celebrities, late-night TV, and live streaming:
Celebrities: Social media platforms, including Facebook, Instagram, and TikTok, have seen celebrities engaging with audiences in new ways. For talk show host Ellen Degeneres, it’s a running Instagram video series on how to fill her hours of free time (including a phone call with Michele Obama), for countless musicians and singers, it’s “free” concerts on Instagram Live.
Late-night TV: Hosts like Jimmy Fallon and Conan O’Brien continued their shows by staying home, shifting to quirky “at-home” episodes with relatable segments and encouraging messages that showed solidarity with viewers doing the same.
Livestreaming: Livestreaming platforms like Twitch are seeing record-breaking days as viewers find alternative ways to pass the time indoors. New faces continue to join the platform, including the hosts from Reply All and a New York Times columnist. Notable video game titles include Call of Duty and Animal Crossing: New Horizons. Streamers are seeing minimal disruptions to their daily routines but pulling in new audiences to cater to.
According to the Global Web Index’s Coronavirus Research, over 40% of people are interested in watching postponed events via livestream, including sports events and music concerts. Around 20% are interested in live-streamed theatre shows, with millennials and the high-income households reporting the highest interest in livestreaming accommodations. Age is a strong influence on comfort and interest in livestreaming as 50% of boomers are not interested in any live streaming, compared to only 20% of Gen Z and millennials.
With quarantines and city-wide lockdowns, YouTube and Amazon Prime Video continue to experience record-breaking days and are now offering free programming as well.
For the time being, slowing down the economy seems to be the most effective way of slowing the virus — though as testing becomes more readily available, confirmed case numbers are only rising, pushing back the timeline for when the U.S. is open for business again.
In the U.S., more than three million people filed for unemployment benefits last week, the most significant one-week increase in filings in U.S. history. With one U.S. Senator ill and three other U.S. representatives in self-isolation, Congress is working diligently to vote on legislation without convening the full 435-member body of the U.S. House of Representatives. In a unique act of bipartisanship, the Senate unanimously passed a $2T stimulus bill, and other countries have already passed or are considering doing the same.
The bill is intended to offset the devastating financial impact incurred on businesses, families, and hospitals across the nation. The bill includes direct support for both small and large companies as well as direct payments to families. Digital banking is on the rise, and similar to retail brands that stepped up to the plate, credit card issuers, including American Express, Bank of America, and Capital One, are offering increased customer assistance for those hit hardest by the outbreak’s impact. This assistance includes the ability to skip payments, avoid late fees, and receive lower interest rates. Real estate and other ventures have effectively hit pause for the time being as many dealings, including home showings, sales, and some mortgages, are required to be in person.
More businesses are hosting webinars and “going live” for customers in place of in-person meetings and traditional communications. What’s been interesting is the scrappy nature of many of these projects. Twitter is filled with “scrappy” turn-key Zoom calls and virtual networking opportunities. For many, this time presents a unique opportunity to connect with brand followers and share insights not typically shared in a business as usual setting about how technology and B2B companies are faring amid the turmoil. This level of transparency and human interaction with the people behind the brand are paying off now, and likely will continue to do so over time.
As organizations get settled into WFH arrangements, new efforts around pipeline generation and virtual selling are coming to light. For many IT infrastructure and DevOps businesses, remote work is second nature. As a result, these companies are shifting content marketing efforts to focus around remote work survival kits and tips for staying focused at home to start the conversation with prospects; guiding rather than selling during this time. Event marketing budget reallocations remain a priority for B2B companies as marketers prepare for a likely recession and engage in cost-cutting measures.
Domestic airline travel has essentially come to a halt, with international travel not faring any better. While many flights are still proceeding as planned, the question on everyone’s mind this week was: should flights be grounded for the foreseeable future? Most cruise liners have docked, and the Navy hospital ship U.S.N.S. Comfort is on its way to Manhattan to support New York hospitals. The ship is expected to arrive on Monday. In a surprising development, cruise lines were excluded from the recent $2T stimulus package passed by the U.S. Senate, despite being an early source of coronavirus infections in America.
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While most travel-related businesses are feeling the pinch, many are stepping in to support the community. New York City’s Four Seasons Hotel is making itself available to temporarily house doctors, nurses, and hospital staff as they continue to battle the disease on the frontlines. Airbnb asked its hosts to do the same for first responders around the country. In the latest attempt to prevent unnecessary travel, the U.S. National Park Service announced the closure of Yellowstone, Grand Teton, and Crater Lake to the public until further notice, and other closures may be on the way.
Posted by Abby Long
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