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June 19th, 2020 - Covid-19

Public confidence and the COVID economy

Through the last three months we’ve been consulting experts to help our clients and readers understand the immediate and long-term impacts of COVID on brands and business operations. This week, I called on Ken Boessenkool, independent public policy economist, to talk about how public confidence is impacting the economy.

Public confidence and the COVID economy

If you open it, will they come?

Most of Canada is now in various phases of reopening and the question many businesses will be asking is NOT “can I open?” but rather “should I open?”

This won’t be an easy question to answer.

The reality is government didn’t shut down the economy, the public did. Open Table reservations fell by three quarters before governments ordered restaurants to close. People heard about a strange and dangerous virus, and didn’t feel safe going out.

And the current reality is government cannot open the economy, only the public can. COVID stories spread as fast as the virus. People will continue to hear – and have a propensity for – bad news. A rise in cases in Edmonton. Spikes in Florida, California, Arizona and Texas are making news and creating nervousness.

Most recessions are caused by a lack of confidence due to things like rising interest rates, the end of a business cycle or a financial crisis. As a result, people demand fewer things – what economists call a demand shock. The COVID recession is not a “typical” recession. This one is driven by a supply shock, not a demand shock – people are not economically uncomfortable, they are physically uncomfortable.

Our economy will only bounce back when people feel safe. This time it’s not about money. Of course people will need purchasing power, but money alone won’t be enough to fill restaurants, spas, gyms and other businesses that the public remains wary of as they watch the daily numbers with concern.

What that means for business is that they need to do more than provide excellent products and services, they need to make people feel safe.

Business owners who throw open their doors and wait for life to return to normal will be waiting a while. Success will come to those who change their business models to match the needs of the population during the pandemic.

And with predictions that up to 75 per cent of restaurants will close forever due to the pandemic, owners of restaurants and cafes have the most work to do as they consider not whether they can open, but rather should they open.

Starbucks is doing just that, citing changing consumer habits due to the COVID-19 pandemic, announcing the closure of up to 200 Canadian locations and the repurposing of other locations to pick-up only.

This move by the coffee giant is part of their plan to “build resilience” amidst the ongoing crisis.

Building resilience can only be done by studying consumers to understand the products, services and experience they are looking for right now. And what they’re looking for has changed dramatically since we ushered in 2020.

What do people want right now? Comfort foods, safe get togethers with friends and family, ease and a bit of fun as the cherry on top.

For instance, restaurants need to think about picnic baskets full of comfort food and sassy cocktail kits, staycation brunches that can easily be served al fresco at home and BBQ kits with all the fixings that make socially distanced get-togethers a breeze for busy families.

The ideas are endless but menus shouldn’t be because consumers are suffering from decision fatigue. They want a few good choices that are easy to pull together after busy days of working from home while homeschooling and training the puppy they adopted during COVID. More than anything they want a quick break from braving the grocery stores with flimsy masks and picked-over selections.

Slimmed down menus and family-style meal kits not only help consumers, they help restaurants cut down on staff, excess ingredients, individual take-out containers and third-party delivery fees.

COVID created curbside pick up, consumers have embraced it and want it to continue. Just like they want their Starbucks coffee without having to go into the shop, they’re looking for the restaurant experience but served up in the safety of their home.

That’s not to say no one is going out. We predict people on patios or heading out for a quick fix from their favourite eatery, but these small steps aren’t enough to build resilience. They won’t protect businesses from a second wave of COVID or from public fears as numbers rise – as they undoubtedly will over the coming weeks.

The best protection for any business is making changes to match what consumers want right now, and then communicating those new offerings in a way that attracts attention and delights audiences.

And if businesses do this, people will come.

With gratitude,

Shannon Larkins
Shannon

Shannon Larkins

Founder, Blackcoffee Studio

Over the course of 15+ years, Shannon has grown Blackcoffee Studio out of a love for building brands and reputations. She serves up Blackcoffee as a morning ritual while caffeinating clients and readers on the regular. You can find her at www.BlackcoffeeStudio.com

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Blackcoffee Studio

Blackcoffee is a premium brand development agency, offering luxury brand experience to clients at home in Calgary, Canada and around the globe. Brands create experience, set you apart from the competition and drive growth. Anyone can bulid a business but only the exceptional can create a brand. Are you ready?

Shannon Larkins

Shannon Larkins

Hi I’m Shannon, founder of Blackcoffee Studio. A former reporter, spin doctor and politico, I now focus on using my powers for good.

I create mighty brands for clients and share their stories with the world. I’m also rather addicted to my nutty family, dogs with pushed in faces, Mexico and of course coffee … black.