Will pivoting your business be enough to survive Covid19?

When the first lockdown was announced in March to restrict the spread of the novel coronavirus, Gurugram-based bag manufacturer Crea Worldwide had its gameplan ready. The firm, which designed and manufactured bags for a diverse clientele spanning across cosmetics, fashion, travel, health and fitness and apparel, quickly pivoted its business.After the nod from Defence Research and Development Organisation (DRDO), Crea started manufacturing breathable and hydrophobic PPE kits to help frontline workers and medical professionals waging the war against Covid. Since April, the company has sold over 50,000 face shields, 40,000 coveralls, 200,000 isolation gowns and over 50,000 N95 masks. “We predicted early on that there would be a major disruption in the business cycle and knew that a lot of money would be stuck for a very long time. Hence, we decided to pivot,” reasons Upkar Sharma, Founder & CEO, Crea Worldwide. But six months since their transition to a new vertical, the unlocking phases have now implied that the demand curve is again undergoing a clear shift. What does this mean for the scores of small businesses who had changed gears during all the chaos to meet the challenges of a tough economic environment? Will it mean reinvention 2.0 for them or does it imply a new struggle, one more time?Getting a makeoverSharma shares a grim outlook on what lies ahead for the economy. “One consistent theme is that we are headed towards a recession. Things will get worse before they can get better,” he adds. He backs up his statement by explaining that since the loan moratoriums are now over, cash flow pressures would expectedly increase and make it arduous for businesses to sustain themselves. K R Sekar, Partner, Deloitte India foresees that though the demand for Covid essentials will continue even after the vaccine, a re-orientation will be visible in such businesses. “Those who pivoted will continue, however, they will also diversify into other allied areas. They will continue to do increasing business so that they survive on both sides and this will be the case at least for a couple of years,” he says. Sekar’s views are aptly reflected in the strategy being adopted by MSMEs to cater to the new demand dynamics coming in. Take the case of electronics manufacturing company Rashmi Rare Earth, which had set-top boxes as its primary line of business previously. Post lockdown, the company branched out to manufacture surgical masks and is now readying itself for another diversification. “India urgently requires nitrile gloves. At present there is no production in India and everything is being imported from Malaysia. We will start production after 4-5 months and manufacture 6-10 lakh gloves per day. The demand for this product is very high in India,” reveals Sunil Patwari, CEO, Rashmi Rare Earth. The company plans to impart training to its engineers online with the help of Chinese experts, just as it had done when it had switched to making masks. Though the manufacturer has seen demand taper down for its masks by 30-40% since March because of imports from China, they hope that government restrictions on import of commodities will make the market revive again. 78526715Sharma of Crea also agrees that demand has thinned not because of the virus spread abating, but because there is oversupply in the market. The company launched MadMask in June, positioned as a protective mask brand, clocking sales of Rs 10-11 lakh month-on-month. From now on, the company has a multi pronged approach to follow. “It is sure now that fashion, which used to earlier contribute 90% to our turnover, will not yield any returns at present. To sustain growth and solvency of the business, we will explore the direct-to-consumer (DTC) route and launch three brands within the fiscal year. The pandemic has sped up all our plans. It is a great opportunity to do something at a lower cost,” he says. Asset utilisation Sagar Daryani, CEO and Co-Founder of Wow! Momo couldn’t agree more. In April, the company had launched its grocery arm ‘Wow! Momo Essential Services’ in partnership with major FMCG players to deliver essential grocery supplies. Looking back, Daryani says that the grocery business kept the cash flows running in the three months of May, June and July. And they have chalked out other plans for it now. “We made 15% profit in the three months from the grocery business. However, from July it started declining quite sharply. We will rename it as Wow! Momo Select by the end of this month, which will showcase 10-12 products as against the 350 products we had earlier. These will be niche products which are not largely sold across modern trade channels,” he highlights. Daryani says that they always knew this vertical had been more for the interim and were not ‘emotional,’ about it. “It taught us more about FMCG, and we utilised the asset better. More than anything else, it garnered us a lot of experience to pivot in the future,” he adds reflectively. The QSR chain will now look to create a new line of ready-to-eat momos which had earlier been planned for the next financial year. This, the company believes, will carry a lot of traction given how the trends of do-it-yourself (DIY) and work from home (WFH) are here to stay. Tapping into the pulse of the market and innovating has, in fact, been an integral component for a host of small businesses who have synced up with the consumer shift in the various unlock phases. Rahul Bajaj, Director of Shree Shakti Enterprises, a kitchenware supplier to Walmart India cash and carry stores, had pivoted in March to manufacture hand wash stations which operate through a foot pedal. Bajaj is now focusing majorly on their core business of kitchenware, while 20% of the team is continuing to work on products related to the pandemic. However, even in the core line of business, Bajaj says that trends have undergone a major overhaul from the pre-Covid era. Out of the box, pleaseBajaj is now catering to the increased demand coming in for products which he terms as ‘fashion kitchen’ choices. “We sold one lakh cake moulds in the last three months alone versus selling the same quantity in the last five years. But now their demand is far more as everyone is making cakes at home. Earlier the percentage of such ‘fashion kitchen’ products was a mere 10% which has now skyrocketed to 45%,” he says. 78526737Next on the horizon is transforming the ‘touchless’ category with novel ideas that can address the needs of sanitisation and convenience. “One has to think out of the box. Any difficulty has to be converted into opportunity,” adds Bajaj, who is also part of the Walmart Vriddhi supplier development programme which aims to train 50,000 MSMEs to enter domestic and global supply chains.Another online seller, Sanjib Prasad, Partner at Kartbin Online Services which sold products in the skin and hair care segment before the pandemic, is candid enough when he says that they never expected such an enormous demand for sanitisers. Earlier, these used to be only a small part of their catalogue. This, incidentally, has been a great learning for them as a business. “Sellers should expand their product portfolio because one can never know what product would boost sales. I never thought sanitisers and masks would be the most sold items amongst all the products. We used to receive orders of over 2500 masks per day during the lockdown,” he reveals. Ecommerce played a significant role during this time in helping a host of MSMEs and small businesses withstand the shock waves of Covid. Faster digital adoption by sellers became more of a necessity than a luxury to survive the crisis. And that has helped them sustain. “Businesses that continue to evolve with the changing external dynamics will see long-term growth. We continue to work closely with our MSMEs, sellers, artisans, weavers, handicraft makers and Kirana partners to bring about positive impact to their business growth and sentiment revival,” asserts Rajneesh Kumar, Chief Corporate Affairs Officer, Flipkart Group.However, all said and done, cautiousness is the sentiment riding high even now with fears of the virus continuing to play up, one way or the other. While small businesses have tried to hold the fort during this time, the next challenge will be to cater to the ever evolving consumer needs and the competitive environment unraveling itself. “Brands that have diversified and been agile will stay. After all, this period is all about remaining alive,” sums up Daryani aptly enough.

from Economic Times https://ift.tt/3iJM6yA