Head of Retail & Consumer | Head of Risk | Commercial
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We wrote in April about how businesses could build resilience and prepare for recovery. Seven months on, it is pleasing to see that our clients and many other businesses have adapted to our changing world and found opportunities thrown up by Covid-19 and Brexit.
People and organisations have not allowed uncertainty to paralyse their business, instead seeking creative solutions which we have helped them deliver. We have seen an acceptance amongst businesses that no one can control all outcomes and timescales. They have turned their attention to what they can control and influence, including revisiting their purpose, values and differentiators and understanding where scrutiny may come from beyond shareholders, making changes to their technology and finances accordingly.
Over the course of 2020, we have been talking to clients and others in the market to garner insight into changing commercial practices. We have gathered this together below, in the hope that it offers some food for thought for businesses as well as highlighting some of the areas we can help with.
Many businesses have had to make difficult decisions and reduce headcount during the Covid-19 pandemic. We have seen a lot of engagement from clients considering alternatives to redundancy in order to protect their employees as best they can whilst weathering the crisis. There has been real recognition of the value of employees and their roles. Examples from our clients are:
As well as focussing on employees, we have also seen an increasing focus on customer centricity for all businesses that need to understand and get close to clients, examples of which feature below.
There has been real scrutiny of the actions of businesses during the pandemic and businesses need to be aware of the distinct absence of nuance in the Court of public opinion. However, there is a real opportunity for businesses to be seen to be ‘doing the right thing’ and we have seen our clients taking up such opportunities. For instance:
The financial implications of these gestures are in many cases significant, but the financial impact is balanced against the fact that businesses are improving customer satisfaction and also receiving positive publicity for their actions.
The FD of a food business shared that the lack of events and hospitality in their industry is levelling up the playing field for smaller operators and is also revealing who is really skilled at developing new business.
One of our entertainment clients has recently released some free online content just to get people watching. They have been digitalising their content and looking in their archives for previously recorded shows and interviews which have been shared as podcasts; there is a clear trend in businesses looking to digitalise their offering. Previously, theatres measured their success on tickets sold for ‘bums on seats’ whereas now it is about digital content and digital streams. Another thing is that they are promoting and marketing the CDs and soundtracks to the different shows that they have put on and they have an online shop for merchandise, so they have had to think about ‘modernising’.
In terms of banking and finance, broadening the range of lenders and increasing competition has been a pre-pandemic strategic objective of policy makers and industry for some time. As a result of the government-backed loan schemes (such as CBILS and BBLS) lenders who are accredited with the British Business Bank have been able to extend their product range and market reach to customers they have not previously lent to. The lender’s risk has been mitigated somewhat by the Government guarantees but the impact has been significant. Critical liquidity has been available to allow viable businesses to survive and adapt.
One of our retail clients have brought forward their plans to move away from a store-based credit application system to an online store-card system which is quicker and easier to apply for, more flexible in terms of the credit on offer and involves the lender, rather than our client, taking more of the regulatory risk.
Another client has undertaken a review of their supply chain which was a project that would not have been a business priority prior to the pandemic. They are looking at all business areas and thinking about what they have been doing and reassessing whether it is the right decision/approach for them. Identifying areas where they want more flexibility and addressing these (property/real estate strategy, for example).
I am a convert to WFH, having previously been sceptical, and my team have adapted really well. Communication and sharing of information and ideas has improved.General Counsel
Many businesses have adopted more flexibility in the office working culture and there now appears to be a much wider acceptance of flexible working in the market. One General Counsel told us how he had become a convert to working from home, recognising that his team was more productive, they had built better relationships across the business and the use of technology had made internal communications better and more efficient.
This type of working can be beneficial for employees, as it may improve work-life balance, and can be mutually beneficial for businesses who may be able to reduce their real estate costs (i.e. downsizing their office space).
Some of our clients have previously found it difficult to recruit due to their base locations, however, with the move to remote working, these geographical barriers have been removed and so they are able to attract a wider pool of candidates.
Innovate and build for better
The greater focus on business resilience and risk awareness is a silver lining
The focus on supply chain resilience is good, we are seeing a move away from 'just in time' supply chains to 'preparing for the future'. This will be very relevant for Brexit too and will drive automation and the skills agenda. It is condensing a lot of pain that we would have experienced over to the 4th industrial revolution. We will now be able to deal with these changes more quickly when they come.
We have also seen an increased agility – the response to the pandemic has reminded business what can be done with a "can do" attitude. It has shifted the dial in terms of appetite for risk. Head of Legal of a retail business commented to us that the greater focus on business resilience and risk awareness is a silver lining.
The pandemic accelerated our customer facing digital transformation – to introducing things we should’ve had anyway like live chat, to adding things that are more cutting edge like virtual video appointments.Leading retailer
Many businesses, through necessity, have had to fast-forward their plans for technology adoption and have been thrust into remote/paperless working. One of our clients, a jewellery retailer said to us that the pandemic has accelerated their customer-facing digital transformation and they have introduced virtual video appointments and live chats.
The pandemic has witnessed an increased use of technology, particularly "DocuSign" for remote deal completions. This has led to overall increased efficiency and shown that deals can be completed remotely.
Necessity has driven a lot of invention and, because banking and finance have had to continue to do work and support clients and customers despite being remote, they have adapted. Things that banking clients thought they didn’t want to do or couldn’t do have been accelerated. So, the issues of virtual completions, doing deals remotely, and not having people attend completion in person with wet-ink signatures has been overcome.
The adoption of technology and enforced remote working has in some cases, opened up lines of communications, as there are fewer barriers to holding meetings (i.e. geographical). This is something which businesses are seeing both internally and externally. Whilst everyone is a bit "zoomed out" now, the embracing of Zoom has meant that it is now easier to catch up with geographically distant clients, as it doesn't feel so "weird" to suggest online catch ups as it may have done previously, when you might wait until you were next in their area or make a special journey, both of which take longer.
Communication has also improved for many businesses internally, with one of our clients commenting that their business is more collaborative and more agile at problem-solving - online meetings facilitate that as meetings can happen quicker.
As mentioned above, the actions of businesses often come under scrutiny from the public and Environmental and Social Governance is high up on the public agenda. The roll out and acceleration of the use of technology means that some businesses will not require their employees to travel as much, which will have a positive impact on businesses' green credentials.
Companies are focusing on long term sustainability and will be buoyed by recent positive developments regarding vaccine trials. The focus on what the business needs to look like for customers, employees, suppliers and community is enabling them to look forward beyond survival.
It has been rewarding to work alongside clients, making creative and commercial suggestions based on our understanding of them to help them implement their objectives as well as identifying potential opportunities. One of our clients commented that this time has made them realise the value of lawyers that understand their business.
If this resonates with you, please do get in touch to see how we can help your business rebuild and innovate for the future.
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