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COVID-19: How brands respond now could define them forever

Gen Z consumers have a very clear idea of how corporations should respond to the current crisis. And the consequences of falling short could be dire.

As my fellow writer Charlie recently talked about, a brand’s purpose, or rather their purposeful actions, are the operating procedures they strive for on top of the necessary market goal of ‘increase capital’. Whilst all brands are first and foremost here to make money, the smartest of them have come to realise that the best way to do this when dealing with the Gen Z consumer is to weave into your brand purpose. Brands that have a social conscious simply do better in the youth market.

The COVID-19 crisis has provided perhaps the best opportunity in modern history for brands that claim to have a social conscious to put their money where their mouth is. Given that approximately 1/3 of the world is now on lockdown, typical buying behaviours are on hold, and brands must adapt. We’re fast entering a recession, meaning that typical spending power is also on hold, and brands must adapt. The eyes of the world are on large corporations, many of whom have monopolies on crucial manufacturing resources, to see whether generosity can trump their bottom line. Many are living up to the challenge.

Supermarket giants change hours to tackle COVID-19 pandemic ...

According to recent research done by globalwebindex, consumers are broadly in favour of corporations addressing COVID-19 directly and implementing seismic changes. 83% of respondents in 13 markets reported that they think brands should provide flexibility in payment options during the pandemic, and 81% think they should offer free services to help pitch in.

Additionally, 67% think brands should suspend regular factory production to make essential supplies, like face masks and ventilators, whilst 79% think that all non-essential stores should be closed down. Notably, this data was collected over a week ago so it’s likely that these numbers have only gone up.

Chart showing consumers look to businesses to lead the response.

The above graph reveals that the global population is generally happier with how businesses have reacted to the coronavirus than the actions taken by their governments. Political leadership has been slow to emerge in some countries, and outright abysmal in the US, the world’s leading democracy. CEOs have the power to make change whilst politicians drag their feet. Edelman’s research into trust and coronavirus tells a similar story.

Crucially, globalwebindex’s surveys show that only 37% of consumers want brands to continue advertising as normal during the crisis. This is the clearest sign that brands will be punished for ignoring the crisis and not altering the way they interact with the market. The most effective responses will likely go beyond acknowledgement and positivity but will draw on other parts of the business to take action.

For example, Pret a Manger is currently offering free hot drinks and 50% off all other produce for NHS workers during the crisis and has been for some weeks. CEO Pano Christou announced on his blog the decision on his personal blog, where he thanked NHS workers for their commitment to restoring order and health to the UK.

Pret NHS 2

 

Amongst the kerfuffle caused by the outbreak, it’s fallen to supermarkets to ensure vulnerable and elderly customers are well provided for and to protect their own staff. There’s a broad consensus that restrictions are needed to prevent people from unreasonably stockpiling resources, and Asda, Sainsbury’s, and Aldi have all put limits on the purchasing power of each individual entering their stores.

Morrisons has gone further, introducing guarantees on sick pay to their staff including those who are isolating asymptomatically, expanding their home delivery system, and committing to pay small farm suppliers their full asking price on time despite prevailing circumstances.

In the world of high fashion and luxury, conglomerates LVMH and Kering are stepping up their efforts of alleviating corona-induced shortages by pledging to provide around 40 million surgical face masks to France, one of the many countries currently running low on medical supplies.

France to requisition all face mask stocks, production: Macron ...

Other fashion labels and celebs are making monetary donations, with Kim K’s brand SKIMS promising to donate 20% of its profits for the foreseeable future to the fight against COVID, whilst Blake Lively and Ryan Reynolds have donated $1 million USD to US and Canadian food banks, and Kanye West is donating free meals to help relief efforts in low-income areas of Chicago and LA.

Brands seen not to be following in this spirit of generosity have been receiving a substantial amount of media heat. In the US, retail giants Macy’s and Gap, as well as Kohl’s, have laid off a substantial amount of their work forces without pay. These chains, that employ more than 420,000 people collectively, have warned that longer-than-expected store closures are putting them in an ‘impossible’ position.

Unions have been critical of the move. Stuart Applebaum, president of the US retail, wholesale, and department store union has publicly stated that these retailers ‘need to do much more for [their] employees than what they have announced so far… They will be judged in the future by how they treat their employees now’. As of 2019, only 7% of Macy’s workers were represented by a union, according to the Financial Times.

Meanwhile, Twitter users have taken up arms against British billionaire and retail magnate Sir Philip Green. Green’s Arcadia Group, which is the parent company of high streets brands like Topshop and Dorothy Perkins, has been given taxpayer backing through the government’s job retention scheme to furlough 14,500 workers. The news comes just days after Sky News reported than the group was halting all payments to its pension scheme due to corona instability.

The internet came together to suggest that the disgraced businessman sell one of his three yachts, which include the £122m Lionheart, £63.5m Lioness V, and the £9.3m Lionchase respectively.

Given the quantitative research conducted by indexing companies and the qualitative responses from consumers that smack you on the face when you open social media, it’s obvious that people are paying close attention to how brands are conducting themselves at the moment. Whilst not all businesses have the utility to produce their own ventilators like Tesla has pledged to do, brands that have a more laid-back or aspirational image can still contribute in other ways. For example, Scottish brewer Brewdog have opened virtual bars to help alleviate the stress of social distancing.

If you’re a corporation, it doesn’t pay to have a cautious approach to coronavirus. COVID has taught us that brands embracing legitimate social change are those that most capture the hearts of Gen Z, a group of committed consumers worth around $143 billion USD in buying power who have been shown to overwhelmingly reward positive displays of brand purpose.

Whilst the Occam’s razor approach to evaluating cause and effect suggests it’s likely brands are taking the reins on COVID with an eye to future consumer retention (and future profits), perhaps there is a Gandhi amongst these Fortune 500 types who genuinely wants the best for their consumers and employees to the detriment of all else. Either way, the effects of a solid brand purpose during this time are paying off dividends.

 

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