When Your Ship Doesn’t Come In – 3 Considerations for Post-Pandemic Recovery
There’s a hill near my home with a stunning view of San Francisco Bay. It’s not uncommon to see tanker ships moored in this part of the Bay waiting for their turn to off-load cargo. On a recent walk around the hill, I noticed something seemed off. The ships that were moored looked different. It felt like an Uncanny Valley moment, but with ships. Then it hit me. The tankers I was used to seeing had been replaced by massive cargo ships stacked high and wide with containers.
Container ships transporting goods are backed up in the US. Worse than any airport’s international arrivals hall, the traffic jam is putting financial pressure on many companies, from Apple to food manufacturers.
The Washington Post recently indicated that some items for the summer, like fireworks, are going to cost double to ship, even with reduced volumes. The cost of shipping a container of goods rose 80 percent just since November and nearly tripled over the last year according to the Freightos Baltic Index.
The shipping challenges are coming from our upside-down pandemic existence. Shopping habits and behaviors have shifted channels as well as categories. Spending on restaurants, travel, and movies has been replaced by home improvement projects and home-cooked dinners. That rendered the finely tuned supply chain forecasts obsolete as supply and demand made dramatic shifts.
Some companies are turning to air freight to get around the surface delays, among them is Peloton - the home fitness phenom is looking to regain goodwill from new customers enduring months-long waits for equipment coming in from overseas.
What exactly does this mean for your consumer in the coming months? Rising prices.
First-Mover Dis-Advantage?
Carrington Farms is among the many manufacturers currently absorbing price increases, but for how much longer?
“Costs are going through the roof. We are waiting to see which brand raises their prices first, then the remainder will follow,” Eben said.
Inevitably, this means higher prices for the consumer in many categories, just as the US is trying to get the economy re-ignited on the heels of vaccination-led herd immunity.
Eben warns, “these price increases are affecting everyone with every product. Eventually it’s a cycle. The consumer pays more, then they have less income. Then he needs to make more money. They ask for a raise. Then the manufacturer has to raise prices again to afford the increased salary.”
“Margin is killing us and every other manufacturer now. This can only hold for so long.”
–David Eben, CEO of Carrington Farms, an innovative organic food product company during a recent email exchange.
3 Considerations for Your Business
Whether or not your product is facing a price increase due to shipping or other COGs challenges, your consumer is going to be dealing with price increases on multiple fronts.
Here are 3 things to consider:
1. Which World Does Your Consumer Occupy?
“White collar” or “knowledge” workers are a more fully-employed sector than “blue collar” or service workers. The Federal Reserve says at least 20% of workers in the bottom wage quartile are unemployed. Coming out of the pandemic, this will create two different worlds and further separate the divide from the “haves” and the “have nots.” Where do your consumers fall? Fully employed knowledge workers will be able to absorb price increases better than workers in lower paying jobs or the unemployed.
2. How Transparent Can You Be?
Consumers trust brands that are honest with them and deliver what is promised. Goodwill earned early on translates into lasting loyalty. Take inspiration from Peloton by owning up to problems and be clear about steps being taken to rectify them.
3. Meet Consumers Where They Will Be, Not Where They Are Today.
Ignite 360’s Navigating to a New Normal study has consistently found 72% of US adults will be seeking change when the pandemic is over. Most of the change is focused on gratitude and adjustments to life that enable greater presence with family and friends. This will lead to over-compensating behaviors in some sectors like travel and hospitality as people “make up for lost time.” Change will also show up in the workforce as some people realign their work life balance, trading in long commutes for more virtual work time. Where does your product or service fit? How has the category changed since last year? What is the over-compensation scenario and what is the re-alignment scenario? How can your brand respond to meet consumers where they will be?
The End Is the Beginning
The moment we get the “all-clear” signal from the government is when things are going to get interesting. From that moment forward, we will be wrestling with changes born not just of the way things were before the pandemic, but how 18-months of pandemic living has impacted how we prioritize our values. One-hundred years ago, the 1918 pandemic led to the “Roaring 20’s.” Will we see something similar occur or is another future in-store for us?
I’ll be exploring The End Is the Beginning and how brands can start planning for the end of the pandemic during a presentation on February 23 at the Virtual Global QUIRK’S Event.
Using qualitative and quantitative data Ignite 360 collected from early 2020 to today on how consumers have adjusted throughout the pandemic, I’ll share implications and thought starters for the future in work, shopping, recreation, and what that means for adapting to the “New Normal.”
Register here!
