The COVID-19 pandemic has upended norms about retail, brand loyalty, and consumer behavior. That’s creating both a massive challenge and a rare opportunity for bold players to accelerate growth.
In this episode of the McKinsey Podcast, Diane Brady speaks with senior partners Brian Gregg and Aimee Kim about the strategies that retailers and brands are deploying to not only survive the pandemic but also emerge ahead of the competition. An edited transcript of their conversation follows.
Diane Brady: Hello and welcome to the McKinsey Podcast. I’m Diane Brady. Is it really possible to grow your business in a global pandemic? We’ll find out when we talk to two of McKinsey’s growth gurus, as I call them. Brian Gregg is a senior partner in San Francisco, who coleads McKinsey’s Marketing & Sales practice in North America. And Aimee Kim is a senior partner in Seoul, who leads the Marketing & Sales practice in Asia. Brian and Aimee, welcome.
Brian Gregg: Thank you, Diane.
Aimee Kim: Thank you, Diane.
Diane Brady: So back in May, you cowrote a piece on rapid revenue recovery. Let’s start with you, Brian. Rapid revenue recovery—those are not three words that I’ve heard put together very often during this pandemic.
Brian Gregg: You’re right, Diane. It’s a bit of a mouthful, isn’t it? But rapid revenue recovery is exactly the kind of phrase we’ve found many executives—and frankly, our clients—coming to us with as the pandemic emerged and as it has persisted. Rapid meaning as fast as humanly possible. Revenue meaning the top line—sales and how to get that engine going again. And then recovery because, let’s face it, a lot of the uncertainty out there has forced a lot of companies to be in recovery-and-crisis mode. So that’s why they all come together.
In terms of what’s changed since we published our article a couple of months back, the answer is, a lot. This is where, Aimee, I’d love to hear your perspective coming at it from Asia. In North America, we’ve learned quite a bit. For one, since this whole pandemic began, we’ve seen consumers have drastically changed. Talk about an epic human experiment, right? Putting aside for a moment the crisis itself and the humanitarian loss that we’re all witnessing—if you just look at this from a true behavioral change shift, it’s quite extraordinary. What we’re seeing with consumers right now is they’re not just trading down.
Diane Brady: Going to generic versions of what we used to buy from big brands?
Brian Gregg: Going to generic versions, looking for the lower price points—essentially, consumers looking to only buy what they needed for the lowest price possible.
What we’re seeing now—in this particular, very unique situation—is consumers trading, period. Not just trading down but also trading from offline physical shopping to online. Trading from brands that they used to know and trust to new brands that they might either see and discover online or ones that are offering different propositions around safety and hygiene. So it’s really a moment to just step back and recognize what’s happened in the last 90 days: something that has really never been seen before on a consumer front. And we’ve learned quite a bit from that human experiment.
Accelerating growth in e-commerce
Diane Brady: So Aimee, given those changes, it would seem that growth is potentially more difficult now than it was when you wrote the article.
Aimee Kim: I think the answer will be quite different by geography. Even within Asia, we have some markets where the lockdown is pretty much still in full force, whereas we also have markets like China where the average Chinese consumer would argue that business is pretty much as usual, setting aside the travel restrictions.
So I do think that, slowly but surely, a lot of companies have figured out how to crack the code and really reengage this very changed consumer, as Brian just described. So growth is not only possible, it is happening. I do want to emphasize that the traits that Brian described are absolutely true for Asian consumers as well.
If anything, if we tie that with the growth question that you just raised, Diane, the companies that are able to capture the imagination, engage the consumer—the new consumer, who has completely different expectations about what hygiene means in physical retail, what delivery speeds mean—on the e-commerce side, those are the companies that will really win.
One more thing I would add is that this pandemic has been probably the biggest onboarding exercise for e-commerce. In Asia, we’re seeing the last consumer segments who were holding off in embracing e-commerce have really been forced to buy online. I’m referring to people who are typically older: mid-50s and above. They had their favorite shop in the neighborhood that they would frequent and were really resistant about buying online. The e-retailers that have been able to deliver a good experience are able to retain these consumers. The channel mix in the landscape going forward has completely changed.
Diane Brady: I think of that Shakespeare quote, Brian, “Some are born great, and some have greatness thrust upon them.” It seems like digital would be a good analogy here, where everybody went digital, but some seemed to do it a little better than others.
Brian Gregg: Oh, for sure, Diane. What we’re talking about now is a K-shaped recovery.
Diane Brady: K-shaped? I’ve never heard of a K-shaped recovery…