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  • Robert Myers

What’s in your Bathwater?

Updated: Feb 2

Keeping Innovation intact and assessing pandemic adaptations for the future.

The old adage of not throwing the baby out with the bathwater is a bit graphic but the underlying message is extremely relevant in today’s business strategy discussions. At a recent industry leadership event, the theme of many conversations was, “Where do we go from here?” For some, the outlook was that “normal” would return, hinting at possible u-turns on the pivots made during the pandemic. For others, the mindset leaned toward changes being permanent, seeming almost hopeful to reduce the requirement and associated costs of some human elements. Clearly, there is considerable confusion between the strategies to keep and those to discard. Taking a step back, it’s important to remember what initiated these changes in the first place. It was the lock-down. Depending on the region, restrictions gradually relaxed and businesses returned to varying degrees of operation. For example, restaurants that offered online ordering, delivery and touchless pickup, have seen the demand for dine-in seating and full-service return. The decision about how adaptations play out in the priorities ahead is not binary or simple to make.

One such discussion I experienced was focused on virtual marketplace platforms and if distributors should continue to offer a B2C salon retail solution. The adoption of these systems grew rapidly during lock down when services were limited and traditional retail wasn’t an option, however, with customers returning to consistent salon service schedules, the need is being questioned. So, what’s the answer? The best place to start is to look at the data starting with productivity. Salon retail sales were on a flat to downward trend going into the crisis and have continued the fall to 29% below the last reliable quarter of 2019. While some retail locations fell over 80% during the crisis, 32% of salons with online storefronts generated the majority of their retail through distributor platforms and 34% through their own retail websites (some overlap likely). I’ll leave the topic of market dilution for another day. On a service level, these app-based platforms made it possible for salons to keep the much-needed connection to their customers. Salons with systems already in place certainly outperformed those without. Some indicators show up to 70% of the early adopters are still promoting the added convenience of online retail ordering and fulfillment. From the numbers, one could argue this was the life raft that kept many businesses afloat in very rough seas.


What about costs? Assessing expense is a critical consideration with a wide scope. For the salon, it reduces precious resources tied up in inventory and has proven to add value to their distributor or manufacturer relationships. The bottom line is, even with reduced margins, actual net retail profit is not much different from when products are sold traditionally on-site. For a distributor, cost of implementation is generally scaled to number of locations or transactions plus some integration and shipping fees. With the current audience being primarily employee-based businesses, there’s also an extended application in capturing new markets like solo salons. Certainly, a viable alternative to the significant human capital required to stock and service independent operators. One last thought on cost. As we remain positive and may not want to consider the implications of another global crisis, one question to keep front and center is, “What will keep my supply chain from grinding to a halt, should something like this happens again?”


In the end, too many priorities create attention to none. As imperfectionists, we will inevitably have to accept some adaptations must be abandoned. Taking time to look at the three elements below and analytics that follow, provides insight into what’s in the bathwater of those strategic choices. It confirms your future priorities are the most important and you aren’t casting out innovation.


REVENUE

  • Quantify the sales performance of each adaptation over the timeline.

  • Estimate what the sales trajectory would have been without the change.

  • The space between trajectory and actual performance is the sales impact.


VALUE

  • Grab quantifiable customer input to measure how adaptations are woven into the value proposition between your customer’s business and their clients.

  • Know how the change has added or decreased your value or has created a significant point of difference.

  • Run what-if scenarios to identify possible unintended consequences or benefits.


COSTS

  • Examine the cost of continued implementation.

  • Project how costs will increase or decrease over time to check sustainability.

  • Overlay sales and expense assessments to get a perspective of profitability.

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