THE outbreak of Covid-19 has shaken major markets around the world. Early data on consumer behaviour indicates how spending patterns have shifted owing to the pandemic-led change in lifestyles.
Demand for live news, videos, digital content, home-entertainment solutions, food and medicine is on the rise.
In Pakistan, consumer demand is rife, but supply chains are being disrupted across categories. “Rice is a staple food. Its demand has increased,” says Qashif Effendi, CEO of Reem Rice. However, logistic issues are making it difficult for us to meet this demand, he adds. “Sourcing packaging material is also becoming an issue as printers and packaging suppliers are closed,” he says.
As opposed to the fast-moving consumer goods (FMCG) segment, consumer durables will be affected worse than others. “In the medium term, we see demand slowing down substantially as industry- and infrastructure-related expenditure is expected to decline,” says Fahd K Chinoy, CEO of Pakistan Cables Ltd. “On the supply side, everyone in the industry is not operating presently. So there is no supply.”
The Securities and Exchange Commission of Pakistan has directed all listed companies to divert their CSR funds towards fighting Covid-19
While online buying may have shown some increase, particularly in big cities, the suspension of delivery services is also posing a hurdle for e-commerce businesses. Opportunities for growth may be ample in this crisis, but businesses are hesitant to make risky decisions. “It is extremely important to drive business efficiencies without compromising on quality and safety,” said National Foods Marketing Manager Wajahat Eijaz.
While businesses try to address the gaps in their operating models to counter Covid-19–induced recession, both global and local brands have stepped up to play their part as brand activists and social crisis responders. Examples surfaced in a matter of weeks as brands called for “flattening the curve” through social distancing. Brands like Coca-Cola, McDonalds and Mercedes-Benz bombarded digital media with their visual identities in support of social distancing. Emirates was among the first companies to encourage staff to go on paid leave.
Brand activism also takes the form of donations to organisations fighting the pandemic. The Securities and Exchange Commission of Pakistan (SECP) has directed all listed companies to divert their CSR funds towards fighting Covid-19. The largest donor to the cause from the private sector is Engro Corporation Chairman Hussain Dawood who pledged Rs1 billion.
Biscuit-maker EBM announced that it would dedicate its advertising budget to the fight. Unilever Pakistan announced a donation of Rs200m. Textile exporter Interloop Ltd announced a donation of Rs20m. Pakistan Cables Ltd collaborated with the Karachi Relief Trust and pledged Rs2m.
These examples demonstrate an emerging realisation: the true meaning of business is to respond to and act on the prevailing public sentiment. Businesses putting their weight behind human values that matter to their consumers and amplifying the voices of consumers through actions that aid communities give their respective brands a strong sense of social identity. Do brands risk being categorised as ‘opportunists’ or are their actions being seen as acts of good corporate citizenship?
“Brands have the opportunity to do the right thing,” says Mr Effendi of Reem Rice. “Some are choosing optics over real help, but consumers are able to tell them apart from the genuine helping brands.”
APAG Ltd General Manager Najiyeh Akbar agrees. “Brands have often weighed in on natural disasters or crisis situations to stay connected with the target audiences. Brands that are genuinely supporting the cause should be commended for playing a positive role.”
Consumer optimism is by far the most important factor in assessing the resilience of a nation. A recent McKinsey survey indicates that despite the massive scare China witnessed, its people are exceedingly optimistic about its economic recovery. But many countries that are facing the threat head-on right now remain uncertain.
Businesses around the world, including Pakistan, are preparing for the adverse impacts of Covid-19. Despite the odds, the business sentiment so far is to come out and support where needed. “Besides the usual surge in online buying and a dip in retail shopping, there may even be a situation where we have less reliance on imports in certain categories. It will, therefore, create opportunities for local manufacturers,” adds Mr Eijaz of National Foods.
The writer works for Pakistan Cables Ltd
Published in Dawn, The Business and Finance Weekly, April 13th, 2020