There’s no denying that times have been tough but we enter 2021 with new hope based on both general economic optimism and our experience with the positive results we’ve achieved with our clients (some of whom were fortunate to receive financial support through advisory subsidies. Our current transitory environment is an incredible opportunity to either pivot your business, introduce different income streams or really get clear about what makes your business spectacular. Our times have changed, and those who refuse to change with it will be forgotten.
New Zealand entered a recession in the June 2020 quarter (GDP fell 12.2% from end of March to mid May 2020). During this time, many small businesses suffered paramount losses and among many industries, Hospitality and Food service businesses were struck hard.
“Retail trade, accomodation, and food services fell 25.2 percent, driven by a 47.4 percent drop in accomodation and food services” (Stats NZ)
However New Zealand was one of four countries that achieved a “full recovery” to pre-COVID levels (Fortune). By the end of the September 2020 quarter, the NZ Economy rose 14% from the previous quarter.
“Retail, accommodation, and restaurants rose 42.8 percent (down 2.6 percent annually), driven by accommodation, restaurants, and bars” (Stats NZ)
In our success to eliminate community transmission of COVID-19, New Zealanders have been quick to spend money on their old comforts and reunite with friends & loved ones to regain some normalcy, help them feel better about the circumstances and find experiences to look forward to when international travel was no longer on the cards. In line with this, Consumers also tended to increase their spending on small, more affordable luxuries during times of economic hardship, with this theory dating back to the 1930s when the idea was coined the ‘lipstick effect’.
“In the years 1929 to 1933, despite industrial production halving, sales of cosmetics actually rose in the United States,” Dr Louise Grimmer, a University of Tasmania marketing lecturer, told The New Daily.
“Similarly, just after 9/11, Estee Lauder reported a spike in their relatively expensive lipstick products.”
What this shows is that regardless of the state of the economy, people chose to spend their money on luxury items to make themselves feel good. “So I might have a massage instead of signing up for a personal trainer, or I might buy one expensive piece of skin care such as a high-end moisturiser but I’ll buy the rest of my skincare from a discount chemist. Similarly, I might cancel my monthly wine subscription service but I’ll indulge in a bottle of whisky or sparkling.” reported Dr Grimmer to The New Daily.
By now your bar, restaurant, cafe, catering or other food service business should be operating near or beyond pre-COVID levels. If this is not the case, this is not a reflection of the economy but a reflection of your need to figure out what’s missing from your business before it’s too late.
- If your product/service exceptional or sub-par?
- Do you do things with your ideal customer’s experience in mind?
- Do you add value to your customers lives or simply provide them with a service they could live without?
- Are there other factors (like impending roadworks in Auckland CBD) impacting the ability for your customers to get to you?
- Do you need to pivot the way you get your products/services to your customers?
- Do you need to fire your old customers and find more suitable new ones in this new reality?
These things don’t solve themselves and require you to be proactive about meeting your customers needs, but we can assure you that once you have them figured out you will likely reap the benefits and clarity for years to come.
The problem with not addressing your reality is that every opportunity missed is another dig in the hole that might eventually be insurmountable to escape out of. At this point, you could spend all the money you want in marketing & advertising but you’ll find the money lost on customers who would rather go elsewhere for a better experience.