McKinsey’s latest decision maker survey in retail shows how the retail market is changing as we come out of the pandemic – here are some key findings to help shape your strategy
Amid the COVID-19 pandemic, the way companies buy and sell from each other now looks very different than it used to – perhaps permanently. To thrive in the next normal, B2B companies will need to continue adapting to the new economic reality.
To understand how large the challenge is and actively monitor the major shifts and swings, McKinsey & Company created its B2B Decision Maker Pulse, a survey of 3,600 B2B decision makers in 11 countries (including the UK), 12 sectors and 14 spend categories. Every 2 to 3 weeks, we run updates that monitor meaningful changes in real time and identify how decision makers continue to learn and pivot their operations in the age of COVID-19.
According to McKinsey, there are three key trends are emerging.
An accelerated migration to digital: Already moving toward digital before the pandemic, B2B companies are now taking the trend into overdrive. Seventy two percent of UK survey respondents told us that digital interactions are more important to their customers than traditional ones – a rise of 40% in significance compared to pre-COVID-19.
No longer a nice-to-have feature, digital is now an essential means of doing business. Companies that provide their customers with outstanding digital experiences are twice as likely to be chosen as primary suppliers (as compared to suppliers providing poor experiences). Further, digital self-service tools are increasingly attractive to B2B customers, with live chat the highest rated channel for researching suppliers and mobile app ordering up by 250% pre-COVID.
The pivot to remote selling: With so many sales associates working from home, remote sales has quickly become the standard way of doing business. In the wake of COVID-19, 97% of UK B2B companies have shifted their sales model either partially or fully to remote selling. And it may be here to stay: 58% of UK company decision makers say the remote model is equally effective or even more effective than what they were doing before the pandemic hit. China and India lead the way in the scale of this shift, when looking at the global picture.
The next normal sales model: Signals from our survey indicate that B2B sales operations are at a digital inflection point. The pandemic has accelerated previous trends – omnichannel selling, inside sales, tech-enabled selling, and e-commerce – and 74% of UK B2B companies said they are very likely or somewhat likely to sustain these shifts for 12+ months post-COVID.
The study also finds that B2B optimism is low and steady, with 39% of UK respondents saying the economy will rebound in two to three months (this is flat compared with the responses given in early April).
More than half of respondents said they will be reducing spend both in the next two weeks and over the long-term. Nearly 60% of U.S. B2B companies and 71% of UK respondents have already trimmed their budgets.
On the flip side, 22% of global companies said they intend to increase their spending in the next two weeks and in the longer-term, potentially strengthening their position for an eventual recovery. India reported the highest anticipated spend increases in the short term.
McKinsey research from the 2007-2008 recession shows that companies which spend carefully and strategically into a downturn grow faster once economies rebound.
Globally, industries most likely to reduce spending are the global energy and materials sector and the travel, transportation, and logistics industries. Most likely to increase are pharma and medical products and technology, media and telecoms.