Navigating the COVID-19 crisis and finding a way to bounce back from it are no easy tasks, but every business has to implement a plan, even if it’s on the fly, to transition into a new normal successfully.
Sustainable luxury fashion brand Stella McCartney realized quickly that adapting in this environment, whether through store reopenings or an adjusting its fashion calendar, is going to be a fluid process.
During the Financial Times Global Boardroom digital conference Thursday, Sandra Federighi, global chief financial officer and business services director at Stella McCartney, said the fashion retailer has already applied lessons from its initial store closures and reopenings across Asia to formulate a different approach for its 11 European stores.
While the company followed all health guidelines and recommendations before reopening stores throughout Asia, it resumed brick-and-mortar operations immediately after applicable government mandates were lifted. But traffic is still lagging throughout the region, convincing the fashion retailer take a more prudent and reserved approach to jump-starting store business in Europe.
“Now that things slowly seem to be coming back in Europe, we want to work on other forms of connecting with the clients and selling to the clients to make sure those options were explored at their best first before reopening,” Federighi said.
Aaron De Smet, a senior partner with McKinsey & Company, identified that organizations responding best to the COVID-19 outbreak have quickly set up fast-moving temporary structures as slow-moving “business-as-usual” arrangements often require multiple layers of approval.
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“What we see is setting up teams that are empowered to move quickly, and that don’t have a traditional set up that allows them to go faster,” De Smet said. “These teams that are set up often are of two flavors. One is of rapid response that’s reactive and can put out fires as they arise. The other is more of a plan-ahead team, so that they can get ahead of the problem and are really thinking two steps ahead so that on the next horizon, we’re prepared and have thought through different scenarios and were able to anticipate.”
Neither team can function correctly without working in tandem with the other, according to De Smet.
Flexibility is the name of the game for Stella McCartney as it aims to adapt to changing shopping habits, but the company is aware that it is largely navigating through entirely uncharted territory, with many more changes anticipated by the end of 2020.
“The whole market is reshaping,” Federighi said. “All the calendars that everyone was working on have been completely shuttered, so we really have to rebuild everything without knowing how the final customer will be responding, and how they will be accepting the new way of working. It’s really a marker of trying to see ahead and trying to build something that is still aligned to reflect the values of the company that we want to communicate with the customer, yet deliver in a different way.”
Corporate governance, eco concerns rise
Mike Froman, vice chairman and president of strategic growth at Mastercard, sees the post-pandemic landscape as an opportunity to help customers as they transition out of the crisis. In April, the financial services company committed $250 million in services and support over the next five years to help SMBs in the U.S. migrate from brick-and-mortar to online, including cybersecurity and anti-fraud tools, he said.
“This crisis came at a moment when there was already a robust dialogue about ‘What’s the role of the corporation?’” Froman said. “Companies are finding that they’re doing things that they never really envisioned before in terms of working with communities―and way beyond philanthropy.
“From our perspective, we’ve been involved in financial inclusion for 10 years. We set out a goal to bring 500 million people into the financial system and we hit that goal this year,” he added. “This crisis underscored just how important it is for small businesses, individuals to be connected to the digital economy. We decided to double down and raise the goal to 1 billion individuals and 50 million micro and small merchants.”
One major shift coming out of COVID-19 will be a changing mindset that prioritizes environmental, social and corporate governance (ESG) across the organization. In a poll conducted within the session, 72 percent of audience members said there will be an increase in pressure to meet ESG targets.
Meanwhile, sustainability has been part of Stella McCartney’s DNA as a fashion brand, with the designer herself establishing the company’s priority for long-term thinking in fabric production.
“Not only was this something we’ve been doing in past years, this has been part of the brand since day one,” said Federighi. “It’s always been important for our values on that front, and we will continue to invest and continue to follow that lead.”
The issue of sustainability and corporate governance is one is a top concern for Jesper Brodin, president and CEO of IKEA owner Ingka Group, who believes the upcoming decade is the most important in the history of mankind.
“That was before the COVID crisis, and with all the respect of the calamities and economic damages, it might just preface what we stand before in the climate crisis,” Brodin said. “From all reasoning, it would be unwise to postpone any actions in relation to address that crisis. It’s difficult from a leadership perspective where we have to debate financial priorities, but at the same time, it is a matter of mindset.”
Brodin believes leaders have a choice to invest in what he calls the pre-COVID “old economy” and the “new economy,” and believes it would be wise and more importantly, moral, to consider massive environmental and socially conscious investments in the “new economy.”