Hospitality sectors, generally speaking, make up about 3-5% of businesses in any country. In the pre-pandemic UK, the hospitality sector’s total economic output was just shy of £60 billion or 3% of the UK’s total economic output. But this figure doesn’t give us the full picture. There is a range of sectors that are connected to the hospitality sector and are supported by it. This is why when the lockdown set in and as the hospitality sector faced tough times, other businesses that supplied their goods and services to this sector also suffered. And it is those businesses that we are focusing on here.
The crisis exposed how vulnerable the business-to-business system was to the domino effect, where a slowdown in a certain sector of the economy could have a multi-sector impact. For example, a food supplier that supplies food items to a hotel could see their business shrink if for whatever reason the hotel expects fewer guests to stay at their hotel.
As a consequence, the hotel will require less food and the volume of their order with their food supplier will inevitably go down, hurting the latter’s revenue. In this scenario, people still need food so the demand for the food supplier’s product is still there but the avenue they were selling their food through has closed, hence, they have no open routes to deliver their products directly to the end consumer.
During the lockdown, to survive, these businesses had to devise an effective strategy and make changes to their operational models to keep their doors open. A good case study in this regard is the wholesale food supplier JJ Foodservice Ltd.
When the lockdown set in and as the restaurants, hotels and bars began closing, JJ Foodservice, almost overnight, lost a huge percentage of their customers. They had two options, either to keep pumping cash into the company to keep the business afloat or to make changes to their core business model that would see them deliver their product directly to their end consumer.
The pandemic saw an unprecedented level of bulk buying and hoarding by the general public. This ensured that the retailers were running at full capacity. Although many were willing to go to stores and marts and risk catching covid, many more stayed at home looking for ways to purchase the items online. With retailers already overwhelmed, catering to online customers wasn’t an easy task. Many retailers just gave up catering to online orders while others saw their standards drop drastically in the face of such a rush.
For JJ Foodservice, it was obvious that they had to switch their business model from business-to-business (B2B) to business-to-consumer (B2C). With 11 warehouses across the country at the time, they had the facilities to store food items but they lacked the traditional brick-and-mortar stores to sell their products. Knowing they had a tried and tested digital platform that could be made operational quickly made things much easier for them. They didn’t have to plan, design and develop a new system, they only had to put their existing digital platform into practice and begin accepting orders directly from their consumers.
The second most important aspect of their transition was getting the food items that their consumers wanted. So far, they had been sourcing bulky items from their suppliers and selling them off to businesses. But now, they had to focus on buying fresher meat, fruits and vegetables that household consumers mostly use. What they had, in the end, was a system so efficient and effective that they were guaranteeing next-day deliveries for orders placed before 8 pm. This was quicker than many of their competitors with a lengthier business-to-consumer experience than JJ Foodservice.
In today’s uncertain economic climate, businesses need to be able to adapt quickly and have systems in place that facilitate transformations of their business models. The pandemic forced the closure of many rigid business models. Most of the businesses that sustained pre-pandemic growth levels had to make changes in their operational models proving once and for all the importance of adaptation and the willingness to look for alternative channels of revenue in a time of crisis.
