Facing The New Normal: Steven Tan, Berna Puyat, David O Chua and More Experts Talk About Their Respective Industries
As countries cautiously emerge from weeks, even months, of lockdown, governments and citizens all over the world are contemplating with a fair amount of trepidation what life will be like from now until we have a vaccine. The coronavirus has changed life as we know it, there is no doubt. It has impacted the global economy; countries are bracing for a recession this year and it may not be until next year that we begin to experience sustainable economic recovery.
Lockdowns around the world were necessary mitigating measures in the absence of neither a vaccine nor a proven cure for COVID-19. Apart from keeping populations, particularly the most vulnerable demographics of every society—the senior citizens and the immune-compromised—away from contagion by mandating them to remain at home, governments were also aware that uncontrollable spikes in infections would lead to health systems from being overwhelmed and unable to cope.
Measures to flatten the curve, however, have come at the expense of the economy coming to a standstill. With only essential businesses allowed to operate, companies have had to find ways to survive; while some employees are able to work from home, others have unfortunately been furloughed. Once work is allowed to resume, physical distancing and other necessary precautions will still have to be implemented. And the question remains: how do businesses bounce back from a series of setbacks that were totally unforeseen and unexpected?
As the multinational consulting giant McKinsey & Co put it, “The toughest leadership test is now looming: how to bring a business back in an environment where a vaccine has yet to be found and economies are still reeling.”
No matter the industry, McKinsey believes that there are five qualities that will be critical for business leaders to find their way to the next normal: resolve, resilience, return, re-imagination, and reform. It also recommends that “in order to come back stronger, companies should reimagine their business model as they return to full speed. The moment is not to be lost: those who step up their game will be better off and far more ready to confront the challenges—and opportunities—of the next normal than those who do not.”
How are Philippine industry visionaries defining this new normal, and how do they plan to steer their companies towards relevance and recovery?
For prominent businessman David O Chua, president of Cathay Pacific Steel Corporation and vice chairman of the University of the East, this global pandemic crisis has resulted in significant changes in our perception of status quo. “The ‘new normal’ has and will usher in an era of new and unprecedented way of doing things. This has affected consumer behaviours, corporate investment profiles, and sovereign leadership directions. Add to this what is happening to the oil industry at this time, and what we get is an era of game changing and wealth moving proportions.”
He sees the immediate future in stark terms. “Fearless forecasts for the Philippines would include zero growth for 2020, challenges in the banking field, real-estate markets, our export industries, our OFW situation, and our entire travel, hospitality, and restaurant sectors. For sure there will be opportunities, but there will be many hard decisions that need to be made in order to overcome the challenges.”
The retail sector will see major shifts and challenges post-COVID. Retail as we know is largely hinged on community and experience, and these are the very things repositioned by the pandemic.
Steven Tan, president of SM Supermalls, believes that “some retail categories will bounce back faster than others. Food and Beverage, Health and Personal Care are among the top priority spends from recent local research I’ve seen. For fashion, I see basic trends picking up where it left off and shoppers will continue to look for quality and value. Filipinos are cautiously optimistic, and the normalising period will be anywhere from 2 to 6 months.”
The future is now, he adds. “Retail will go through bold interventions and rapid acceleration to adapt to the new market environment. This includes the entire operating model, value chain, digital capabilities.”
Retail will go through bold interventions and rapid acceleration to adapt to the new market environment.— Steven Tan
Luxury retail has certainly suffered from the absence of foot traffic into malls and stores. Ferdinand Ong, founder of Living Innovations, which distributes such high-end home design brands as Georg Jensen, Dedon, Gaggeneau, Barrovier & Toso, and Bulthaup, to name a few, remarked that there would be modifications in a business that is usually conducted face to face. “There will be changes in the showroom display, method of delivery of the goods, and servicing for that matter. We have to be able to establish trust with our clients and assure them that we are giving them great products and great service.”
Communication is key. “I believe we have to communicate properly with our clients how our company and products can give value to them and their lives. Each family has their own needs and wants and as long as we stay relevant, then that brand will be able to survive.”
For her part, Florence Ko of Gruppo Mobili Philippines, Inc, which represents luxury Italian furniture brands Furnitalia, Calligaris, Space 2000, and Lucem, says, “Our products are from Italy, so our supplier has also stopped operations. We expect some delays in deliveries of orders. Once the goods are received, the challenging part comes when we deliver since there are guidelines like social distancing we may not be able to apply fully. Six feet away might not be realistic and the speed of work will slow down.”
She has also had to adjust forecasts for this year because constructions have been stopped, which means delayed projects. However, “the one big advantage is that we keep stocks, and we’ve always made sure about the consistent new arrival of goods. So for those clients who urgently need something for their home, I have so much to offer. There’s no need for them to wait.”
The property sector will definitely soften this year, says Rick Santos, CEO of property giant Santos Knight Frank, but there will still be opportunities.
“The COVID-19 pandemic impact combined with economic shutdowns has created a ‘black swan’ event on a massive scale, slowing down real-estate activities globally.” He expects the property industry to soften considerably both in the commercial/retail sector as well as residential.
He sees liquidity, flexibility, and business continuity as being of utmost importance for companies, especially those in the property sector, to continue running. He offers the following advice: “Prioritise cash and liquidity. Real estate is one of the most capital-heavy expenditures that businesses incur. Businesses should maximise revenue generating opportunities, collect debts, cut costs, eliminate non-critical expenditures, and consider selling or leasing non-core assets. Pivot existing properties and assets into revenue-generating real estate. Companies can convert empty spaces or real-estate assets to cater to the demand of the healthcare, food, and logistics sectors. Businesses can convert their facilities into pop-up healthcare centres, employee housing, offices, warehouses for last-mile logistics, and retail facilities.”
Travel and tourism, which accounted for 12.7 per cent of the country’s GDP in 2019 and provided around 5.4 million jobs for Filipinos as of 2018 have been severely curtailed by the pandemic. But Department of Tourism Secretary Berna Romulo-Puyat is optimistic that the sector will bounce back.
During the enhanced community quarantine, she noticed many people posting their favourite travel photos on social media. “I think this reflects my position that the travel industry will once again thrive, as many people have the innate urge to seek adventure, explore, and experience new things.
“Together with the private sector, we will be developing new tourism products that will have greater appeal in the post-COVID-19 scenario: activities that promote healthy lifestyles such as nature adventures with some exercise, more nutritional food binges, more wellness to release urban and work stress.
“Pre-COVID operations and value chains will have to be redesigned. Incentives, promos, and special offers will be prevalent during initial phases once travel restrictions have been lifted,” she says.
“There will also be stricter standards for safety, sanitation, inspection, and accreditation for all tourism-related industries. In addition, there will be limitations in terms of the number of people allowed on board various modes of transportation, in restaurants, and even at our tourist spots such as parks and museums. Safety will be a big factor and consideration for tourists when travelling.”
John Rice, Philippines vice president for operations and general manager of The Shangri-La at the Fort, acknowledges that “the pandemic has definitely challenged us to find new ways of providing Shangri-La’s legendary hospitality.” Responding to this challenge, the Shangri-La at the Fort, Manila began to make food from some of its F&B available through Foodpanda and GrabFood for delivery services. “And our team of chefs at the hotel’s Raging Bull Burger joint have created ready-to-enjoy meals and will soon start selling DIY kits for their famous burgers.”
It is important for the hotel sector to work hand in hand with other industries in order to rebuild and adapt to the new world that is emerging, he believes. “The pandemic has given us the time to reflect and evaluate how things can be done differently. It is now presenting us with the opportunity to introduce new methods, new technologies and new guest experiences.” There are certain practices that are already standard within the Shangri-La Group worldwide: elevated cleaning and sanitising protocols that meet or exceed public health guidelines, mandatory temperature screenings, health and travel declarations, readily available hand sanitisers, safe distancing markers, and increased cleaning frequency of public and common areas.
Elbert Cuenca, the man behind Elbert’s Steak Room, Elbert’s Pizzeria, Elbert’s Diner, Elbert’s Upstairs Bar, and Metronome, agrees with Rice. “For sure, enhanced sanitation and disinfection practices will be commonplace, and both customers and staff will be more conscious about washing their hands and not touching their faces.” Like many restaurants and F&B establishments, Cuenca shifted to the take-out and delivery model. Only two of the five establishments he’s involved with fit this model—Elbert’s Pizzeria and Elbert’s Diner, “since the cuisine can be portable.”
For the future, he says, “foresight is needed. Market trends are rapidly changing, so restaurants need to be keen and open-minded as to how customer behaviour is evolving. Owners need to be quick to cater to their customers in new ways.”
The challenges that define businesses re-emerging from the effects of the pandemic, and the innovations they would have to undertake to survive in the new reality will be possible with resilience and co-operation.
For Rice, “the hospitality industry is certainly one industry that is kept on its toes when it comes to world events. COVID-19 is definitely one for the history books. Its global impact has been colossal, but there’s nothing humanity can’t get through if we weather these storms together.”
As Tan puts it, “Our greatest resource is our people and our resiliency and agility to evolve. Malling in the Philippines will never go away because Filipinos are sociable people and we continue to seek physical convergence points. It is the transactional nature that will improve. We continue our click and collect Pick Up @SM programme and run Shop@SM online delivery. They are existing programmes that are seeing more traction now. To adopt, we are ramping up delivery fulfilment for our tenant partners. The goal is the eventual development of virtual malls to complement our physical spaces.”\
Chua cautions that absent a vaccine or a workable solution to this virus situation, our definition of the new normal may have to be constantly updated. “Businesses need a good sense of certainty in order to move forward,” he explains. “There is guarded optimism that government is doing what needs to be done, and that people are willing to make sacrifices. All will need to be crossing fingers, doing respective parts well and hoping for the best to arrive soon.”
The Philippines will bounce back in a past-COVID-19 world, Puyat believes, although it may take time as the world adjusts to a new normal.
“My faith rests on what made the Philippines increasingly popular as a destination in recent years—our magnificent tourist attractions; myriad cuisines; diverse cultures; and of course, the genuine warmth and hospitality of the Filipino people, perhaps our greatest strength. All these will remain beacons for tourists.”