New, agile startups usually get all the attention, but as The Drum columnist Samuel Scott writes, one unintended consequence of the coronavirus lockdown is that the big business Goliaths are actually pummeling the small Davids to death because of how distribution has changed.
The best pizza place in Boston is Santarpio’s in the Italian neighborhood of East Boston. The 110-year-old, family-owned establishment is so revered that people who are caught taking delivery from chains get dirty looks for being too lazy to support the local pizzeria. When I lived there for a year in the mid-2000s, the place had only dine-in and takeaway.
With no delivery, Santarpio’s was a destination restaurant for non-Eastie people for special occasions. It was the only pizza place I knew that advertised group functions – for adults. Still, East Boston sits next to the airport and is separated from the city by a Boston Harbor inlet. To go there, people have to drive or take the subway through a tunnel under the ocean. The distance that people needed to travel added to Santarpio’s mystique.
Now, fast forward 15 years to the current coronavirus pandemic. I recently heard that Santarpio’s is now delivering (through DoorDash) for the first time in its century-plus history. Every other pizza joint within its greater delivery area should be very, very afraid.
The coronavirus lockdowns have increased opportunities for market leaders, heightened the competition among all other market followers and increased the need for quality marketing. When the ‘P’ for Place in the marketing mix greatly changes, companies need to do better research, positioning, differentiation and promotion in response.
Supermarket chains benefit, corner stores suffer
Whether the economic effects of the coronavirus pandemic will be temporary or permanent, companies that want to succeed during lockdowns need to remember one thing. To varying degrees, both the potential growth and the potential competition are now almost infinite.
Here in Tel Aviv, I can buy groceries at the small convenience store on the corner or at large supermarket chains such as Shufersal. Usually, I would pop over to the convenience store because of the, well, convenience. In addition, the line is much shorter, and I see friendly faces from the neighborhood. However, the trade-off is that everything costs more.
Shufersal, on the other hand, can take advantage of economies of scale, buying in bulk from wholesalers, and focusing on lower margins at higher volumes to have lower prices. However, the lines are very long, and I do not see anyone who I recognize. Both types of stores have competitive advantages and disadvantages.
Today, however, the coronavirus pandemic and resulting lockdown have destroyed the convenience store’s main advantage and eliminated Shufersal’s main disadvantage. The economic and public health crises are…