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term effects of COVID-19 will have on the foodservice equipment and supplies (FES) industry. While our research focused on technology needs, many of the insights and trends are not directly tech related. As you can see in the following list, however, each links to digital transformation and long-term investments. The top themes we have derived are: Altered foodservice landscape – Estimates vary, but everyone agrees that more foodservice closures are forthcoming as operators struggle to adapt to the challenges of COVID-19. The resulting landscape will look different. We will see a reduction in foodservice units, with the reduction concentrated in small and independent businesses. Short-term, we may see an increased supply of second-hand equipment that accompanies these closures. Longer-term, surviving units will see healthier P&Ls, a greater proportion of which will be chains/groups. These chains/groups will have more sophisticated procurement processes and higher expectations of the supply chain. Digital acceleration – The reduction of in-person sales will accelerate the importance of digital tools, including e-commerce, digital payments, and tools that boost efficiency to cope with a reduced workforce. Whereas digital tools were a luxury before COVID, they are now a lifeline, and we are already seeing rapid and widespread adoption of payments and commerce technology within FES. Beyond an e-commerce presence, larger firms are seeking a way to create seamless data interoperability across systems. Value engineering – Many operators will be working with limited cash flow during the recovery. Projects will be increasingly scrutinized for value engineering opportunities, and dealers will benefit from adding value on the margin, such as providing convenient payment and financing options. As competition for FES sales increases, dealers are recognizing that they must differentiate themselves through an exceptional customer experience, often through online platforms. Shifting demand – Demand patterns will change as operators reduce capital spend by hanging onto equipment longer but consume more supplies and personal protective equipment. New equipment sales may shift to back of house reconfigurations, ghost kitchens, and delivery-only outposts. Well-managed manufacturers and dealers will use industry data and closely track trends to adopt efficiency-generating process improvements and adapt to changing demand.


Product discovery – Operators will seek new and innovative products to enhance their reconfigured operations or improve safety. Savvy manufacturers have already figured this out and are producing innovative COVID-related products (some of which we have highlighted on our blog). But manufacturers need to provide more timely and engaging opportunities for discovery. Great customer experience on digital platforms will become a differentiator for brands as well as channels.


Digital engagement – Many traditional, face-to- face channels of customer engagement may not return soon. Manufacturers and dealers will need to shift their marketing mix to emphasize digital and online engagement. Manufacturers will need to syndicate their product and marketing content across new channels. Dealers will need to create high quality, engaging e-commerce experiences with accurate and comprehensive product data. Each of the above trends will influence business decisions in the industry in the coming months and years. Together, they suggest that successful FES companies must be nimble and adapt to the market conditions as the industry recovers. At AQ, we have closely tracked industry data and share it on our website to highlight where we are in the recovery and to help businesses trying to adapt.


In the meantime, businesses need to be making smart investments before things pick up again. Sandy Shen, senior director analyst at Gartner, put it well in a recent article: “The value of digital channels, products, and operations is immediately obvious to companies everywhere right now. This is a wake-up call for organizations that have placed too much focus on daily operational needs at the expense of investing in digital business and long-term resilience. Businesses that can shift technology capacity and investments to digital platforms will mitigate the impact of the outbreak and keep their companies running smoothly now, and over the long term.”


Simply put, businesses that invest now in technology and digital platforms will perform far better as the economy recovers than those who stay on the sidelines. This is a hinge moment that will separate the leader companies from the rest of the pack over the next decade. We are bullish on the future of FES and cannot wait to see where this digital transformation takes us as an industry.


Summer 2020 55


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