From Lysol to Condoms, Companies Plan for a Post-Pandemic Buying Shift

Figuring out how much customers plan to spend on your product, and when, is always job number one for management. But the task becomes especially urgent, and thorny, when preparing for a return to business as usual after a year of pandemic-hobbled economic activity. Just ask Kris Licht, head of the health business and chief customer officer at consumer-products giant Reckitt Benckiser. RBGLY 0.74% “If we don’t create good scenarios and good plans in advance, we will not be able to meet demand,” he told me in an interview this past week. That effort includes predicting when the pandemic will run its course and predicting the extent to which the experience of a yearlong lockdown will alter consumer behavior, among other factors.

It isn’t just Reckitt trying to sort through this issue, of course. Lately, reopening has been the dominant theme when corporations face Wall Street, since vaccines are rolling out and some government leaders are lifting health restrictions. There were nearly 500 mentions of the phrase “pent up demand” on public corporate conference calls in February, according to financial-data provider Sentieo. That monthly figure barely cracked triple digits as the U.S. emerged from the global financial crisis roughly a decade ago. If talking is as good as spending, maybe a sequel to the Roaring 20sreally is in store, as more than a few punditshave lately predicted.

Any executive who is only beginning to answer these questions is far behind: Mr. Licht says good plans and forecasts are needed six months in advance, because decisions around global production, staffing and other concerns require significant lead time. To make the challenge even more significant, there is no modern historical precedent for the U.S. and other major economies to help management teams plan.

Reckitt owns brands that have thrived during the pandemic, like Lysol. It also owns products that should do better in a world of full mobility, like Clearasil acne medicine, Airborne cold medicine, and Durex sexual well-being products. To gauge demand for Durex, Mr. Licht watches the pace of restaurant and bar reopenings in key markets, while cold medicine sales may hinge on kids spreading germs as more schools reopen.

All told, a team of more than 200 employees at Reckitt studies a host of metrics to produce demand forecasts, says Mr. Licht. These include child birth projections, Covid-19 measures such as rates of vaccination, as well as local-market gross domestic product and retail consumption data.

While the U.S. is in its early stages of reopening, some preliminary consumer trends aren’t exactly surprising. A year of limited travel options has would-be revelers rushing to book trips to Las Vegas, for instance. Caesars Entertainment executives said last month that casino bookings are up 20% from a month earlier. “It’s like a switch was flipped,” Chief Executive Thomas Reeg told Wall Street analysts last month. At least some Americans are feeling lucky.

Things are more complicated for other businesses, even some that have been thriving. For instance, retail giant Target declined to provide a sales or profit forecast for its current fiscal year on Tuesday as it reported quarterly results, due to “continued uncertainty.” “The reality is that none of us can accurately predict the future as all of us are facing a much higher level of uncertainty compared with a normal year,” finance chief Michael Fiddelke told Wall Street analysts.

He certainly has a point: The reopening’s ultimate shape and nature is still a mystery. But there are clues available in smaller countries that are farther ahead in the fight against Covid-19. Some of those suggest that all that optimism on corporate conference calls might be justified: Israel, which leads the world in vaccine distribution, has experienced a jolt of activity as national lockdowns lifted in February. Online travel and restaurant reservation portal Booking Holdings told investors last month that domestic bookings in Israel were now well above 2019 levels.

Lysol sales grew 70% from a year earlier in 2020, a pace that will be hard to maintain. At the same time, Reckitt has found that Israeli consumers have retained an elevated awareness of hygiene habits. That is similar to how shoppers in markets affected by past outbreaks like SARS have reacted. That trend could bode well for longer term sales of products like portable disinfectant wipes or office cleaning products.

While a look at distant markets that have reopened is certainly helpful, Mr. Licht cautioned that what happens in Tel Aviv is no crystal ball for predicting how the reopen might look in Dallas or New York. The modern consumer living in a pandemic environment faces a balancing act of important factors, like safety, willingness to spend money, employment prospects, and child care availability. Those circumstances vary significantly across markets.

And yet another layer of the onion still needs to be pulled back: in some places and product categories Reckitt is the entrenched market leader, and in some cases the plucky upstart.

“You need a good amount of art on top of all the analytics,” he says.

Write to Charley Grant at [email protected]