Hanging in there
Madison businesses have taken tentative steps to reopen and retool, and some things will never be the same.
From the pages of In Business magazine.
During a period that can aptly be described as the COVID-19 cold shoulder, perhaps the most repeated phrase of local business operators has been a hopeful one. “When we come out of this” not only reflects their hope for a rebound, it speaks to their eagerness to get back to business.
As with any emergency, lessons have been learned as employers discovered or rediscovered the value of video conferencing, e-commerce, remote working, and other advances that either have been underused or taken for granted. In this look at the bizarre detour our business and professional lives have taken, we asked a variety of businesses and institutions how the pandemic response has affected their business operations, how it’s likely to affect them in the future, and how they believe it will impact their respective industries.
A pandemic and nonessential business status is not the way Carol “Orange” Schroeder planned to spend the 45th anniversary of her store, Orange Tree Imports, but as the big day (May 1) approached, that’s the position that she and Dean Schroeder, her husband and co-owner, found themselves.
However, even during the peak of shelter-at-home, Orange Tree didn’t have all of its branches clipped. Having been forced to shutter curbside pickup for several weeks, the proprietors laid off their entire staff, placing them on unemployment insurance until they could return, and they focused on paying bills, staying in touch with staff and suppliers, and receiving shipments at their home.
The store continued to sell gift cards, but it also needed a little help from its friends on Monroe Street. Mystery to Me bookstore took 48 of Orange Tree’s jigsaw puzzles and sold them, while Neuhauser Pharmacy took some of its Easter candy and sold it. Several suppliers offered to drop-ship items ordered through Orange Tree. Customers could order an assortment of greeting cards, which Carol personally picked out and mailed.
Carol “Orange” Schroeder and husband Dean, co-owners of Orange Tree Imports, enjoy a 45th anniversary staff parade past their store with balloon art from Funny Faces Family Entertainment. Photo by Kathryn Lederhaus/Daryl Sherman
On May 1, in honor of the store’s 45th anniversary, the Schroeders were saluted by a parade of employees driving by the store. They also relaunched curbside pickup and they hoped to add personal shopping and local delivery in May.
“We think the curbside pickup option will continue to be of interest to customers during the reopening period, whenever that may be,” Carol says, “but at that time, it will morph into buy online, pick up in store — perfect for customers who know what they want and who don’t want to spend a lot of time browsing.”
On May 11, Gov. Tony Evers announced that retailers could reopen with no more than five customers in a store at any one time, but the recovery period raises concerns. Even though Orange Tree employees all are planning to come back, Schroeder wondered what that was going to look like. Will they need plexiglass shields and face masks? Then there is the specter of a second COVID-19 spike this fall. “For us, being closed in March and April and even May is unfortunate,” Schroeder notes, “but being closed in December would be much more of a catastrophe.”
A long-term worry for Schroeder and other independent retailers is that the pandemic will cause more consumers to shop on Amazon, which could test the shop-local movement, even in Madison. “That’s something that’s always been an alternative to shopping online — to come into the store to have an enjoyable experience,” she notes. “How do we make it an enjoyable experience if people are nervous about being out of their homes? So, that’s going to be a challenge. We can make it safe and we can make it comfortable, but can we make it fun?”
Shooing the flu and COVID, too
The Wisconsin biotech industry is stepping up to develop both short-term and long-term solutions to COVID-19. Exact Sciences, Promega, and UW Health were enlisted by Gov. Evers to ramp up COVID-19 testing statewide, and UW Health is part of a clinical study of convalescent serum, a potential treatment for the virus. Catalent announced a partnership with Arcturus Therapeutics Holdings to manufacture Arcturus’ COVID-19 vaccine candidate, and the Covance facility in Madison is involved in several projects to test potential COVID-19 treatments. Workers at GE Healthcare in Madison helped supply the nation’s hospitals with ventilators, while Epic has vowed to use the data gleaned from electronic medical records to serve the cause of public health.
Perhaps the longest-term impact will be made by FluGen, the Madison-based vaccine company that is engaged in an international collaboration with virologists at the University of Wisconsin–Madison and Bharat Biotech in India. In addition to its work on a universal flu vaccine candidate called M2SR, FluGen will attempt to develop CoroFlu, a COVID-19 vaccine, on the back of M2SR. The value proposition of both potential therapies is that they induce an immune response to the flu and viruses.
Paul Radspinner, founder, president and CEO of FluGen, explained that with the COVID-19 project, the company is taking M2SR, which now is in phase two clinical trials, and applying it to the virus. So far, the universal flu candidate has been well tolerated in almost 300 patients, and that gives the company confidence that it can be tested for COVID-19.
The premise with M2SR is that a single replication live virus goes into cells one time, replicates, and stops, generating an immune response without making the patient sick. “What happens here is that we insert pieces of the COVID virus into that vector,” Radspinner explains. “So, you can think of it as a Trojan horse, and it goes in and goes through that replication cycle and generates immunity to COVID. That’s the goal.”
As part of a technology transfer collaboration, Dr. Yoshihiro Kawaoka at UW–Madison’s Influenza Research Institute is generating the construct from animal testing, and FluGen is working with Bharat Biotech in India to share its GMP [good manufacturing practice] materials. Bharat Biotech, a commercial vaccine manufacturer, has delivered over 5 billion doses of vaccine, primarily to India and the developing world.
As a clinical trial unfolds, researchers increase the dose slowly and carefully to make sure it’s safe and determine whether it can produce an immune response. “Once you get that data, you can start to expand into a larger group, but you really do have to look at it in large numbers to discover whether or not there are any idiosyncratic side effects or anything that would show up in one out of 1,000 or one out of 10,000 people,” Radspinner says. “That’s balanced with the challenge of COVID and the impact that it’s having on society, as well. A lot of us are hearing a lot of projections about it [a vaccine] coming out really quickly, but nobody really knows how long it’s going to take.”
FluGen is taking on the twin challenge of flu and COVID-19 at a time when it is, like many businesses, operationally handicapped. Even though it’s considered an essential business, it has to practice social distancing and take all of the necessary precautions when using its Madison facility, and that includes a shift-work process. To minimize the number of people in the facility at any one time, the company has developed four shifts so that anyone who is not working in the lab works from home 100% of the time. The people who work in the lab divide their shifts into periods where they perform deskwork from home, but then come to the lab for the other half of their shift, practicing social distancing and donning masks.
“So, it’s difficult, it becomes more complicated, and it’s harder to get as much work done, and we’ve now taken on this second project, so that’s a challenge,” Radspinner notes. “Having said that, I feel grateful that the company can have revenue when our customers can’t do anything, so I’m not complaining by any means, but it has affected what we do on a daily basis.”
Putting on a virtual show
Residential realtors are considered an essential business, so they could still market homes and show them virtually, if not in person, but adjustments had to be made. Given the low inventories and the likelihood of pent-up demand as the economy reopens, one local real estate executive does not expect the pandemic to have a detrimental impact on home prices.
According to Dave Stark, president of Stark Company Realtors, residential realtors are doing virtual tours, and not only does the potential buyer walk through without the realtor because of social distancing, in some situations, they will purchase the house after seeing it online. “Don’t hold me to this exact number, but anecdotally I’m hearing that 25% of the offers we’re getting are sight-unseen offers,” he states. “Many people are looking online, doing virtual tours, driving by them and satisfying themselves that it’s worth taking a shot at, and so they’re doing it.”
In most cases, however, buyers want to see the house in person. When that happens, all the necessary precautions have to be taken. Everybody is set up with gloves, masks, and hand sanitizer. Surfaces are not to be touched. Only the essential decision-makers come through. Sellers are expected to thoroughly clean their homes after each showing. “We’re trying to keep it as neat and tidy and contained as we possibly can,” Stark explains, “but at some point, people do want to see it.”
Another trend Stark has seen is that some sellers are opting not to put their house on the market, so the number of new listings is down quite a bit. That’s created an interesting dynamic because there are a lot of interested buyers, and when good listings come on the market, multiple people want to inspect them. According to Stark, his clients are still getting multiple offers on a house the day it hits the market — sometimes up to eight or 10 offers. So, while business is down, the expected pent-up demand is the silver lining.
“We’re lucky at this time compared to the last recession,” Starks adds. “Our industry is well positioned to handle something like this. We’re not like a restaurant that’s really dependent on daily receipts to keep things going and pay people. We have a long transaction cycle. We have big ups and downs day to day and month to month in terms of what our revenue streams are, so if people put it off for a month or two, that doesn’t necessarily make much difference to us.”
Pent-up demand is likely to be a short-term effect, but Stark also expects a deeper interest in remote house hunting to linger for quite a while. In fact, the industry has been working to develop better virtual tools and the pandemic has intensified that effort. Stark invested in a small, handheld gimbal that can be affixed with a cell phone for video capture as an agent walks through a home.
There also will be greater use of electronic documents. “This streamlines the process, and I think you’ll see that continue,” Stark predicts. “Wisconsin has passed an online notary law which is supposed to take effect shortly. It still won’t solve all the problems with this, but you’re going to see more of it being done virtually.”
Chris Carpenter, president and owner of Royle Printing Co., was asked what print clients are doing to prep for the day society reopens. If they have quality content, he says they don’t have to wait. Royle Printing has seen some page count reductions, and some publications could decideto put out 11 editions per year instead of 12 monthly issues, but there is still an audience for quality content.
“On the publishing side, if you have really good content that is relevant to an audience, there is still merit in getting it to them,” he states. “Of course, when that’s getting to the right readers, there are advertisers who have a desire to be part of that, as well, and I don’t think we have one publishing client that has actually put the brakes on everything.”
On the catalog side of print, Royle has catalog customers that have seen a 200–300% increase in sales year over year, even throughout the pandemic. “One of the things you’ll see there, much like quality content, is that it’s quality products they are selling,” he says. “It’s not a commodity product that you can easily find on Amazon or elsewhere. It’s also the experience those customers have with the mailed piece time and time again.”
With customers, Carpenter has preached patience, flexibility, and a certain understanding that all businesses should have for one another. “When we talk about being patient with our customers, some of that is actual payment to us,” he states. “Their advertisers are paying them more slowly or there is reduced advertising revenue, so we try to be as accommodating as we can.”
What is the new normal moving forward? Like many employers, Royle has experienced changes that have come with working remotely. The company has 70 or 80 administrative people — customer service, billing, and payables — and during the pandemic, all of them work from home. As an essential business, management could require them to come to work, but they are just as productive working from home. “When this thing passes, I don’t know that we’re going to go back to the way it was before,” Carpenter states. “We’re learning more about ourselves, and technology plays a strong role in that, but people are pretty adaptable, and businesses have to be mindful of that.”
Creative class in session
Dave Florin’s main objective during the pandemic has been to keep his team intact to take care of clients. Florin, president and partner of the marketing firm Hiebing, has the advantage of a diverse client portfolio, which is beneficial because not every industry has been affected equally.
He also had a remote challenge that other employers faced. “The biggest change has been moving our 105 people from on-site in Madison and Austin, Texas, to all working remotely, which can present challenges for a creative environment like ours that is so highly collaborative,” he notes. “We are big believers in the idea that teams outperform individuals, so transitioning seamlessly from being together to being apart was the first challenge.”
As the pandemic unfolded, Hiebing worked on several prominent projects, including new national campaigns for Culver’s and Batteries + Bulbs, as well as new messaging for Doctors Without Borders. Fortunately for the firm, its multicity footprint had already given it a leg up on using technology to work together across the miles. “Given that many of our clients are national, we had to address different challenges throughout the country since states were and still are moving with different timelines,” Florin states.
Florin worries about a vicious cycle created by lingering economic doldrums. The economic recovery is bound to be a gradual one, and Hiebing’s business goes as its clients’ business goes. Part of Hiebing’s challenge will be to convince clients to stay the course in order to retain existing customers and gain market share from competitors that pull back.
Managing a meltdown
Clint Walkner, financial advisor and founding partner of Walkner Condon Financial Advisors, is grateful that his clients “held up pretty well” as the stock market plummeted during the early stages of the COVID-19 lockdown. Bear markets are nothing new, of course, and baby boom investors have seen them before. Younger investors have not.
The firm has answered a lot of calls, emails, and conducted video meetings to discuss its thoughts on the economic issues surrounding the pandemic. To keep investors informed and hopefully calm, it ramped up communication in weekly blog posts, podcasts, and newsletters. “It is always a challenge reassuring people during extreme market events or perceived events that didn’t turn into much,” Walkner says, citing Brexit, the Iranian conflict, and the Ebola scare. “If I can keep someone from making a mistake, that’s really where a huge part of our value as advisors resides.”
Although the firm was identified as an essential business, the majority of its staff worked from home to comply with social distancing recommendations. Some made daily visits to the Monroe Street office to receive mail in case the firm received checks from rollovers or contributions, but even with the precautions, one employee contracted COVID-19.
The infected employee began to feel better and resumed working, but it was a long road to recovery. “Fortunately, none of our employees or clients came in contact with that person or contracted coronavirus, but it definitely was a sobering reminder that it can happen to anyone,” Walkner states.
The pandemic has forced more people to communicate efficiently online. As a result, video meetings have become more commonplace and comfortable, Walkner adds. “It’s likely to allow us to offer our experience outside of the area, which was better delivered in person in the past,” Walkner notes. “Face-to-face and in-person is still the most desirable meeting setup, but the divide between that medium and a Zoom meeting has narrowed significantly.”
Beer to go
Garth and Briana Beyer
With his original business model for Garth’s Brew Bar, Garth Beyer anticipated 80% on-premise beer sales and 20% off-premise. With the onset of the pandemic, it was 100% pickup, which was the last scenario on Beyer’s mind when he opened in December.
Beyer runs the establishment with wife Briana, and even though it was deemed an essential business, business as usual was out of the question. “Top-level things from the pandemic and the shelter-in-place environment have pretty much forced us to minimize hours to keep those windows tight for people to come in,” he says. “We’ve also had to furlough our team for the time being, but with every intention to bring them back as soon as we can open our doors for on-premise consumption.”
Now established as a to-go venue, Beyer expects this service to survive the pandemic to the point where the sales split is more 60-40, if not 50-50, between off-premises and on-premises consumption. As for the on-premises environment, he says don’t be surprised to see more distance between bar stools and ubiquitous hand sanitizer. “If the governor says we can open to 50% occupancy, then we’re going to do that.”
Local colleges responded to the COVID-19 pandemic by quickly pivoting to remote instruction, and while they hope they never have to do it again, they are extremely confident that they can replicate remote instruction if it remains unsafe to gather in person.
These were large undertakings accomplished in short time frames, but they also maintained an important revenue stream at a time when revenue-producing events were canceled and any support schools receive from revenue-strapped units of government was likely to dwindle, as well.
UW–Madison Chancellor Rebecca Blank has already responded to the financial strain, announcing campus-wide furloughs and other steps to begin addressing a $100 million budget deficit attributed to COVID-19. “I have little doubt that we can continue remote learning into the fall, but our preference, and I think the preference of all our instructors and students, would be to return to in-person instruction and to full campus operations,” she states.
Dr. Andrew Manion, the new president of Edgewood College, officially starts on June 1, and he’s hoping to avoid further impacts on traditional undergraduate programs. “While it may seem that there would be little impact on our graduate programs that were already being delivered online, we know many of those students have family at home now continuously, which can present challenges,” Manion notes.
The undergraduates want to come back, as indicated by early registration and housing sign-ups, but some of their families have been hit hard by furloughs or layoffs and it will be a challenge for them to return to normal, Manion adds.
“Interestingly, that same economic impact could be good for graduate and other nontraditional programs,” he notes. “Adult students tend to seek educational opportunities when the economy is in tough shape.”
Madison College President Jack Daniels says his faculty had to develop online curriculum for an eight-week period, including some labs. Fortunately, MATC already offered 40% of its courses online, and that could rise as high as 70% by the fall.
“We pivoted very quickly when we needed to, and we’re confident that we can do it again,” Daniels states. “You’re never going to eliminate the need for face-to-face, in-person instruction because it’s just unavoidable in some instances. There is human value in that, but the vast majority, or good majority, will be online.”
Opportunity knocks on office doors
The COVID-19 pandemic will continue to both challenge and provide opportunities for businesses, and when people return to the office, cleanliness will take on an even higher priority.
During the early stages of the COVID-19 lockdown, that reality was evident to the staff at AkitaBox, a Madison-based developer of building management software. While working remotely from home, they developed what they believe is an innovation that ensures best practices for deep cleaning.
Using disinfection guidelines set forth by the Centers for Disease Control and the Environmental Protection Agency, their DeepClean Assurance software platform was born over a weekend. “We believe it addresses both the immediate needs and likely long-term requirements we will expect within buildings as we begin to operate in the new normal,” says Derek Blackmore, chief of staff at AkitaBox.
Blackmore is proud of the rapid launch of a new application, especially one that fits AkitaBox’s core business, but he also knows the new realities of the office environment will keep innovators on their toes for the foreseeable future. “The way we think about and use buildings,” Blackmore notes, “has already and will continue to change for some time.”
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