As well as launching new products and diversifying their services, many are well on the way to digital transformation, following investment in cloud-based applications, Artificial Intelligence (AI) and robotics, and Internet of Things (IoT).
Of course, there was a raft of new legislation to comply with, including HMRC’s Making Tax Digital, increases to the National and Living Wage and preparing for executive pay gap reporting in 2020.
A new year is a chance to look ahead to the economic, societal and industry trends impacting businesses in all sectors.
Not surprisingly, technology is going to be central to the success of any company, from major corporations using deep analytics to inform decision-making, to Small and Medium Enterprises (SMEs) managing their operations using intuitive business apps. Sustainability and ethics will also shape business strategies and create new growth opportunities, in line with shifting consumer attitudes and purchasing behaviour.
Making sense of a rapidly-changing landscape is not always easy, but there are plenty of reasons to be confident too. Here are our top six business trends for 2020.
1. Small business trends: Levelling the playing field for SMEs
SMEs are the backbone of the UK economy, accounting for more than 99% of all private sector businesses.2 Being your own boss brings enormous rewards, although most understand the risks, investment and long working days required to be successful.
On top of that, SMEs have traditionally struggled to compete with big players because they don’t typically have the same resources to invest in marketing campaigns, IT infrastructure, staffing and other business functions.
All that has started to change in recent years, as technology continues to break down traditional barriers. Growing numbers of SMEs have already started to combine easy-to-use and relatively low-cost accounting, HR, email marketing and web development tools to save both money and time, and present a professional image to the world. This looks set to continue into 2020 but some will go a step further, using data captured via these applications to make better business decisions, react quickly to change – and potentially take market share from companies several times their size.
Finally, announcements made in the Queen’s Speech at the end of last year should provide an additional boost for SMEs. These include support for dealing with late payments and doubling the threshold on Small Business Rate Relief.3
2. Economic trends: Reasons to be cheerful
While 2019 may have been characterised by lower-than-expected growth across the world, it appears the clouds are starting to lift. Economists have predicted an average of +3.2% global Gross Domestic Product (GDP) growth in 2020, partly as a result of growth in emerging markets. But they have also warned of a slow-down if more tariffs are imposed.4
The Bank of England’s decision to hold interest rates at 0.75% in January is further evidence of confidence returning to the UK economy. The still near record low interest rate spells good news for firms looking to borrow in 2020, as is the fact that unemployment is at a 44-year low.
Mohammed Chaudhri, Head of UK Macro Forecasting at Experian added “The Bank of England’s decision to hold interest rates at 0.75% points toward a sense of confidence returning to the UK economy. Whilst maintaining interest rates at a near record low, the Bank made it clear that it stands ready to cut rates should the economy need it.”
Bolstering the economy further, consumer confidence grew by three points at the end of last year, according to one index.5 As long as you have the right product or service, and keep moving forward, this renewed optimism could pave the way for exciting business growth.
Nobody can afford to be complacent and with the economic outlook still far from certain, any adverse change could quickly derail your business. Late or non-payments from customers can seriously damage your cash flow and result in bad business debt, while suppliers could hike their prices to cover rising costs. As always, it pays to keep a close eye on your customers’ and suppliers’ credit scores, so you can spot late payers and those at risk of defaulting. Tools such as Experian Business Express help you do this, you can then decide who to work with and what credit limits to set.
“The Bank of England’s decision to hold interest rates at 0.75% points toward a sense of confidence returning to the UK economy. Whilst maintaining interest rates at a near record low, the Bank made it clear that it stands ready to cut rates should the economy need it.”
Mohammed Chaudhri, Head of UK Macro Forecasting, Experian
3. Marketing trends: Conversation starters
Data-led marketing has been a game-changer over the past decade, enabling even small firms to run targeted and cost-effective online ads. Marketing teams with bigger budgets have pushed the boundaries of data analytics, in a bid to better understand their customers and the path to purchase.
Machine learning and AI are expected to feature in brands’ marketing activities, as the technology becomes more accessible. We’ll see brands experiment further with automated content creation, using AI-powered tools to generate blogs and emails far quicker than a human.
One key trend to watch over the coming year is conversational marketing, partly driven by innovations in voice search and the adoption of smart speakers such as Alexa and Google Home.6 Another is using chatbots to deliver personalised marketing messages via a medium many already interact with daily.
Conversational marketing is clearly a powerful way for brands to interact with their audience, via the same messenger apps they use in their everyday lives. At the same time, they provide valuable, organic feedback from customers that enables marketers to track trends and improve decision-making.7
4. Consumer Trends: The age of conscious shopping
The past few years have seen a marked change in society’s attitude to fast fashion, plastic waste and meat-consumption, which will no doubt intensify further in 2020. Consumers, including the powerful Millennial market, are aware of the impact their purchasing decisions have on the environment and may turn to brands whose values match their own.
This shift has forced businesses in all sectors to review their products and practices, from supermarkets vowing to remove plastic packaging to airlines looking for ways to reduce fuel consumption and clothing retailers running garment recycling schemes.
It’s no surprise that 2020 has been referred to as the year of sustainability, something that goes beyond environmentalism and fair trade.8 Business ethics are now firmly in the spotlight – and those who fail to uphold workers’ rights or use data responsibly could well face a backlash from consumers.
Although sustainability is one of the key differentiators for brands this year, it’s important to consider the operational, financial and reputational impact of any new initiative. As long as businesses build sustainability into their brand values and are aware of any unintended consequences (such as increased product prices), they potentially might be able to open their products and services up to new audiences.
5. Data trends: Next steps in digital transformation
No matter what sector they operate in, many businesses are now well on their way to digital transformation, as cloud-based services become even more powerful and cost-effective.
Technology, as we have seen, levels the playing field for SMEs, who can attract customers via relatively low-cost pay-per-click and email marketing campaigns. If the potential cost and time-saving benefits were not enough of an incentive, new regulations like Making Tax Digital could prompt more smaller firms to move towards cloud-based business software. You can read more about Making Tax Digital here.
At the other end of the scale, major firms are likely to invest resources in real-time and predictive analytics, Internet of Things (IoT) and data automation.9 Big data has already transformed manufacturing, logistics, retail and banking, so expect to see it being used more widely in everything from tackling climate change and predicting natural disasters to clamping down on fraud.10
As personal data becomes an increasingly prized commodity, businesses are under pressure to review their security and privacy policies. The fact that the Information Commissioner’s Office (ICO) issued numerous penalties for data breaches in 2019, suggests that some companies and individuals are still not taking their legal obligations seriously.
The fines and reputational damage alone should be enough to make 2020 the year to make sure their practices – and those of their suppliers – comply with the General Data Protection Regulation (GDPR) and other relevant regulations.
6. Retail trends: What’s in store for brands?
Throughout 2019, the UK high street was dogged with reports of poor performance, Company Voluntary Arrangements (CVAs) and store closures. Online sales accounted for more than a fifth of retail sales by the end of last year11 – an upward trend that is likely to continue through 2020 and beyond.
Bricks-and-mortar stores have clearly suffered in the face of growing online competition, not to mention costly business rates and wage bills. Their fortunes have not been helped by the fact that many Millennials (and other shoppers) value experiences over things.12
However, there seems to be good news on the horizon at last. Experts believe the retail sector could grow by +1% over the next 12 months, bolstered by a recent rise in consumer confidence.13 Brands that have adapted their model during the challenging years look set to benefit from this new-found optimism, although the market remains tough for those who have fallen behind.
Omnichannel retail is here to stay, as businesses leverage data from multiple sources to personalise shopping experiences and influence purchasing behaviour. While it’s difficult to predict the rate of change, we can certainly expect growth in social commerce, engaging store experiences and a focus on sustainability. All eyes are on the major food retailers currently experimenting with in-store automation, including entirely cashierless checkouts.
Where next?
The rate of change, whether in technology, consumer attitudes, the economy and regulation, mean that staying ahead of the curve is an ongoing challenge. Agility and innovation drive success – yet jumping on the latest consumer trends can be costly if they prove to be a flash in the pan.
To avoid this, businesses will need to leverage data to grow their prospect lists, engage with customers, improve their experience and make the most of every sales opportunity. Quality data will continue to underpin your marketing, sales and business strategies, whatever your objectives and budget.
Even if you already have a loyal customer base, 2020 is shaping up to be a golden opportunity to scale your company up sustainably, without being exposed to unnecessary financial risk. Just as important as uncovering new business opportunities is ensuring they, and your existing customers, are in a position to pay you on time and in full, while protecting your cash flow and credit score.
Sources:
- www.imf.org/en/Publications/WEO
- www.fsb.org.uk/about-us
- https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/853886/Queen_s_Speech_December_2019_-_background_briefing_notes.pdf
- www.morganstanley.com/ideas/global-economic-outlook-2020
- www.gfk.com/en-gb/insights/press-release/uk-consumer-confidence-increases-by-three-points-to-11-for-december-2019
- www.smartinsights.com/managing-digital-marketing/marketing-innovation/6-essential-marketing-trends-for-2020
- https://blog.hubspot.com/marketing/conversational-marketing
- www.forbes.com/sites/jonquilhackenberg/2019/11/28/2020-will-be-the-year-of-sustainable-business
- www.techrepublic.com/article/big-data-predictions-8-analytics-trends-in-2020
- www.financesonline.com/big-data-trends/#bigdata
- www.ons.gov.uk/businessindustryandtrade/retailindustry/timeseries/j4mc/drsi
- www.forbes.com/sites/blakemorgan/2019/01/02/nownership-no-problem-an-updated-look-at-why-millennials-value-experiences-over-owning-things
- www.retailgazette.co.uk/blog/2020/01/retail-think-tank-hails-1-retail-industry-growth-2020