Trends for the New Year
It’s a new year, and with it comes some optimism that the economy is finally starting to gain some traction. Indeed, in a survey released in December by Business Roundtable, an association of CEOs of big U.S. companies, 45% of the executives said they expect their companies to add more workers in 2011. It’s the highest percentage of CEOs who have said they planned to add jobs since the survey began in late 2002.
In other good news, nearly six in 10 CEOs expected to bump up capital spending, another signal of confidence in the economy. Consumer sentiment is also slowly improving.
But while executives and consumers are feeling more bullish than they have the past couple of years, no one expects a return of the freewheeling spender anytime soon. For retailers, many of which sustained profits throughout the downturn due to productivity enhancements, the challenge is to generate real revenue growth. Some good advice is offered by the experts at the management consulting firm Booz & Co., New York, which believes retailers (and other consumer companies) can leverage growth in 2011 and beyond by pursuing opportunities generated by four key consumer trends. As the editor of Chain Store Age, I’m inundated with trend forecasts and surveys. The Booz annual year-end update is right on target, in my view, succinct and to the point.
Here’s how Booz sees it:
1. Frugality with a twist: Consumers’ frugal spending habits are lingering; for some, these habits may become an enduring reality. However, there are still opportunities for companies to grow, provided they can capitalize on the demand for products and services with emotional appeal as well as more functional items.
2. An aging and health-conscious population: Booz calls this one the trend with the most far-reaching implications. As the population ages, consumers are increasingly demanding goods that promote health and well being. Companies need to harness scientific research in the development of products for this group and influence government and professional communities.
3. Fragmented media, digital consumers: Marketers can no longer rely solely on broadcasting brand messages via traditional television or print advertising. Now more than ever, companies need a marketing function that can reach consumers in the right way and at the right time, no matter where they are on the path to purchase: at home, on the go or in the store.
4. Big emerging markets: Retail companies already know that China, India and Russia hold rich potential. In China, for example, GDP growth in 2011 is expected to slow to 8.7%, compared with 2.9% here at home, according to the World Bank. But capturing this value depends on a company’s ability to navigate some complex challenges, including fierce competition from already-established multinationals and from local companies.
Winning in these emerging markets also is dependent on the ability to attract and retain the highest-caliber talent, which can be a major challenge in some areas. Expansion initiatives require executive teams that can marry a multinational perspective with local knowledge, as well as the training and development of competitive, highly engaged front-line managers.