4 Emerging Business Trends That Affect Your Profitability
The Great Recession has altered the very foundations of life and business and set off changes that are transforming industries and companies. Climate changes are inspiring new corporate commitments to sustainability. New generations are bringing new values to the forefront.
The emergence of these tide-shifting business trends redefines the way business is conducted and profits are realized. Four trends, in particular, are reshaping the world of business. Understanding them will help you to respond and redefine your go-to-market process to capitalize on the new reality.
Information has never been so free and readily available as it is today. And while the price of knowledge has dropped, the supply of data has exploded, creating information inflation and a whole set of new problems for the future. This is often referred to as "Big Data."
Businesses can use data to increase revenue and reduce costs. For instance, according to Inc.,
Businesses successfully mining Big Data are cross-referencing their internal information—pricing histories, customer traffic patterns—with multiple outside sources to increase revenue by understanding customers' behavior better, reducing costs by eliminating inefficiencies and human bias, strengthening client bonds by anticipating clients' needs, enriching service offerings with new knowledge, and giving employees new tools to perform their jobs better.
Information forms the basis of decision making. For businesses to compete, they will require skills and technology to find the truly valuable data in a universe of content.
The Frugal Consumer
We have entered the era of the frugal consumer, according to economist Peter Dawson. He views this trend as a shift towards a more permanent condition of consumerism that will change the way businesses operate.
Dawson isn't alone in his theory; he is backed by market research. McKinsey & Company conducts an annual survey of consumer buying behavior. The management consulting company's most recent report noted that "in general, consumers are making cautious financial decisions," which isn't surprising considering that over half of the survey respondents indicated that they are "finding it harder to make ends meet than they did a year ago" or living paycheck to paycheck. The report also noted that approximately one-third of the respondents agreed that their financial situation was "causing them to delay purchases and cut back on spending."
This tight-belted consumer behavior means companies must be that much smarter in determining the price of their goods and services and offering true value.
Millennials, also known as Generation Y, are people born roughly between 1980 and 1996. Millennials are over 71 million strong with a spending power that's expected to reach $1.4 trillion in the U.S. in 2020. This cohort has lived the digital life, and, as a workforce, they are more adaptable, collaborative, and innovative than any previous generation. What is most earth-shattering about this generation is its diversity and the way in which millennials embrace community as well as all cultures and classes.
It's key for companies to capture millennials' interest and business. According to the American Express Open Forum, businesses—particularly small ones—can capitalize on some of these Millennial concerns for community, diversity, and doing good.
Clean and Green
The green business movement has now accelerated into overdrive. Backed by billions in government stimulus and venture capital, the earth-friendly companies in biofuels, solar, wind, and more will stand to reap big rewards going forward as the face of commerce changes for the benefit of Mother Earth. Consumers will respond to your business' green efforts—the materials you use, the manufacturing process, and how you bring them to market.
According to the Small Business Administration:
There’s a new focus on environmental responsibility, and as a small business owner, you can make a difference. Help protect our ecosystem and serve your customers who value your environmental efforts.
The Bottom Line
These four business trends will pose a challenge for business and society as a whole. What we see now is a restructuring of the world as we know it. Businesses will need agility and adaptability to ride these trends into the future.
McKinsey and Company. "Saving, Scrimping, and ...Splurging? New Insights Into Consumer Behavior" March 2016. Accessed Nov. 7, 2019.
Accenture. "Who Are the Millennial Shoppers? And What Do They Really Want?" Accessed Nov. 7, 2019.