It's that time of year again. Eggnog time.
Every year during the holidays I try to add one retro piece to my decoration collection. This year it's one of those three-foot-tall red plastic outdoor Noel candles with the glowing plastic yellow flame, which were popular in the 1980s. Money. Hard to find, but that's what eBay is for.
I don't only look in the rear-view mirror for obscure holiday items. I also look back at the previous year and try to take stock of the business trends my clients and I observed. And I look forward to the coming year, in order to try to get ahead of my clients.
The year 2010 was surprisingly busy for most of my clients. It seemed like I would get a similar response every time I asked "how's business?" – a tentative "pretty good," where the intention was to say business was strong, but also not to jinx the situation.
We've all read about the jobless recovery. I don't think that is true any more. We are hiring, as are the majority of my clients.
All that said, 2010 seems to have been the acceptance-of-the-new-normal year. The new normal is living with uncertainty. The new normal is intense competition and pricing pressure. The new normal is more rigorous decision making. The new normal is a bit of a street fight.
Here are some specific trends from 2010 that are likely to carry forward:
Retail and other consumer businesses
1. U.S. entrants keep coming.
I remember the predictions of doom and gloom for Canada's retailers 15 years ago when Wal-Mart was entering the Canadian market. Canadian Tire, Shopper's Drug Mart and others pulled up their socks, becoming more competitive. We are now looking at a new wave of U.S. entrants –Victoria's Secret landed in Canada this year. In 2011, J. Crew, among others, will arrive. Fending off large, sophisticated U.S. players is a trend that's here to stay.
2. The return of customer experience.
In the year before the downturn, a lot of my clients were starting to invest substantively in true customer experience (CX) initiatives, not just dressed up customer services improvements. These initiatives focused on improving experiences across a number of touch points with the brand. In 2010, a focus on CX returned, and in an increasingly competitive consumer market look for CX to be a significant investment area for consumer-focused businesses next year.
Business-to-business (B2B)
1. Fighting hard to achieve reasonable targets.
Many of our B2B clients have talked lately about two things: the fact that they achieved their 2010 sales and profitability targets; and how hard they had to work to get there and that the targets were not stretched by anyone's imagination. Since most businesses have cut costs as far back as possible, profitability growth in 2011 will come largely from sales increases. These gains are likely to be as tough to come by as they were in 2010, because of heightened competition and continuing conservatism in spending.
2. Reviewing contracts for cost savings and writing RFPs for smaller contracts.
A major home improvement retailer executive I spoke with recently said she has reviewed supplier agreements more, and written more RFPs this year than any year she can remember. "I wanted to be sure we were getting the best pricing, and the best value," she says. I saw this everywhere with B2Bs in 2010. I don't see it changing in 2011, putting pressure on incumbents but also opening up opportunities for new, smaller competitors.
Services businesses
1. Intense competition for all assignments.
Tied directly to the point about B2Bs reviewing vendor contracts and RFPing more than ever, my business partner noted that he's seen competition heat up dramatically across the spectrum of services businesses. This year marked the return of the bake-off (many professional services firms bidding on one contract) as a normal course of business. This is unlikely to change heading into 2011.
2. Contracts now phased.
Pre-recession, services contracts were often large and tendered in one piece. These contracts (for engineering, consulting and other advisory work) dropped off dramatically during the downturn, but returned in 2010. The difference was the introduction of stage gated contracts, where only the first 25 per cent to 33 per cent of the value was guaranteed, with two or more decision points on additional phases/budgets built into the process. With clients still somewhat skittish about short-medium term prospects, it's easy to imagine this trend continuing into 2011.
Dec. 14: New trends to expect in 2011. Look for it on the Your Business website.
Mark Healy