As we start 2018 there are a number of economic trends that we need to consider if we are to have effective business plans that will enable us to grow our businesses.
For most of us the referendum vote will be the single biggest thing to impact our personal and business lives in the coming years and while it may appear daunting it is important to remember that many businesses that traded through the last recession did not do it by slashing costs and battening down the hatches - but instead invested and innovated their way out of it. I believe a creative approach will be needed this time too.
All the negative talk and scare mongering is creating uncertainty for consumers, businesses, our government and the EU itself - no one knows what will happen, so we have to plan but also remain flexible. Essentially we have to treat this as another business challenge its( name just happens to be Brexit) and as such it will present new opportunities and some problems too. The key to success will be to take advantage of the opportunities and minimise the risks just as we have before.
One of the biggest impacts has been the drop in value of sterling against the dollar and the euro, so we are able to buy less for our pounds, which is bad news for anyone buying imported products or components. We have seen some price increases in 2017 but I believe we will see more in 2018 as many businesses will be faced with increases in rents, business rates, national living wage and apprenticeship levy as the larger businesses start to pass on these costs along the supply chain.
The upside is that if a significant % of your business is export then this change in exchange rates makes your products more attractive to foreign buyers. If you don’t export currently now is the time to consider if it could help your business. The Artfile have been massively successful in this are being awarded The Queen’s Award 2017 for International Trade as Blue Eyed Sun was before them in 2016.
And of course the improved dollar/euro exchange rate has encouraged significantly more tourists to the UK and this is benefiting many areas of the country. In 2018 this is going to be boosted by all things Royal with a new baby due in April and now a Royal Wedding too!
For British manufacturers and retailers the increase in focus on 'Buy British' and 'Buy Local' products presents an additional sales opportunity with foreign visitors and patriotic Brits and we should all be thinking about how we can maximise this.
There are worries about consumer spending decreasing as we become more unsettled about the changes we are seeing and can’t control. Prices increasing faster than our incomes is also exacerbating this concern. The British Retail Consortium reported in November that the total 3 month average spend on non-food was -0.6% year on year and Helen Dickenson said of Black Friday that "consumers have become ever more careful, willing to wait and deploy their discretionary income only when they see an exceptional bargain". I would suggest that this applies to more than Black Friday and that products will have to be exceptional in terms of function and quality to tempt shoppers to buy them.
Periods of uncertainty in the past have shown that we tend to make more regular contact with family and friends and spend time together rather than buying things. We also spend more time celebrating occasions, particularly those linked to children, as we want to protect them from any concerns we have about money. If your business is linked to 'occasions' or 'children' this could be good news.
The reality is that it is critical that we all keep spending in our personal and business lives; this doesn’t mean we should spend more than before or spend unwisely, but if we can we should make savings and then re-invest that money in things that will drive our businesses forward. For example if you have the money to invest in property or larger items now is a good time to strike a deal as there could be some favourable terms to negotiate. It may not just be a question of saving money - it may be about using your time more effectively. Regardless, be realistic and focus on where you feel you can make the biggest difference.
As retailers and suppliers to the retail market our job is to continue to give your customers a reason to keep spending money by offering a great selection of products that are well priced against the competition. Make sure everyone feels welcome when they contact your business -whether that's coming in to your shop, phoning or visiting you online. You need to know that they can find what they are looking for easily and everything about visiting your store or website is simple, straightforward and welcoming. (Check out my previous blog for more tips on this >).
In all honesty, we will have to work hard to grow our businesses, working with renewed vigour and focus to ensure we are taking away any of the barriers that might stop our customers spending money. Remember to keep calm, hold your nerve and obsess about your customers!