What can businesses expect from 2021?

  1. Melissa Tredinnick

    Melissa Tredinnick UKBF Newcomer

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    At the start of a new year, many people will be hoping to use this time as a kind of mental reset, to put 2020 behind them and focus on the future.

    On UKBF, we usually mark the occasion with a series of business trends we expect to see in the year ahead, but it now seems hard to trust any predictions at all.

    This time last year, when I wrote optimistically about technological breakthroughs and international sporting events, few people could have guessed what was really in store for us in 2020. 

    That said, some of the themes covered in that article are still relevant in 2021. Environmental concerns and ethical consumerism are still on the rise, as are fears over the spread of misinformation online – a point Channel 4 set out to make this Christmas with its ‘Deepfake Queen’.

    Unfortunately, one thing we can say with some certainty is that the damage of the pandemic is not over yet. 

    Continued restrictions at the start of this year are likely to put more businesses at risk of closure, and while it feels like recovery is in sight as vaccines gradually roll out, any return to normality is still a long way off.

    Meanwhile, now that the Brexit transition period has come to an end, the UK has its first year with the new EU trade deal ahead, putting importers, exporters, and supply chains into uncharted territory.

    Accelerated digital trends

    Much has been said about the increased digitalisation the pandemic has brought about, with social distancing measures forcing people to communicate remotely with friends, family and colleagues.

    According to a survey by New York-based consulting firm McKinsey, company executives around the world are now three times likelier than before the crisis to say at least 80% of their customer interactions are digital in nature.

    Businesses also adapted much faster than they themselves expected to, with survey respondents saying they were able to respond to a range of COVID-related changes between 20 and 25 times faster than they thought they could – rising to 40 times faster when it came to implementing remote working.

    Knowing that it’s possible to work productively from home has been an eye-opener for a lot of SMEs, and it now looks likely that many businesses will keep up some form of remote working, perhaps dividing employees’ time between the office and home.

    As more businesses take up remote working for good, online project management and collaboration tools will keep developing, offering more opportunities to make processes digital and automatic.

    It’s possible this change in attitudes towards working practices could also lead to more flexibility in general when it comes to employees’ hours, or even a shorter working week.

    Online shopping

    The other big digital change, particularly for retail businesses, is the shift from buying products in person to purchasing online. 

    Research by O2 and Retail Economics suggests that consumer habits have been altered permanently by the pandemic, with 44% of customers saying it will change the way they shop in the future. 

    Around half of those surveyed also said they’re spending more time researching their potential retail purchases online than they did before the pandemic.

    Now that more small retailers have an online presence, the bar has been raised when it comes to customer experience and getting found online.

    The other side of this is the decline of the high street, which most of us were already used to seeing reports about long before the events of 2020.

    Restrictions on non-essential businesses and a general decrease in footfall put more pressure on businesses that were already struggling, with several major retailers entering administration over the course of the year.

    Community and the kindness economy

    That brings us to what some see as the solution to high street decline: a greater focus on local communities and conscious consumerism.

    It’s something retail guru Mary Portas calls ‘the kindness economy’, based on the idea that the traditional retail model isn’t enough to attract ethically-conscious shoppers anymore. 

    For many people, the pandemic has created a renewed interest in shopping locally and supporting the independent businesses near them, and in many cases, small businesses themselves have teamed up to promote one another too.

    To entice customers back into physical stores, businesses will also need to provide an experience that makes it worth their while, rather than competing purely on price or convenience.

    It’s possible that as large chains lose out, disused high street properties could develop into community-focused spaces, and businesses that offer a more personal experience could become consumers’ destination of choice.

    Possible recovery

    Finally, as vaccines provide a light at the end of the tunnel, we could look forward to some level of economic recovery this year.

    In its economic and fiscal outlook published in November 2020, the Office for Budget Responsibility warned that economic output would not return to pre-crisis levels until the fourth quarter of 2022, but predicted we would see the economy gradually recover over the next few years, with GDP growing by 5.5% in 2021.

    This is based on the assumption of restrictions being eased in spring, followed by vaccines being made available more widely in the second half of the year. 

    The Confederation of British Industry (CBI), which made similar forecasts for GDP growth, has called on the Government to implement measures such as business rates reform and ‘productivity vouchers’ to incentivise investment and speed up recovery.

    Alpesh Paleja, lead economist at the CBI, said the UK should take “positive steps to foster a more dynamic business environment which rewards entrepreneurship, innovation and investment”.

    While there’s no guarantee any such measures will be put into place – and the Government will also be looking for ways to cover around £280 billion spent on COVID-19 support measures in 2020 – we might hear about any major changes in the Budget, scheduled for 3 March this year.

    What are your business predictions for 2021? Leave your thoughts in the comments below.

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  2. Digital-Marketeer

    Digital-Marketeer UKBF Newcomer

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    Melissa hits the nail on the head, not sure of the "kindness economy" though. Our town centres are simply going to shrink a lot. There will be massive changes in education and health as well and more facilities for "home working" with say general facilities such as work stations available in relatively local bubbles. (ie a "home worker" might use a local shared office facility than their actual home or commute.) Will these changes take up any slack?
    My worry is that many businesses simply hope they will muddle through, obviously some won't.
     
    Posted: Jan 20, 2021 By: Digital-Marketeer Member since: Apr 27, 2019
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