In what will be seen to be one of the most fundamental and far-reaching developments affecting how we conduct the NAM Job, Brexit is sending a signal that the savvy consumer has added politics and trust to what defines being a stakeholder in today’s markets, bringing with it the realisation that politics is too important to be delegated to the politicians … and we are all savvy consumers under the skin…
However, business is still about adequate reward for risk, fair share dealings, and above all, a need to build and maintain a consumer’s trust that the contents will always exceed the description on the tin…
In this inevitable period of uncertainty, we need to revert to basic principles that in some cases can seem like clichés:
- If the numbers don’t add up, they probably don’t.
- If I don’t understand my business idea, what can I expect from a distracted buyer?
- If I cannot make the product for less than the consumer is prepared to pay, why bother?
- Continuous satisfaction of consumer need has to be a fundamental driver, with trust an integral part of the equation…
Brexit, albeit a monumental leap in the dark, means the following:
- A fall in the value of the pound, meaning that exports will be cheaper, i.e. If your company is UK owned, there will be a positive impact, an advantage vs. competitors that rely on imported goods.
- However, brands that rely on imported ingredients will incur higher costs that are difficult to pass on, given the continuing price war.
- Imported products will have to be sold at prices that reflect the falling value of the pound, given the lack of any remaining scope for absorbing costs in the system.
- Retailers sourcing locally – including Aldi and Lidl – will benefit, and probably increase this part of their assortment…
- Retail structural change will continue in terms of the growth of the discounters at the expense of the multiples.
- Consumers will increasingly buy easier, faster, closer, and more often.
- ‘Making do’ will increase, as consumers try to make their money go farther.
- Price wars will continue, as the multiples try to reverse the discount tide…
- Given the inevitable period of uncertainty, many major investment decisions will be put on hold, at least while the numbers are re-run…
- With interest rates continuing to fall, the normal investment benchmarks are no longer reliable. Near zero interest rates can lull companies into making decisions that will be unprofitable in the event of even modest increases in the cost of money. Better to act as if interest rates are 5%+ and testing business initiatives on that basis.
- Companies that set up in the UK to ensure ‘easy’ access to the EU will probably place relocation at the top of the agenda, although it is likely that a new UK government line-up will introduce lower corporation taxes by way of being an offer that few can refuse…
- Above all, running the numbers will become a way of life i.e. the ability to calculate real cost and demonstrate value to the buyer will become increasingly important amidst the uncertainty…
- A NAM’s ability to calculate and factor in the risk associated with all business decisions will become a way of life… (even the ability to label ourselves, our company and the customer as risk-averse, risk-neutral or risk-seeking, and acting accordingly, will help…)
Given a reasonably open mind, Brexit will restore our faith in our common sense, and the use of that common sense as a criterion for making decisions. Based on the continuing uncertainty, with management distracted by bigger issues, NAMs will have to become their own worst critics, subjecting all their strategies and planned initiatives to ‘common sense’ scrutiny, without missing a beat.
In these unprecedented times, we the suppliers, retailers and consumers need to work together, using trust as our most valuable resource, keeping to the spirit rather than just the letter of the law or regulation, always aiming to deliver more than it says on the tin, recognising that opportunity lies available now for those that attempt to move forward using basic principles of acceptable reward for risk in business, while others await a return to normal…
Above all, using a slogan that worked well in other times, NAMs need to keep calm and carry on….
