This question increasingly seems to be at the start of many meetings and conversations these days. All too often, it elicits a rather gloomy response as more and more industries and people within them seem to be adversely affected by the current downturn in the economy.
So, is it all bad? Well, it is if you were to accept the view of many journalists – especially Robert Peston of the BBC!! However, without being dismissive, the reality is that in such situations, there are some winners and some losers. As people re-balance their spending priorities and manage budgets more carefully, we are seeing ‘discount’ supermarkets and some of the budget food outlets such as the burger and pizza restaurant chains increasing their business and recruiting accordingly.
Less than 9 months ago, with the pendulum at one extreme, we were ‘suffering’ huge increases in oil [petrol] prices and other commodities. This position was presented as a ‘damaging negative’… yet now we are seeing such prices falling as the pendulum swings the other way and this converse effect is now being presented as a ‘damaging negative’! The point is that we are dealing with two sides of the same coin and as I said earlier, whatever happens, there are winners and losers.
If we look at some of the business failures such as Woolworths and other high street retailers, we could choose to see the negative loss, but one of the consequences for the businesses that survive is that they have by default acquired an increase in the proportion of their market share. How they capitalise on this is a matter for them, but it is important for all businesses to raise their heads above the necessary ‘tactics’ of survival and look to the strategic opportunities that will emerge – something that they should be preparing for now.
In our own industry of Financial Services, the answer to the question of ‘how is business’… will again depend upon whether you are a winner or a loser. The sub-prime market has suffered a major bloodbath over the last 12 – 18 months and there are many other parts of the lending/packaging community that have suffered too. One area of business that seems to be on the winning side of the coin at the present time is that of e-commerce. Having talked to the various POS/middle-office/back-office suppliers, they are telling us that their order books and pipeline are buoyant. Even if you discount some of the potential desire to paint a ‘rosy picture’, the conversations we have had with the Providers and Distributors certainly appears to verify that there is robust demand for these solutions. Indeed, a number of the providers have told us that following general instructions to cut operating budgets by the ubiquitous 10%, the resulting justification for being able to save this money has often been to increase reliance on e-commerce and or IT processing improvements. Indeed, several have told us that this has benefited their budgets, in one case this resulted in the Finance department initiating a threefold increase in the e-commerce budget!
We believe those who invest now will gain a positive market position when the recovery arrives. Indeed, a failure to act now and perpetuate current inefficiencies will be exposed as RDR takes effect. There will be a need to justify the ‘factory gate’ pricing of products and requirement to deliver first rate service. Distributors will face similar pressure, as they will have to justify more robustly, what their costs of advice and service are.
There is a lot of ‘fear, uncertainty and doubt’ about at the moment and there is a real danger that we succumb to the negative mood. In truth, there is much that we cannot fix, but for that which we can we should do so… As a colleague once said – somewhat unsubtly – to those who kept telling him what they ‘couldn’t do’… ‘stop whinging and get on with it!
