Prediction one: Cost leaders will continue to set the pace
With slow growth being forecast throughout much of the western world, companies which adopt a cost leadership approach are those most likely to succeed. This strategy, which entails becoming the lowest cost producer in an industry, for a certain quality of product, has been successfully adopted by a number of companies. Amazon, BT and Whitbread are all examples of industry cost leaders which have been able to thrive through innovative cost management. As the economy continues to stagnate, cost leaders will again show other companies how to achieve growth in challenging times.
Prediction two: Corporations will align cutting costs and carbon emissions
Businesses will again look for areas where they can improve their environmental footprint whilst cutting costs. Previously, ‘green’ initiatives had moved down the agenda as companies focused on short term profits, however, as slow growth continues, consumers will begin asking more questions about environmental compliance. In the UK, new regulations announced by the Deputy Prime Minister, will see all listed companies obliged to include emissions data in their annual reports from April 2013. These measures will further intensify the spotlight on corporate carbon emissions.
Prediction three: Online delivery models to change drastically
2013 will be the year in which the unsustainable “free home delivery” model is dropped by most parcel operators. Faced with rising demand and fuel prices, retailers have found themselves making deliveries at a loss. Research has shown that most customers are unwilling to cover these costs, meaning retailers need to explore new delivery strategies. Examples include Amazon’s collection lockers and Tesco’s Click and Collect system.
Prediction four: Onshoring will become increasingly attractive
A rise in salaries in Asia, coupled with a global surge in fuel prices, will force companies which have moved functions offshore to reconsider their options. In parallel to these developments, many western nations have begun implementing measures to make onshoring a higher value proposition. One example is the “Patent Box”, a tax reduction scheme which will come into force in the UK in 2013 and has already helped secure investment from GlaxoSmithKline. The situation has already changed to the extent that Taiwanese iPhone manufacturer, Foxconn, is considering opening plants in the USA.
Prediction five: The rise of the corporate app
With IT departments grappling with security and management issues arising from employees working from personal devices, mobile computing is without a doubt high on the list of priorities for 2013. A key trend in 2013 will be redeveloping corporate IT applications to exploit the opportunities offered by mobile devices. The dominance of Windows has already begun to fade and as IT functions enter a post-PC era they need to offer support for iOS and Android platforms. New markets will emerge, such as the corporate app store and cloud service brokers. IT departments will increasingly need to develop an enabling and coordination capability, in addition to the traditional command and control model.
Prediction six: Cross-sector projects and collaborations will enable companies to access the next level of savings
Despite the current economic climate there remain many opportunities for businesses to innovate and work together. 4C research has shown that companies are increasingly willing to discuss mutually beneficial collaborations. This approach is particularly relevant in terms of logistics. In this sector a joint strategy can deliver savings through shared vehicle utilisation, reduced labour costs, decreased carbon emissions and technology deployment. Obtaining partner buy-in has often proved to be a stumbling block, however, as the financial situation remains challenging, 2013 should see a rise in collaborative projects.
Prediction seven: The Eurozone crisis to continue
The tail end of 2012 saw a number of small but positive signals emerge from the Eurozone economy. In November, for example, the rate of contraction in the Eurozone diminished, and the Purchasing Managers’ Index rose by 0.8 to 46.5, compared to the previous month. Despite this limited progress, weak consumer demand, coupled with a lack of confidence in business and a decline in global trade, will see the Eurozone economy remain in decline throughout much of 2013. Britain is likely to be the fastest growing of Europe’s largest economies and the European Commission’s prediction of 0.9 per cent growth in 2013, is in line with 4C’s estimates.
Prediction eight: Low inflation and higher prices
In 2012, the UK experienced a period of very low inflation. The Bank of England has stated that in 2013, it expects inflation to remain around 2 per cent, but estimated that there is a 30 per cent probability of inflation rising above 3 per cent. The current economic situation presents limited opportunities for companies looking to grow with the market. Many businesses have been keeping their prices low for a long period of time, but are now coming under increasing cost pressure. As a result of this, a number of companies will be forced to raise prices. This will prove difficult for sellers, who will need to tread carefully against strong resistance. Buyers will need to focus on implementing robust processes to mitigate potential price increases.
Prediction nine: Traditional shopping outlets will adapt for a new breed of consumer
Faced with the phenomenal growth of online retail, traditional shopping outlets will continue to lose market share. Studies have found that British customers spent an average of £1,083 on internet shopping in 2011. This represents an increase of 14 per cent on the previous year. 4C predicts that the number of consumers choosing to buy online will rise by a similar number in 2013. This growth will be in part fuelled by customers shopping via mobile devices and the adoption of new delivery channels, such as Click and Collect. 2013 will see the beginning of shops being used as depots and “show rooms” for consumers looking to try before buying online. Retailers and distributors will need to drastically change their cost model.
Prediction ten: Barcelona will win the UEFA Champions League
Once again it is hard to look past Barcelona for the title of European champions. With a team boasting the likes of Lionel Messi, Andrés Iniesta and Cesc Fàbregas, the Catalan giants are, on paper, the best side on the planet. Their sometimes entertaining, sometimes nauseating, style of football has seen them pass their way through most of the world’s top defences. Despite this, a defeat to Real Madrid in the Spanish Super Cup and Chelsea’s surprise win in last year’s semi-final, is evidence that they are beatable. Other possible contenders include Spanish rivals, Real Madrid, German power house Bayern Munich, defensively frail Manchester United and dark horse Juventus.