To stay ahead of the game businesses must be alert to globalisation, consumer power, multichannel and sustainability, says Pentland Brands’ Andy Rubin
For businesses to survive and return to growth beyond the downturn, their leaders must be thinking about external influences that will impact trade in five to 10 years and beyond, according to Andy Rubin, chief executive of brand house Pentland Brands.
Rubin has identified four crucial areas and trends that business leaders should focus on planning for to ensure their future health: globalisation, the consumer being in control, multichannel and sustainability.
Speaking at the inaugural Next Generation Academy, Rubin urged delegates to understand the importance of China and India as developing markets, even if they worked for UK-focused companies.
He said: “In the UK, one of the challenges is where we get growth from. In 2009 the only area of growth in fashion came from formalwear - the rest of the sectors were down. It proves this is a tough industry and a tough environment we are operating in.
“This year, the economy is likely to see growth of just 1% or just north of 1%. By 2020, the E7 [emerging markets including Brazil, Russia, India and China] will overtake the G7. We need to be fishing where the big fish are. In 20 years, where are you going to be fishing?
“There are 50 million middle classes in India. There will be 583 million by 2025. Think about the opportunity.”
Consumer in control
Rubin cited a report from management consultancy McKinsey and said we were now in a “creator economy” where “production and consumption happens in the same act”.
“Think of the power the consumer has in defining products as well as being able to buy them. We used to say the brand manager was in control of the brand. Now, really the consumer is the brand manager. The world of marketing is very different.”
Illustrating the power of social networking, Rubin pointed out that in the week before the Academy, 400 million people had accessed Facebook in the US - more than the number who had accessed search engine Google.
He added that 1 billion people viewed YouTube and that a typical Generation Y consumer (classed as 23 and under) checked Facebook every 37 minutes, watched 2.5 hours of video a day on YouTube, read reviews on Yelp four times a day and updated their Twitter pages every three hours.
“This stuff will change the world of retail. Imagine being able to upload a picture of a product to your iPhone and then being sent where you can buy it or iPhones that can read barcodes.
We are behind countries like South Korea on this,” he said.
“Email is old-fashioned to Generation Y. It’s like a letter is to us. How will that impact marketing? Anything that’s more than three sentences will be pointless.
“Business leaders need to look at getting reverse mentors to keep in touch with developments in technology.”
Rubin added that the trend for multichannel development was linked closely to the rising power of the consumer. “Customers expect to be able to buy what they want when they want it. The notion of set shopping hours is nonsense. This is going to challenge the Western world and revolutionise how people shop,” he said.
Sustainability is also shaping Rubin’s strategy at Pentland Brands. He said: “What do companies stand for? 60% of UK consumers believe that by choosing to do business with companies that are more socially responsible, they can make a difference to the world.”