2020 will go into the history books as the year when the world stopped, at least for a while. Many businesses are today fighting for survival, and their traditional markets might never again become what they once were. However, this does not necessarily mean only bad news. Crises also bring new opportunities and spur innovation, and companies that are open to change and learn from the past turbulent months could emerge stronger, more competitive and more resilient.
Uncovering main market trends
The key to success is therefore to spot and seize new opportunities. “We are convinced that many of the changes are here to stay, and that the most successful companies will be those that are able to adapt their business models to take changes into account,” comments Sara Bouchon, Head of Market Intelligence at Luxinnovation, Luxembourg’s national innovation agency.
Her team has recently released an in-depth study entitled “Post COVID-19 Market Trends”. It is part of a national effort, initiated by the Luxembourg government, to help companies come out of the crisis stronger and more competitive than before. The study provides a unique overview of the innovation, technologies and trends that will shape the economic reality in the months and years to come. Four major market trends are identified: digitalisation, sustainability, resilience and new business strategies.
The digital leap forward
Defining digitalisation as a megatrend does not sound very original, but the rapid adoption of digital technologies to manage business as well as basic aspects of everyday life during the pandemic moved us forward 3-4 years virtually overnight, according to some experts.
“This development made us take a big step forward towards the data economy,” Dr Bouchon points out. “The use of digital technologies gives companies new opportunities to collect data on client behaviour, for example, or on what is going on in their supply chain. Smart companies will use this data to improve their offering and to take strategic decisions based on facts, not feelings. The data itself is also a precious asset that could be bought and sold.”
This development made us take a big step forward towards the data economy.
Industrial companies will probably ramp up their investments in big data, the internet of things, cloud computing and other technologies needed in “smart factories”. “In China, firms with a high degree of automation and with systems making it possible to control equipment remotely, managed to weather the lockdown much better than others. The COVID-19 crisis will certainly accelerate the digitalisation and automation of industrial production even further, also in other parts of the world.”
Resilient supply chains
The COVID-19 crisis has also highlighted the urgent need to design smarter, stronger and more diverse supply chains that are resilient and can withstand crises. “We expect global companies to diversify their supply chains much more in the future and rely less on single-sourcing models driven exclusively by cost control,” comments Dr Bouchon. “More firms will also decentralise their manufacturing capacity and look to bring parts of their production closer to home.”
Digital technologies are essential. “With technologies such as artificial intelligence and the internet of things, companies can obtain a real-time view of all suppliers and their stocks. When regular suppliers face disruption, they can react by quickly switching to alternative providers.”
Towards a new, sustainable paradigm
COVID-19 has been a radical eye opener when it comes to sustainable business and societal practices. “The lockdown gave us a simulation of how to drastically reduce our negative environmental footprint,” says Dr Bouchon. “If we want the economic recovery post COVID to last over time, we need to ‘build back better’ as the OECD says.”
This would probably result in the biggest business opportunities of the last 200 years.
Romain Poulles, who chairs Luxembourg’s Higher Council for Sustainable Development, goes a step further. “We need a complete paradigm shift towards an economic model based on well-being, social equality, reduced environmental risks and much less pressure on finite resources,” he claims. “This would probably result in the biggest business opportunities of the last 200 years.”
Key sustainability trends identified in the Luxinnovation report include the transition towards clean, renewable energy sources, reusable medical equipment, healthy and locally produced foodstuffs, and the construction of sustainable and resilient public infrastructure. Circular business models, such as product-as-a-service and the sharing economy, are also emerging. “Every product is a service waiting to happen,” Mr Poulles agrees. “I think that companies will increasingly change their business models and sell services rather than products in order to have more control over their resources and get them back, after their initial use, into their own value chains.”
Business strategies: a shift of focus
One thing is clear: COVID-19 will leave its mark on the strategies of numerous companies. Luxinnovation predicts that changes in consumption patterns, the emergence of new forms of entertainment and tourism, the increased importance of remote working and other factors will lead to new business models. Numerous companies are now analysing their offering to see whether it still corresponds to what clients want and whether they are focusing on the most relevant target groups.
“This crisis has forever transformed the way we work together,” comments Thierry Ravasio, Head of Corporate and Public Sector at KPMG Luxembourg. “We have seen a shift of focus on what really matters: customers, employees and citizens. Our CEO Outlook Survey of September 2020 illustrates that the crisis has accelerated digital transformation and social responsibility strategies, and these mindset shifts are likely to go the distance. A motivated workforce, resilient and agile operations and outstanding customer experience are also hot topics that will continue to shape the business strategies of the future.”
We have seen a shift of focus on what really matters: customers, employees and citizens.
He sees exciting opportunities arise in several fields, for example in the healthcare sector that has received a huge boost by innovative medical technologies driven by tech companies. “The need to be able to provide an exceptional customer experience during the lockdown has increased the demand for digital tools that enable paperless processes and remote team working. The intense focus on minimising the risk of productivity and data loss when working remotely is also creating opportunities in the field of cybersecurity.” Luxinnovation points out innovation as one of the most important factors for being able to adapt to the “new normal” and benefit from these new opportunities. “Before the pandemic, we spoke about innovation as a way of improving products and services. Now, we focus more on innovative business models, innovative ecosystems and innovation in policy and decision making,” says Dr Bouchon. She mentions the many partnerships set up very rapidly this spring by companies pooling their resources and innovation capacity in order to respond to urgent needs for medical equipment. “Innovation and cooperation are effective means for becoming more resilient to challenges in the future.”
Photo: Laurent Antonelli