This is the fifth successive year in which ECI has sponsored the Consumer Business of the Year category in the Growing Business Awards (GBA). And while this year’s awards take place against a challenging backdrop, there is still much to celebrate.
The Covid-19 pandemic has taken its toll on this sector more than most, but our experience of partnering with consumer-facing businesses since the 1980s has shown us how many companies bounce back from crises stronger than ever. The dynamism, adaptability and imagination of these firms has been crucial during lockdown and will be especially important as we make our way into recovery.
Consumer-facing businesses have always understood the imperative for agility. Even in the five years we’ve been supporting these awards, we’ve seen rapid evolution as businesses have responded to changing consumer trends. Here are five of the most significant changes we’ve seen.
1. The rise of conscious consumerism
Consumers have begun to think much harder about what they buy, making purchasing decisions that are now far more likely to take account of ethical or environmental criteria.
Ethical consumer spending hit an all-time high in the UK last year, with consumers focusing on a broad range of concerns. Environmental concern has prompted growing interest in recycling, upcycling and the circular economy, as well as a new approach to traditional forms of spending. It has also driven an increasing number of people to consider holidaying nearer to home to reduce their carbon footprint, a shift that supports the growth strategy of ECI’s portfolio company, Travel Chapter , with its selection of quality UK holiday homes.
The rise of vegetarianism and veganism is part of the same movement. Almost one in four Britons expect to be vegan, vegetarian or pescatarian by 2023 according to research from finder.com and the number of vegans in the UK rose 62% last year. Sales of plant-based food have risen 40% over the past five years according to Mintel, part of a strong global trend that has also seen the US company Beyond Meat’s shares almost double in value since its IPO last year.
2. Brand morality and authenticity wins the day
Alongside a growth in conscious consumerism, consumers are increasingly focusing on what a company says and does. Consumers are determined to seek out businesses that demonstrate values they share; this requires businesses to think ever more carefully about all that they do, from the way they treat their staff to the charitable decisions they make.
Authenticity is crucial, with consumers very quickly seeing through brands whose marketing messages are not backed up by the way they behave. Indeed, consumers expect their favoured brands to take a stand. The efforts of many brands to respond to Covid-19 or support the Black Lives Matter movement has provided a litmus test in this regard. Those that are seen to be present themselves one way, but that come up short in their actions or their treatment of employees, have faced a backlash.
The most successful businesses are built on values that are lived and breathed beyond the brand. Pip & Nut , which won the Consumer Business of the Year award in 2017, has gone from strength to strength on the back of its very public commitment to core ethical values. It is one of a growing number of companies to secure B-Corp status, the certification awarded to businesses acting as a force for good across the board; from how they treat their workers to their environmental footprint.
3. Health and self
Health and wellbeing has been a driving force in consumer spending, with consumers increasingly looking for healthy snacks and meals, as well as products with nutritional benefits, vitamin supplements and similar attributes.
People now increasingly care about the provenance of their food and this interest affects a broad range of product categories. For example, Kiddylicious, the 2018 winner of the Consumer Business of the Year award, has built its children’s food business with a focus on allergen-free nutrition and child development. Elsewhere, ECI portfolio company, MPM, has taken a similar approach in the pet food market, with its development of a high-quality, clean-label, natural pet food product.
Beyond food and drink, the influence of the health and wellbeing movement can also be seen in the thriving fitness industry, in areas ranging from athleisure apparel to gym membership and, more recently exponential growth in online fitness platforms. Covid-19 has brought an increased focus on the physical and mental health benefits of exercise and this is only likely to boost this trend.
4. Technology as a differentiator
The most successful consumer businesses nowadays are very often built on increasingly sophisticated technology platforms. Five to ten years ago, such platforms were often inflexible solutions built and maintained in-house; today, they are likely to rely on microservice applications provided from the cloud, integrating core applications with off-the-shelf third-party technologies. The result is much greater agility and scalability, enabling businesses to exploit new market opportunities at speed.
Such technology is set to become even more important in the post Covid-19 environment. The pandemic has accelerated consumers’ shift online, to the advantage of businesses with the best e-commerce platforms that are capable of adapting to consumer needs and therefore driving growth. These platforms are the ones that can achieve materially increased scale and therefore profitability.
5. The rise of data
Data analytics tools enable businesses to understand their customers, and potential customers, to a far greater extent than ever before. The result is a virtuous circle: data-led businesses understand how to acquire the most valuable customers and how best to retain them with bespoke products and services that suit their individual needs. Tails.com, for example, is a pet food business that uses data from customers to create a product tailored to the specific nutritional requirements of each dog.
Indeed, the leading consumer businesses of today are increasingly those with the most sophisticated data tools and skills, replacing an instinctive approach to customer acquisition and retention with a much more scientific one, driving stronger and more enduring relationships with consumers.
Find out more about the 2020 Growing Business Awards here!