Small Business Labs

Euromonitor's Top 10 Global Consumer Trends for 2018

Euromonitor International recently released their 2018 Top 10 Global Consumer Trends list, which are listed in the chart below.

We found all the trends interesting, but we especially liked two trends that we also follow closely - the shift to access over ownership and the rise of entrepreneurship.

Key quote from the report summary:

Consumers of all ages want and need less. Ownership is under question, and flexible, minimalist living is gaining popularity, with consumers sharing everything from clothing, household items and pets through to cars and living spaces. Rejecting commitment also plays out in the workplace, as consumers say no to corporate 9–5jobs and instead choosing entrepreneurial lifestyles on the road.

 

Their 3rd trend - The Borrowers - covers the continued growth of the sharing economy.

They point out it's not just 20 something Millennials who are embracing the sharing economy.  It's also "beginning to impact older generations: previously materialistic Baby Boomers are looking to downsize and simplify their lives."

Trend 5 is called Adaptive Entrepreneurs. Key quote on this trend:

Consumers are increasingly seeking flexibility in their lifestyles, and are prepared to take risks. Millennials especially have an entrepreneurial nature, shifting away from the “traditional” 9-to-5 career towards one that affords more freedom. Euromonitor International’s 2017 Global Consumer Trends Survey shows that nearly 50% of respondents across all generations aspire to being self-employed. Taking out Baby Boomers, amongst which this desire is lower, this aspiration increases to 56%, clearly showing the growing trend towards this Adaptive Entrepreneurial lifestyle.

As we've often pointed out, when people are asked if they want to become self-employed, many more say yes than will actually take the plunge and become self-employed.

We've found in our work only about 5%-7% of those who say they are likely to become self-employed over the next 2 years do so. 

But having half of all consumers saying they aspire to self-employment is still impressive and shows the broad appeal of being your own boss.

One of the reasons we follow Euromonitor's research is their global perspective.

Being based outside of the U.S. and working across geographies gives them a perspective often missing from trend analyses from U.S. based organizations. 

The full report is well worth reading (it's free, but registration is required). 

Coliving Attracting VCs

While coworking has taken off, coliving has struggled to gain steam.

Part of this is venture capital and investment funds have been hard to come by for those trying to build shared living space businesses.

This appears to be changing. 

The coliving company Common recently announced raising $40 million in a round led by Norwest Venture Partners. 

Common currently has 14 shared living sites and over 400 members. They plan to use the new money to fund expansion.

Other coliving companies raising money over the last year include Starcity, Roomi and Bedly. 

And, of course, coworking giant WeWork continues to invest in WeLive, although they appear to be expanding this business at a slower rate than they originally planned.

The picture below (click to enlarge) is from their website and shows some of the features and benefits of coliving.

The trends driving the coliving are similar to those driving coworking. Rental space is expensive and hard to find in many cities, people are seeking community and want a greater degree of housing flexibility.

Euromonitor points to these trends as some the reasons they list coliving on their Top 10 Global Consumer Trends for 2018 list. 

Despite coliving gaining some momentum, it's not clear to us it will become a major industry like coworking has. Housing is a much different and more complex market.

But we will continue tracking coliving to see.

Consumer Goods Workers Increasingly Choosing Gig Work

According to the British recruiting firm Sterling, the consumer goods industry is:

" ...having to contend with the battle of the interim employee; a growing trend of permanent employees deciding to ‘go interim’."

According to the article, the primary driver is skilled gig workers earn a lot more than traditional employees doing the same work. 

The article also points out - and their graphic below illustrates - that this is leading to even relatively young, inexperienced and modestly compenstated consumer goods workers choosing to become contract workers.

    

Sterling doesn't see this shift as a good thing.

They blame a combination of skilled labor shortages and the industry not being an attractive employer. Key quote:

"Paying sky-high wages for inexperienced employees that yield little to no return, is senseless. The FMCG and food sector must instead, focus their efforts on changing the perception of the industry to attract innovative, motivated and dynamic talent that will drive the industry forward."

FMCG, BTW, stands for "fast moving consumer goods", such as food and things you buy in a grocery or drug store. 

This article caught our eye because it's an interesting example of how the war for talent is leading to more skilled professionals becoming independent workers.

It's also interesting in that it's not just older, experienced workers moving to gig work, it's also younger workers doing so.

We're seeing the shift towards independent work in almost every industry -  and trends driving this shift show no sign of slowing down.

CB Insights on the Trends Shaping Tech in 2018

The technology information site CB Insights recently published their list of 15 Trends Shaping Tech in 2018.

CB Insights is widely followed in the tech community, especially among investors and tech deal makers. So their list of tech trends is well worth taking a look at.

 

We found several of the trends particularly interesting. These include (the trends and descriptions are from their report):

Cars become a subscription good: Pay a monthly fee and drive a car for as long as you’d like. This package often includes insurance and maintenance. This takes away the pain of having to sell your car — an asset with a value that begins to depreciate the minute you buy it — and eliminates the need for maze-like leasing contracts.

This is happening and next year, for example, Volvo will release a car subscription option for their new 2018 XC40 SUV. 

The global race for AI chip dominance heats up: We’re seeing a Cambrian explosion of applications for artificial intelligence, from recognizing faces in videos for security purposes to detecting diseases in medical images at scale. But what chips will these processes run on? China and the US are in a race to own this segment.

They're right about the explosion of applications for A.I. This includes many targeted at small businesses and independent workers. We'll have more on this topic in the near future.

Swallow a smart pill for better diagnostics and treatment: In November 2017, the US Food and Drug Administration approved its first smart pill. The product, Abilify MyCite, is essentially a sensor-enabled version of Japanese drug maker Otsuka Pharmaceutical’s existing schizophrenia and bipolar drug, Abilify. By partnering with Californian digital medicine company Proteus, the original pill will be enhanced with sensors that track whether a drug regimen is being adhered to.

Smart pills are obviously still in the early stages of use, but digital health will continue to be a big trend in 2018.

Personalize the pooch: The discerning dog of the future (and its owner) certainly have a lot of technology to look forward to. KickStarter-backed ZenCrate is another “smart” dog den. It plays music at specific times to calm dogs, operates a motion-activated fan, and is Wi-Fi-enabled to collect and transmit data. It’s also padded with orthopedic memory foam.

Hong Kong’s Tesla Technology takes it a step further. It has two products, T-Pai and the Dog PC. T-Pai is a double-decker dog house equipped with an automatic flush toilet, auto feeding, constantly regulated temperature, and games.

Regular readers know we like Pet Trends, so of course this caught our eye. We're curious to see how auto flushing doggie toilets work.

All 15 trends are interesting and if you're interested in tech trends this free report should be on your reading list.

It Had to Happen - Digital Cats For Sale Using Cryptocurrency

Yes, it was just a matter of time before two of the most popular fads on the Internet - cats and cryptocurrencies - would end up combining in some way. 

CryptoKitties is a game by Axiom Zen lets users design and trade digital cartoon cats. The game uses Ethereum's blockchain technology for it's ledger system. This ensures that the game's claim that your kittie can't be "taken away, replicated or destroyed" (see their website picture below) is accurate.

The game allows players to trade or sell their digital kitties. Instead of money, the game uses the cryptocurrency Ether for transactions.

All of this sounds somewhat silly, until you start to look at the prices of the digital kitties. 

According to CryptoKitties Sales (warning: we have no idea whether or not this data is accurate), sales in the $5000 range appear somewhat common and there have been several recent sales for over $100,000.

Other sources have also claimed that six figure sales have occurred. 

It seems to us that investing in CyrptoKitties is unlikely to end up being a good idea. Older readers may remember how the Beanie Baby investment craze of the late 1990's turned out.

For those wanting to play (or invest), Mashable has a nice learning guide on the game.

Ford's 2018 Consumer Trends

Ford (yes, that Ford) recently released their 2018 Trends Report.

Ford has been doing an annual trends report since 2013. Like prior years most of the reported trends are not new or surprising.

But Ford does a great job presenting and explaining the trends. And that, we think, makes the report well worth reading for anyone interested in trends.

We particularly liked the trend they call The End of Reason, which they describe this way:

Global upheaval is evident in everything from politics to pop culture, and people are responding to these changes in polarized fashion. As divisiveness grows, a sense of being overwhelmed intensifies. Consumers are hungry for inventive ways to cope and adapt.

As the report chart below shows (click to enlarge), one result of the end of reason is that most people are feeling overwhelmed. 

Ford also nicely covers the shift away from marriage and children in the trend they call Singled Out.  They describe this as:

Couples today – with more choices and longer life spans to consider – are rethinking commitment and fulfillment. 

Ford used to include ads for their cars and trucks in their trend report and talk about how they linked back to the trends. This got a fair amount of criticism, with many claiming it was too commercial.

But we liked seeing the cars and how they linked back to the trends. And besides, does anyone not know Ford is in the business of selling cars?

The Rise of the Long Term, Off-Balance Sheet Worker

Off-balance sheet worker is the term Deloitte uses for contingent workers, such as freelancers, independent contractors and other non-employees. 

They describe this in their recent article Forces of Change: The Future of Work. In it they list two powerful forces shaping workforces and workplaces:

"the growing adoption of artificial intelligence in the workplace and the expansion of the workforce to include both on- and off-balance-sheet talent."

As their chart below shows (click to enlarge), they see the future workforce being made up of four types of workers.

More interesting is their view about how the relationship between corporations and off-balance sheet workers is going to evolve. 

They see corporations hiring two broad types of independent workers. One group - the transactional remote worker - is hired for short term assignments, often through an app or some 3rd party platform. Think hiring people via Amazon Turk to categorize pictures, etc. 

The other group - outside contractors - will increasingly work on hybrid teams with traditional employees.

These outside contractors will also tend to stay connected with their client organizations for longer periods of time.  Key quote:

As the alternative worker shifts to more rapidly evolving work, the way that work is done is likely to change, moving from short-term transactional remote worker to longer-term relationships that help to accelerate learning and performance improvement.

This shift to longer term relationships between independent contractors and hiring organizations will have a wide range of implications for hiring organizations. We've been exploring this for several years as part of our ongoing "client of choice" research we've conducted with MBO Partners.

We recently finished another study in this research series and will have more on this topic in the near future.

The Digitialization of Jobs

Brookings recently released an interesting study on Digitalization and the American workforce. 

The report:

"... presents a detailed analysis of changes in the digital content of 545 occupations covering 90 percent of the U.S. workforce in all industries since 2001. The analysis categorizes U.S. occupations into jobs that require high, medium or low digital skills and tracks the impacts of rapid change."

The study findings show the U.S. economy is digitializing rapidly. 

As the report chart below shows (click to enlarge), the number of high digital jobs has grown from 5% of jobs in 2002 to 23% in 2016. It also shows the number of low digital jobs substantially declined during the same period.

According to Brookings, pretty much all industries have become more digital. 

The bad news is workers who don't have digital skills, or can't acquire them, face declining job options.

The good news is those with digital skills tend to be paid pretty well. The mean annual wage for those with a high level of digital skills is an impressive $73,000. Those in low digital skills jobs earn an average of just $30,000.

There's little doubt that the digitalization of the economy is going to continue. This will impact almost all jobs and pretty much all small businesses.

We'll have more on this topic, including how small business owners view automation and automation tools, in the near future.

Five Major Global Economic Challenges

Is peaceful international collaboration ending?

This is the key question asked in Knowledge@Wharton's How to Manage the Top Five Global Economic Challenges.

The article is written by Kalin Anev Janse, secretary general of the European Stability Mechanism (the eurozone’s lender of last resort). In it, Janse describes 5 broad forces shaping the world's economies and economic order. The 5 are:

1. Growing Income Inequality 
2. Technology Driving Change in Jobs
3. Rising Protectionism
4. Increasing Migration
5. Growing Influence of Social Media and the Post-truth World

All of these are well known to anyone following economic, social and technology trends. 

But this article focuses on the potential of these trends to create global strife. That's not a topic that's well known or well covered.

On a more mundane level - and closer to the topic of this site - the article nicely describes of the changing nature of work.

Key quote on how millennials and today's teenagers view the job market:

"They feel that they are receiving conflicting messages from employers and career advisors: On the one hand, they are told that robots are bound to replace future jobs; on the other, they need technical skills to compete in the job market.

Caught in this conundrum, they are trying to create new types of jobs, rather than going for traditional ones such as banking, finance, or accounting. They dream of becoming YouTube stars, famous videogame vloggers, or Instagram travel bloggers who are paid by sponsors to visit hotels and restaurants around the world and generate sufficient number of likes.

What's interesting about this is as recently as 5 years ago, it's unlikely a senior government official in Europe or the U.S. would have included the changing nature of work in an article like this. At that time, few government officials gave much thought to this. 

Now they do. So progress is being made. 

The article provides excellent descriptions of all 5 forces, including interesting charts and data on each.

Our favorite chart (click to enlarge) is below. It shows how global protectionism is growing. 

We're well aware of the trend towards increased trade protection. But despite this, we believe small business globalization will continue to increase.

The article is well worth reading.

The New Multinationals: Small, Micro and Solo Businesses Driving the Next Wave of Globalization

Globalization and international trade was once driven almost exclusively by large multinational corporations.

No longer.

Propelled by global online markets and platforms and a growing global middle class, small businesses and even freelancers and individuals are exporting goods and services in growing numbers.

In fact, according to the U.S. SBA small business goods exports have grown from 29% of total U.S. goods exports in in 2004 to 34% percent in 2014.

As the chart below shows, we're forecasting small business exports will continue to grow and gain share, reaching 48% of U.S. goods exports in 2026.

The rise of the Internet and global online marketplaces has been the major driver of this trend and will continue to do so.

These have reduced many of the non-tariff barriers to trade, especially reducing and even eliminating the need for a local presence as well as the detailed knowledge of a country’s business landscape, culture, customers and language that foreign trade once required. 

They’ve also made it much easier for global customers and suppliers to find, connect and do business with one another. 

This digitalization of exporting has led to a rapid increase in the number of small business exporters and the growing sharing of exports by U.S. small businesses.

Even freelancers and independent workers (independent contractors, self-employed, independent consultants, etc.) increasingly serve the global marketplace.

Data from the 2016 MBO Partners State of Independence study, for example, showed that about 2 million independent workers sold services or goods to customers outside of the U.S. over the prior year.

This is just the beginning of the small business export boom.  The global middle class reached 3 billion in 2015 and could surpass 4 billion by 2021, 

And as we recently pointed out, this surging middle class is happening mostly in Asia and other developing regions of the world. It's also driving global economic growth.

As digital platforms grow in scale and sophistication and the global use of the Internet increases, even more U.S small, micro and solopreneur businesses will access these growing, global markets and customers. 

To help these micro multinationals, the Global Innovation Forum has released Simple Steps for Global Success, a report with advice on how startups, small businesses and freelancers can successfully engage in global markets.

The report focuses on 4 steps small businesses can take to become successful exporters. These are:

1. Recognize the opportunity to be global from Day One;
2. Use technology to simplify and extend operations;
3. Understand the value of early attention to regulatory compliance;
4. Engage professional advisors early in your small business journey.

See the report for more details.