Changing focuses in Europe

The UK is hurting under the double-whammy of a burst property bubble and the financial crisis, with GDP predicted to shrink by 2.7 percent this year. Germany missed the property boom/bust, but the credit crunch and dramatic fall off in export trade will nevertheless result in a contraction there as well this year.

However this is still comparatively less than in many other countries and Europe remains a large and wealthy market.

Arguably it is not the best time to launch a start-up in Europe so companies need to evaluate market entry options carefully.

Rather than going it alone, new to market companies or those with unproven products should consider using local distributors, brand partners or out-licensing strategies, to establish themselves quickly and cost effectively. Either way, access to relevant advice from business people working in today’s markets is important.

The changing times are likely to shift consumers’ priorities as well. Demand for luxury goods or high-value premium products may be displaced by emerging brands with a point of difference. Likewise, a trend back to quality rather than throw-away consumerism can be expected.

Recent better-than-expected Q4 sales data from Marks & Spencer in the UK suggests latent interest in buying fewer but better quality clothes – a bit like our parents’ generation.

An emphasis on design, sustainable manufacturing and eco-cosmetic products are examples of trends that could prevail because they are exclusive rather than decadent. This opens up real opportunities for New Zealand consumer, lifestyle, food and beverage companies.

The trend to online purchasing is also likely to accelerate as consumers – reportedly staying at home to cook rather than going out to eat - go online for bargains.

As we all know, once we try and like a new way of shopping we tend to stick to it and the recent Marks & Spencer data supports this – online sales in Q4 were up 20 percent year on year.

The first priority for New Zealand companies is clearly survival. But there are opportunities that arise from changes occurring in the markets. There are three key messages for Kiwi companies eyeing the European market.

First, plan and resource for the worst. It is not yet clear how long the recession will last so companies need to ensure they have the financial and management resources in market to survive.

But you should also be ready to seize the opportunities created by this dynamic environment. There is appetite for innovation that provides solutions, reference points of proven deployment and cost savings.