Industry Outlook 2020

It appears that 2020, and indeed the incoming decade, will crystallise the necessity of businesses to adapt to emerging trends. There also seems to be a considerable push from regulators to improve creditor and employee protection. In this blog, we discuss how some industries might fair in 2020, changes to employment regulation and the rise of corporate restructuring.

 

Retail

The retail landscape throughout the last decade has evidenced the importance of properly integrating technology and tailored offerings into customer experiences. Brick and mortar retailers within the apparel and technology markets were particularly hard-hit in the 2010’s. The rise of online retailers has made it clear that consumers prioritise convenience and the ability to research a product before purchasing. There has also been an increase in online subscription-based retail offerings. Companies such as Dollar Shave Club, Foodora and Stitch Fix have shown an increased demand for recurring, personalised monthly deliveries of retail products. However, most observers note that retailers should adhere to the following trends to remain competitive throughout the incoming decade:

The Push for Responsible Consumption

There is a growing expectation from consumers that products are created, managed and distributed in an ethical manner. Prominent brands have achieved this by employing a ‘circular economy’. That is, products are created and recycled in a fashion that minimises waste while promoting sustainability.

Personalised Marketing

 

Social media has allowed retailers to discard the broad net of televised advertisements and discuss the needs of their customers directly through messaging apps. This new method of interfacing allows brands to create online communities and encourage participation from its customers.

 

Integration of Physical and Digital Experiences

 

Successful retailers will be able to seamlessly integrate online shopping into their physical presence. The most common implementation of this hybrid experience is known as the ‘click and collect’ approach. Instead of dealing with the uncertainty that comes with shipping, consumers can purchase from the comfort of their homes, pick up their desired goods and then make in-person enquiries when collecting the product from the retailer.

 

Food Services

Despite a downturn for some fast-food franchises, the compound annual growth of the food market is expected to increase by 5.1% until 2024. Chained food operators that have cultivated online communities with and listened to their customer base have enjoyed a steady growth. The rising trends within the food services sector include:

  • A demand for healthy food;
  • Virtual menus; and
  • Convenience of delivery.

Restaurants and cafes, however, continue to exist within a highly dynamic, competitive and ultimately turbulent environment. Uncommercial rent increases have served to disincentivise independent operators from opening shop within inner city areas and taking risks necessary to set them apart from their competitors.

 

Accommodation

As we have discussed in previous posts, traditional mid-tier operators within the accommodation sector are suffering a downturn. Instead, independent providers – offering single rooms via digital platforms such as AirBnB – have experienced the highest growth within the accommodation industry. This has also extended to High-tier providers that have integrated digital features to keep their customer experience engaging and hands-free. Facial recognition and apps that act as keys are likely to be employed by international hotel chains. There is also a growing interest in artificial intelligence that operate as personalised hosts. Although there is an expected increase in domestic and international visitors throughout 2020, operators that fail to utilise emerging technologies will be left behind.

 

Changes to Employment Legislation

To combat the rise in payroll scandals, new legislation has come into force to protect employee salaries and superannuation. Employers should be aware that:

  • Employees must be paid superannuation on their gross pay, including salary that they have sacrificed;
  • Salary sacrifice cannot contribute to compulsory super contributions; and
  • Some employers will need to keep written records of when their employees start, finish and take breaks during work.

There is also a likelihood of a superannuation amnesty being offered to employers within 2020. This would be implemented via the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 which is currently before the Senate. The amnesty would allow employers a one-off opportunity to correct any unpaid super contributions owed to their employees. Failing to correct super contributions after the amnesty would see employers hit with penalties of up to 200% of the owed amounts.

Changes will also be made to 22 modern awards from 1 March 2020. Effected employers will be required to notify their employees of any change to their pay scales, expected hours and overtime compensation.

 

Restructuring Landscape

Although bankruptcy has entered a 24-year-low, corporate insolvencies have been on the rise globally. This trend is likely reflective of an increase in small businesses – traditionally individual operators – engaging in corporate restructuring and asset protection. The emergence of uncomplicated accounting platforms and small business tax incentives have made restructuring more appealing for business owners. While restructuring can be incredibly beneficial for businesses of all sizes, it is important for operators to ensure that they are receiving appropriate advice. According to the Australian Securities and Investments Commission, illegal restructuring (such as phoenixing conducted to defraud creditors) has been on the rise. Bills such as the Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 are currently under review, evidencing the government’s intention to regulate corporate restructuring.

More information? To find out more, give us a call on 1300 023 782 or email team@cdrta.com.au.

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Craig is the principal consultant of C&D Restructure and Taxation Advisory and has been working in the industry since 1999. Having established C&D Commercial Partners in 2015 the precursor to the current business.

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Post Author: Craig Dangar

Craig is the principal consultant of C&D Restructure and Taxation Advisory and has been working in the industry since 1999. Having established C&D Commercial Partners in 2015 the precursor to the current business.

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