From your point of view, what should the placemaking industry expect in 2023?
“A(nother) turbulent year ahead of us, where economic and geopolitical unrest will play a significant role on consumer demand/desire. However, we should be used to this by now! Yield shifts, cost of capital, etc. I believe anyone who has become a little complacent after the post-Covid pent-up demand may be in for a surprise or two. It is time to expect the placemaking leadership to focus on the implementation of strategic creativity, while in the same vein applying sensible and self-evident cost management as part of the process.”
What opportunities and challenges do you see?
“I fully expect in the coming months that we will see a shift in the nature of consumer visits and subsequent spending. If we are lucky, we may not see mainstream spending fall off the edge of a cliff, but rather we can expect to see an even greater proportion of spending triggered by ongoing discounts. While the spending on luxury goods is still forecasted to grow between 8 and 10%, personally I would not be surprised to see that expectation soften in the coming months. Expect all consumers to reassess their discretionary spending in terms of needs, ‘must haves’, ‘nice to haves’ and ‘little indulgences’. In parting with hard-earned cash, I suspect that more rational and pragmatic thinking might increasingly win the day.
Amongst the noise of all the usual encouragements to work smarter, be bolder, be nimbler, protect share, protect cash, preserve profits, etc., I would theorize that the need for clear, distinctive Brand propositions and articulations (particularly through the products) will never be greater. The need to re-frame ‘value’ and what it means for your brand or destination will never be greater. Thinking and demonstrating ‘value’ will need to go way beyond simply price and managing margin. The need to create lasting engagement which maintains your place on the consumers ever-expanding brand and destination repertoires will never be greater. As I outlined in my November article, 2023 is going to be stormy! Yet another freak wave of disruption! But, as with any storm, it will at some point blow over.
Those who navigate the immediate turbulence while not losing sight of, interest in, or ambition for, what lies beyond are likely to be the most successful. So, of course, organizations must like never before, break down internal silos, re-align, and be aligned on objectives, strategies, and priorities in driving the self-evident need for cost management as opposed to simply cost-cutting or dare I say cost slashing! All of which ultimately requires the leadership management of operational processes and functions to be equally matched with the leadership management of a strategic and creative business vision. A balance that I would say, in recent years, has been sacrificed in too many businesses.”
In your view, is the placemaking industry facing any fundamental or long-term changes?
“Do I think the industry will be facing changes that will last? Yes, of course. However, honestly, I believe those changes are not the result of the last 12 months or the last three years. The indications of change have been all-too-evident for much longer and are more institutional as a result. But, all of us have been rather good at looking away from such change until it became commercially unavoidable, well it is pretty unavoidable now! The oversupply of space, the over-presence of brands, rocketing operational costs across every function, manufacturing contractions, balance sheet erosion, extreme margin pressures, the cost of capital, the need for a distinctive compelling brand purpose as a hygiene factor, the plateauing of e-commerce growth, the commercially exciting but largely unproven world of the metaverse, exploding consumer brand repertoires… and so the list can go on without even contemplating if a further potential pandemic, global financial re-sets or geopolitical acts of madness await us or not.”
What do you recommend / what are your hopes for the industry and market participants?
“Within such a context, you could be forgiven for wanting to retreat into a darkened room and simply rock in a comfortable chair! Tempting though that might be, I would suggest a different approach. As I hinted earlier, over the last 20 years in this industry, we have become quite brilliant at optimizing, squeezing, and extracting the last drop of value from processes, functions, and data in the relentless search for shareholder value. I would suggest an implementation of strategic creativity at the most senior leadership level of all businesses. If you do not have a strategic creativity team, get one. If you do have one, give them free rein, listen to them, and make sure you keep them.”
Read more about expert opinions in our Online Special: “Industry Outlook 2023”.