Quite simply, the changes we all faced in 2020 were momentous, reshaping the world for consumers and businesses, and it looks like 3 specific trends are set to continue into 2021:
1. The Rapid Pace of New Business Creation Continues
Perhaps a testament to the creativity, ingenuity and resilience of the British people, 2020 was on course to see the highest recorded number of new businesses ever created. With a similar set of circumstances at the beginning of 2021 - lockdown, home schooling, retail restrictions etc. – we can expect this to continue. The challenge for those who offer services to the SME sector, will be to engage entrepreneurs whilst their businesses are in their infancy, establishing both trust and rapport as they get their businesses off the ground.
Naturally, by sector, there are large discrepancies in the types of new business to have emerged. E-Commerce, clothing and medical goods companies saw significant growth, while veterinary businesses, opticians and businesses linked to the beleaguered travel industry suffered.
Source: 1. https://smallbusiness.co.uk/2020-set-to-be-record-year-for-new-companies-created-2551479/ / 2. https://www.shl.com/en/blog/will-2020-be-the-best-year-ever-for-new-business-creation-in-the-uk/
2. Online Shopping Will Continue to Break Boundaries
While the surge in online shopping has been well documented for many years, the impact of the pandemic has undoubtedly forced faster change through many sectors. Amazon is everywhere, with 86% of the British public now reportedly buying from them. As anyone who’s tried to get a delivery slot in the last few months will attest, supermarket food delivery and ‘click-and-collect’ services are also more popular than ever – and the convenience of these services will no doubt mean that for some, the act of walking around a supermarket or high street are over, even once lockdown is lifted.
Whilst these increases are predictable, perhaps more surprising is the extent to which much larger purchases are now increasingly made online. Remote property viewing has enabled estate agents, responding to the requirements of social distancing, the opportunity to continue to offer viewings to potential buyers. Also, 2019 saw the launch of ‘Cinch’ – an online car buying site and rival to Autotrader - who have evolved their proposition in 2020 to include free delivery and a 14-day money back guarantee, have all the hallmarks of a fully remote proposition. Together these demonstrate a marked change in the online ‘trust equation’, with consumers evidently more willing to make larger and more involved purchases without the need to physically see or touch the product itself.
No one can claim to have foreseen the speed of this shift, but the evolution to online trading has been steady and is the reason why we have invested heavily in our online propositions. From ‘Payment Options’, an e-invoice and payments portal for commercial partners and their customers, to FITS (Fully Integrated Transaction System) which seamlessly incorporates the offer of finance into an insurance quote-and-buy journey.
3. Customer Expectations of Payment Flexibility are Growing
If you’ve made a few online purchases recently, you might be forgiven for feeling a little overwhelmed at the choices you’re given when it comes to paying for your goods. The market for retail finance seems to have exploded in recent years with companies such as ClearPay and Zip providing opportunities for customers to pay later or to split the cost of the product into manageable instalments.
The best known of these retail companies is Klarna, who saw YOY volume growth of 44% through to the end of the first half of 2020 and by September last year had 12m customers actively using their smartphone app.
This growth reveals two changes in consumer buying behaviour. Firstly, rather than halting purchases altogether, customers are actively looking for convenient services that offer them an alternative to paying in full. Secondly, customers are now more comfortable than ever with opting to pay for goods and services using finance.
Our experience in 2020 and research conducted for our Insurance Index echoes this trend, with many new commercial customers opting to take finance for the first time. As the vaccine rollout continues and we return to something resembling normal life, we would expect to see this increased take-up reflected across our personal lines customers too.
