To give you the best experience, our site uses cookies. By continuing to use our site you are agreeing to our Privacy Policy.
Some trends are longer-lasting and more impactful than others. Yes, recent developments in economic activity reflect the influences of high interest rates and the high cost of living. And there are some residual effects from the COVID pandemic, including catch-up immigration, foreign students, overseas holidays, and persistent Working From Home impacts such as CBD visitation and office vacancy rates. But enduring trends can have even more of an effect over a longer time period. We can think of them as ‘megatrends’, not only to reflect their importance, but also the likely long-lasting nature of their influence on the economy, businesses and society. As things evolve over the next 10-20 years, in order for businesses to adapt and thrive, it’s essential for business owners to remain aware of potential megatrends, including those that follow.
1. Artificial Intelligence (AI) & Technology
Open any newspaper or go onto an online news platform today and, more often than not, you’re likely to come across a story about AI. It’s extremely topical and, apart from changing the way many professions operate, the demands for data centres and electricity are also important considerations. More broadly, technology has changed the way businesses operate for many years, with digitalisation and the internet continuing to have significant impacts. It’s possible that AI will displace jobs, which would not be beneficial for the economy or society. Yet, historically, new technology has tended to impact the nature of jobs performed, rather than reduced total employment.
It’s always important for business owners to spend time thinking about how they can harness technology to deliver great outcomes for their business and customers. And while we often hear about the overarching importance of improving productivity, it’s important to remember that the productivity discussion begins at the organisational level, by reviewing how technology can improve business processes and support the business vision and strategy.
2. The Ageing Population
With most Baby Boomers nearing or already in retirement, intergenerational wealth transfer and the transition or sale of family businesses are becoming increasingly important considerations, which often require considerable care and professional advice.
At the same time, Boomers are also spending, travelling and being the bank of mum and dad or of grandma and grandad - an early taste of intergenerational wealth transfer. Demands for retirement living, health and other aged care requirements continue to rise. There appear to be considerable opportunities, though for many business owners, the issue of business transition or sale likely looms largest.
3. Climate Change
Given the considerable focus on it in recent years, this may be the area that businesses have already thought most about. The high price of energy makes it worthwhile to explore the business case for solar power. But other businesses, including agricultural ventures, have been exploring differing locations to hedge against the vagaries of the climate. Again, it’s a subject that business owners need to consider carefully to see how it might affect their business and what sensible moves can be implemented to manage this risk.
4. Geopolitics & The Rise of Inequality
These two trends have been grouped together because, to an extent, they’re two sides of the same coin. Diversification of supply chains and product markets were important lessons learned during the pandemic and, in some cases, due to recent trade sanctions.
Diversification of supply (or higher inventory holdings) and markets seems to be the major protective response for businesses, as even our smartest experts don’t have solutions to the complex geopolitical tensions around the world.
The rise of inequality is more of a domestic political issue – and, in my opinion, a considerably under-estimated influence. It’s reflected in the debates over fiscal spending, housing affordability and immigration, to name a few. Indirectly, it was part of the reshaping of the Stage III tax cuts and it’s also a factor in the rise of the Far Right overseas.
Ultimately, the answer will likely be increased redistribution of wealth, which usually involves higher tax rates on the wealthy.
In summary
While it’s clearly important for businesses to keep a close eye on specific, local, economic trends, it’s vital to stay across societal megatrends. Over time, they will have a very important impact on businesses in Australia.
