Does size really matter in consumer business?
In consumer business, being small can create big growth, writes Irma Patala.
After a long period of stagnation, Finnish export industries are showing signs of growth. While the overall tone of the growth news is positive, it is, however, dimmed by the absence of renewal. The dominance of traditional export sectors like pulp and paper and automotive is striking, and the domestic value added in exports is decreasing. Currently, the vast majority (over 80 per cent) of Finnish export growth stems from big companies, making Finland more vulnerable to market changes than our neighbouring countries.
In Finland, micro companies (<10 employees) account only for three per cent of exports. In Sweden, micro companies’ share of exports is 12 per cent, in Estonia 19 per cent and in the UK 14 per cent. Similarly, SMEs’ (<50 employees) share of exports in Finland’s is around 11 per cent, in comparison to 21 per cent in Sweden, 36 per cent in Estonia and 22 per cent in the UK.
Consumer goods are a major export asset for many export-driven countries. For example, fashion is the fourth-biggest export sector for Denmark. For Sweden, fashion exports amount to 15 billion euros. The value-add of design-driven exports for Italy is estimated to stand at 70 billion euros in 2020, given its annual growth rate of 20 per cent. Companies operating in the consumer business typically offer fast-moving goods and services, thus balancing economic cycles of investment and capital goods.
The numbers show that we Finns still seem to think that nothing smaller than a horse is worth exporting. International markets, on the other hand, have changed radically. A growing number of individualistic and conscious consumers are now looking for fresh and authentic brands that resonate with their values and personal choices. At the same time, digitalisation allows even the smallest of brands to reach out to consumers and build relationships with niche segments globally rather than one market at a time.
Finnish consumer brands have what it takes to stand out from the crowd. Major international retail brands such as United Arrows, Beams, Kuho and Tom Greyhound have already added Finnish brands to their selections, proving size is not the only thing that matters in the lifestyle business today.
The dynamic consumer business sector in Finland has great potential to become a significant export sector. It also plays a major role in building a positive country image that attracts tourism, investments and a skilled workforce to Finland.
Last but not least, a dynamic, international consumer business sector enables new value creation in all industries. Understanding the end-user has become a key driver in all areas of business. Individuals worried about big global challenges have a strong need to make a difference with their actions and opinions. Building future success stories means also understanding consumer values, behaviour and needs, regardless of at which step of the value chain your product or service is.