Implosion to explosion: customer demand to ramp up as lockdown eases

Last year was tough. But the changes it catalysed – many supported by technology – mean there are great opportunities ahead. Didier Bench, a serial entrepreneur with 14 non-exec roles under his belt in the technology and digital space, shares his thoughts.

Maintaining productivity without being able to get together with others was the biggest challenge of 2020, according to Didier. Conquering this steep learning curve required perseverance. “We’ve all learned to use various communications tools and they have become second-nature, but there are limits and they can be frustrating.” Despite these limits, we learned last year that a lot can be achieved in spite of lockdowns – M&A resumed, big projects were undertaken. “It’s possible but I don’t think we can continue to do it for years.”

Hopefully we won’t have to. But the dogged determination of last year may pay dividends in the longer-term: leaner and more flexible companies as well as an increased adoption of technologies by these companies and individuals alike. Hopefully these steep learning curves of businesses last year will have put many in good stead for this year and beyond – whether rolling out changes to accommodate a new type (and often volume) of customer demand as well as rethinking their own strategies and seeking out efficiencies. We saw some companies and customers embracing automated self-checkout or contactless payments for the first time.

Whether or not we were aware of it at the time, amidst the short-term survival mode of 2020, a great deal of digital enhancement took place for companies and individuals alike.

Now it’s about companies planning paths back to longer-term growth.

Our companies have been optimised and we know where we have to focus to generate profitable business to succeed these days.

As an example, he points to Flooid, a retail tech platform he chairs, which has shifted its focus from fashion to essentials and convenience. As a result, the business expects to grow by 20% in 2021.

Another company he sits on the board of, Axo Finans, is also in firm growth mode. Having launched in Oslo during the 2008 crisis, the digital personal lending platform now operates in Norway, Sweden and Finland and wasn’t too impacted by COVID-19. In fact, headcount increased 16% in the last six months, and plans are in place to launch in Denmark later this year. Didier explains that much of last year was spent on upgrading Axo’s platform to prepare for new product offerings and cater to increased demand this year.

Some companies even displayed exceptional growth. Native Instruments, a German digital music creation software and hardware business Didier sits on the board of, generated “explosive” growth in 2020 because a new generation of products it launched last year was extremely well received by musicians, who were spending more time on composing given their external activities were limited. So impressive was the firm’s results and prospects, management sold the business in early January to a financial investor.

Last year’s pain, this year’s gain

These consumers are shopping differently, and Didier thinks they will actually be shopping more as lockdown fatigue fuels a spike in appetite as pent-up demand is released. “Once the pandemic is under control, I expect an explosive catch-up as consumers come back, whether in 12, 24 or 36 months’ time. I expect demand from consumers for anything from social life to leisure and even fashion to be absolutely explosive.”

His sentiment on consumer exuberance echoes that of a number of economists, including Bank of England Chief Economist Andy Haldane, who likened the economy to a ‘coiled spring’ which would bounce back as the UK’s rapid vaccine programme eventually allowed the economy to safely reopen. Consumer’ resumption of spending and socialising may be more like a switch being flicked rather than a dimmer being turned given pent-up demand may be fuelled by ample finances from households which have saved during the lockdowns.

This sounds as promising for the economy as it does for lifting spirits – but many will recall the dark days of spring 2020, when a surge in demand for online grocery shopping saw retailers unable to cope with the unprecedented custom. Even online-only offerings, which have typically been at the forefront of tech, forced customers to endure virtual queues before eventually allowing them in for a limited time – and often then failing at checkout. The technology which so many had relied on for its reliability and convenience had suddenly done an about-face and failed to keep up.

But that was then and this is now, with the leaps in tech adoption and learning putting companies in a much better place now. “This year is completely different. We were caught by surprise last year and it was about limiting damages, adjusting to a new working environment and optimising how businesses are run. It was resetting the parameters and protecting future investment. Now, however, all that work has been done.”

The learning experience of 2020 – for businesses and customers alike – brings benefits for investors.

This has accelerated the migration towards digital services and solutions in general. We’ll have more opportunities to invest into tech-enabled services and data-driven services because of the pandemic, and this can be positive.

Consumers had to become more comfortable with tech and this too creates fresh opportunities.”

And so when pubs do reopen it may just be Flooid’s pick-and-pay platform powering customers’ orders from their tables rather than the former familiar jostle at the bar.

The Inflexion team has significant experience in supporting the growth of a broad range of companies within the Technology sector, with current investments including ATCORE, Comparison Technologies, Halo, Radius Payment Solutions and UKFast. All have access to Inflexion’s value acceleration levers: digital enhancement, international expansion, M&A, commercial effectiveness and talent management.