Building back better with digital (Santander)
New research from Santander shows that British businesses focusing on recovery from the COVID-19 pandemic see digital transformation as one of their greatest opportunities
The Spring 2021 edition of the Trade Barometer research, a leading indicator that signals changes in world trade growth two or three months ahead, shows that more than a quarter of UK businesses (27%) believe digital transformation could power their growth in the wake of the pandemic.
Increased e-commerce during the crisis, as well as the way in which so many organisations have put technology to use in order to continue operating, is encouraging a wave of businesses to pursue new opportunities.
E-commerce will be at the centre of this strategy, both for domestic sales and increased international trade. For example, 51% of businesses focused on digital opportunities point to the possibilities of increasing sales through online marketplaces, and 49% believe digital tools can directly help them to increase sales.
However, transformation can also help in other areas of the business, including in operations. For example, 39% of respondents in this edition of the Trade Barometer expect new digital tools to help them improve their logistics and manage their supply chains.
Similarly, many businesses see the potential for new technologies to drive improved performance and profitability, boosting the bottom line as well as top line sales. Almost one in five Trade Barometer respondents (19%) believe technology-driven productivity gains will help them recover from the impacts of the pandemic.
The combined effect of these potential benefits is that for many businesses, a shift towards a more digital footprint now represents a central plank of their growth strategy. Overall, 16% of businesses regard digital growth as a key driver of their recovery following the pandemic. Amongst businesses aspiring to trade internationally for the first time, this figure rises to 20%, underlining the value of digital channels as enablers of increased international trade.
Many businesses have exciting plans for capturing this digital opportunity. Some 24% of respondents to the Trade Barometer expect to invest in digital transformation over the next 12 months. 12% expect to invest in business model change, which is likely to coalesce around digitally enabled strategies.
Closing the digital gap
Nevertheless, there is considerable scope for more businesses to embrace these opportunities. In this Trade Barometer, 51% of respondents say they already trade digitally, up from 50% in Autumn 2020 and 44% in Autumn 2019. But while the number is increasing in each edition of the Trade Barometer, the data suggests that nearly half of all businesses are yet to implement a digital sales strategy.
Some businesses do point to barriers to digital trade.
- 44% cite the potential difficulties posed by the taxation rules around digital sales.
- 43% worry about excessive data protection regulation.
- 40% say they lack employees with the necessary skills to pursue digital opportunities.
Moreover, while digital trade can be a cost-effective and practical way to break into new markets, 41% of businesses say restrictive regulation in destination countries is an obstacle to taking advantage. Given that 27% of domestic businesses say a lack of an entry route to international markets is what has stopped them developing exports, unpicking this problem must now be a priority.
Indeed, supporting businesses as they seek to overcome all the potential obstacles to increased digital trade must now be regarded a crucial challenge for policymakers, business groups and partners, as the UK seeks to bounce back from the economic difficulties of the pandemic. For those businesses able to invest in transformation and pursue new digital opportunities, there is real potential to accelerate growth.