New research has revealed that people are increasingly less willing to follow the money to big economic and urban centers and are instead choosing to live, work and invest in places that give them better quality of life - and in turn the money is following them. Here Enshalla Anderson, Chief Strategy Officer at FutureBrand North America, provides her thoughts on the changing economic landscape.
This recalibration of global economies and workforces has come to light in our latest Country Brand Index, which re-orders the World Bank’s top ranking 75 countries (in terms of GDP) by how well they’re perceived against an alternative set of factors, such as value system, business potential, environmental friendliness, culture and tourism.
In the index, ‘quality of life’ was the attribute that averaged the highest in the top 10 countries, and averaged lowest in the bottom 10. In line with this are the findings that people are placing increasing importance on tolerance and environmental factors in the choices that they make about where they work, live, and visit. This is set to radically change how countries and companies organize themselves to attract talent, tourism and investment.
In the meantime, the so-called Fourth Industrial Revolution, defined by the arrival of substantial technological change, has transformed our day-to-day reality. Individuals now have more freedom to choose where they live and how they work, and they’re exercising that choice. The arrival of 5G marks a tipping point in all of this this and as telco companies roll out 5G services, we’re likely to see a spreading out of the intellectual capital across the country, instead of being isolated to the key economic hubs.
Meanwhile, we’ve observed businesses with aspirations for global growth actively avoid expanding in the expected international locations and instead set-up in relatively obscure or peripheral locations. They’re looking ahead and taking advantage of this diversifying workforce – tapping new talent, creating new opportunities for people who don’t want to live in the big cities and desire to work remotely, and benefitting from favorable tax rates and perks from regional governments along the way.
The groundswell of environmentalism is also fuelling this shifting balance of power. People are finally beginning to look beyond their household and increasingly making more personal choices of scale and import based on environmental impact and concern. This often means prioritizing ways of living and working that are less harmful to the environment, and in turn better for people’s physical and emotional wellbeing. It can also mean choosing an employer because of their stance on sustainability. By necessity, big corporates, and in turn governments, are having to prioritize facilitating this shift if they want to attract and retain the best talent.
Most recently, New Zealand (ranked no.11 in the index) has been one of the major examples of the big rebalance in power that’s taking place. Prime Minister Jacinda Ardern’s national budget balances goals that encourage the well-being of citizens (such as tackling mental health, child poverty, inequality and the environment) with traditional measures such as productivity and economic growth. Her rapid response to gun control following the Christchurch attack also asserted a genuine and urgent focus on safety and wellbeing that has set a new precedent and benchmark for other governments around the world.
There’s a growing opportunity for countries like New Zealand, and also smaller nations and cities, to compete with bigger counterparts who have more economic might than them on attributes like quality of life, tolerance and environmental concerts to attract greater tourism, trade and investment. It also serves as a warning sign for countries such as China, US and UK, who’ve scored lower in some or all of these crucial measurements, that if they don’t follow suit they’ll have to rely on doubling-down on economic might and power, which citizens, tourists and investors alike are growing increasingly less attracted to as a sole measure of country strength.
A study by City Index revealed the financial reports of the worlds biggest brands to reveal exactly how long it took each to make their first $1 billion, as well as how fast they make a billion today.
They compared this data to how fast it would take the world's biggest brands to make the average UK salary, and the results are mind-boggling:
1. Walmart – 2.16 seconds
Industry: Retail
Total Revenue: $500,343,000,000
First Billion:18 years
Latest Billion: 0.7 days
Did you know?
While McDonald’s recently announced plans to roll out more self-service pay kiosks, Walmart revealed plans to bring more cashiers back. The move came after reports that self-service checkouts hadn’t helped operating margins and left customers unsatisfied.
2. Apple – 4.32 seconds
Industry: Tech
Total Revenue: $265,595,000,000
First Billion: 14 years
Latest Billion: 1.4 days
Did you know?
In August 2018, Apple became the first public company in the world to hit the trillion-dollar mark after share prices rose to $207.05, sending the tech giant to all-new heights. This landmark moment came just 42 years after the company was founded.
3. Amazon – 6.48 seconds
Industry: Retail
Total Revenue: $177,866,000,000
First Billion: 5 years
Latest Billion: 2.1 days
Did you know?
In June 2018, Investopedia named America ‘the United States of Amazon’ as the company’s Prime memberships tipped over the 100m mark. Fast forward to September of the same year and the retail kings became the second $1 trillion company, just weeks after Apple became the first to hit this impressive milestone.
4. Walgreens - 8.64 seconds
Industry: Retail
Total Revenue: $131,537,000,000
First Billion: 110 years
Latest Billion: 2.8 days
Did you know?
Walgreens recently revealed it had spent $500 million on building, testing, and implementing new IT systems for its US stores, with plans to spend a further $500 million. This news came as the brand faced competition after CVS Heath bought out the country’s third largest health insurer and Amazon announced plans to enter the pharmacy market
5. Google - 10.19 seconds
Industry: Tech
Total Revenue: $110,855,000,000
First Billion: 5 years
Latest Billion: 3.3 days
Did you know?
Google was fined $2.7 billion for breaching European Union antitrust rules in June 2017 after it was found to be using its search engine to steer users to its own shopping platform. Luckily for the tech giants, this figure was dwarfed by its $110 billion revenue in the same year.
6. Microsoft - 10.19 seconds
Industry: Tech
Total Revenue: $110,360,000,000
First Billion: 15 years
Latest Billion: 3.3 days
Did you know?
In October 2018, Microsoft announced it had acquired coding platform GitHub for $7.5bn, expanding the brand’s developer tool and services offering. The deal is rumoured to have made GitHub’s three founders billionaires.
7. Target - 15.75 seconds
Industry: Retail
Total Revenue: $71,879,000,000
First Billion: 87 years
Latest Billion: 5.1 days
Did you know?
In a bid to fend off competition from Amazon and bring its business model up to date, Target purchased same-day delivery service Shipt in 2017 for $550 million. Target is hoping that its $99 annual Shipt membership ($20 cheaper than Amazon Prime) and commitment to delivering a wider range of products will see it eat into Amazon’s profits throughout 2019.
8. Walt Disney - 18.83 seconds
Industry: Entertainment
Total Revenue: $59,434,000,000
First Billion: 69 years
Latest Billion: 6.1 days
Did you know?
The bidding war to takeover 21st Century Fox isn’t the first time Disney and Comcast have come to blows. In 2004, Disney curbed Comcast’s unsolicited bid to take it over, which caused a huge rift between Disney CEO Bob Iger and Comcast CEO Brian L. Roberts.
9. Facebook – 27.79 seconds
Industry: Tech
Total Revenue: $40,653,000,000
First Billion: 6 years
Latest Billion: 9 days
Did you know?
Facebook shares were down 7% in March 2018 after a data scandal dominated the headlines around the world, equating to an estimated loss of $40 billion. Chief Strategy Officer of GBH Insights, Daniel Ives, commented that the social media channel could lose $5 billion in annual revenue if it failed to assure its users and government agencies.
10. Time Warner Inc – 36.12 seconds
Industry: Entertainment
Total Revenue: $31,271,000,000
First Billion: 7 years
Latest Billion: 11.7 days
Did you know?
With around 26,000 employees worldwide, Time Warner’s impressive entertainment property portfolio includes Warner Bros., HBO, New Line, and Cartoon Network. Blockbusters such as Wonder Woman, Dunkirk, and It contributed to the company’s $31.3 billion revenue in 2017.
“Potential for growth in today’s market is significantly greater than before”
Fiona Cincotta, a Senior Market Analyst at www.cityindex.co.uk, said: “The markets have changed dramatically over the past 30 years, not just in composition, but also how quickly a firm can grow. From the data, the earlier the business was founded, the longer it took to reach its first billion in revenue.
“While firms founded at the turn of the last century, such as Walgreens or Target, have taken over 100 years to hit the $1 billion mark, more recently founded companies such as Facebook or Amazon have hit the milestone in next to no time. Potential for growth in today’s market is significantly greater than before.
“It also comes as no surprise that while tech firms and retailers are among the quickest companies to hit $1 billion in revenue, but traditional retailers are the slowest. This is yet another piece of evidence highlighting the struggles that more traditional retailers on the high street are up against as shopper’s habits move away from bricks and mortar stores to online shopping and technology."
(Source: City Index)
US mortgage rates jumped last week, with the benchmark 30-year fixed mortgage rate moving to 4.35%, according to Bankrate.com's weekly national survey. The 30-year fixed mortgage has an average of 0.25 discount and origination points.
The larger jumbo 30-year fixed climbed to 4.34%, while the average 15-year fixed mortgage rate rebounded to 3.51%. Adjustable mortgage rates also moved upward, with the 5-year ARM notching higher to 3.51% and the 7-year ARM stepping up to 3.73%.
Mortgage rates moved higher following increases in two different inflation measures – the Producer Price Index and the Consumer Price Index – and Fed Chair Janet Yellen's testimony to Congress that waiting too long to raise interest rates "would be unwise." With this week's move, the benchmark 30-year fixed mortgage rate reset a new high water mark since May 2014. The two inflation readings and strong results on retail sales for both December and January indicate an economy gaining momentum. Coupled with near full employment and the prospect of government stimulus, Janet Yellen reiterated the need to raise interest rates further. The timing however, remains uncertain. But within a 24-hour span following Yellen's initial comments to the Senate Banking Committee and the release of the retail sales and consumer price data, the odds of a March rate hike doubled from 13% to 26% according to trading in Fed funds futures.
At the current average 30-year fixed mortgage rate of 4.35%, the monthly payment for a $200,000 loan is $995.62.
SURVEY RESULTS
30-year fixed: 4.35% -- up from 4.27% last week (avg. points: 0.25)
15-year fixed: 3.51% -- up from 3.49% last week (avg. points: 0.22)
5/1 ARM: 3.51% -- up from 3.46% last week (avg. points: 0.26)
(Source: Bankrate.com)
Commercial real estate industry executives are optimistic about Q1 market conditions while taking a "wait and see" approach to new Administration policies and potential tax reform, according to The Real Estate Roundtable's Q1 2017 Economic Sentiment Index released this week.
"The Trump Administration and a new Congress are aiming to unshackle the economy by focusing on growth-oriented policies," said Roundtable CEO and President Jeffrey D. DeBoer. "As our Q1 Sentiment Index shows, leaders in commercial real estate are cautiously optimistic about what policy changes may bring, yet concerned about any potential unintended consequences that could threaten real estate's vast contributions to the US economy."
The Roundtable's Q1 2017 Sentiment Index registered at 55 — seven points up from the last quarter. [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.] This quarter's Current-Conditions Index of 55 increased four points from the previous quarter, and rose 1 point compared to the Q1 2016 score of 54. However, this quarter's Future-Conditions Index of 55 rose nine points from the previous quarter and is up 10 points compared to the same time one year ago, when it registered at 45.
The report's Topline Findings include:
- The Q1 Sentiment Index came in at 55, a seven point uptick from pre-election Q4. Reacting to the new administration in Washington, many are optimistic about potential market opportunities and the US economy. Mitigating this optimism is concern around potential tax policy reforms.
- While optimism has been the most common reaction to the new Administration, many responders are employing a 'wait and see' approach. Most expect changes in the real estate industry as a result of the policies of the new Administration.
- Despite previous concerns about asset values nearing peak pricing, many feel that pricing has stabilized. Industrial properties are perceived as well priced while many are reporting a lessening of values for multifamily properties in gateway cities.
- Foreign capital continues to seek real estate investment opportunities in the US market. As a result, access to equity capital is plentiful. Construction lending remains challenging to secure, but for high quality, stabilized assets, financing is available with competitive terms. Asset pricing and debt constraints are concerning, general sentiment about the US market is neutral to positive. Gateway markets have been identified as past peak pricing but many secondary and tertiary markets are intriguing for value-add investors.
Although 36% of survey participants said asset prices increased "somewhat higher" compared to one year ago, 43% of respondents said they expect generally flat valuations a year from now — reflecting the view that many believe pricing has stabilized for certain property types. Some also noted that inflows of private capital currently favor equity to debt, dependent on the quality of the property.
DeBoer added: "The Real Estate Roundtable and its members want to advance policies that will spur job creation and economic growth, always guided first by research, data and reasoned analysis that inform policymakers' understanding of all issues, particularly when making choices that affect real estate. We hope our information will assist the policy discussion as lawmakers continue to charge forward on proposals that could have an enormous impact on our nation's growth, prosperity and national security."
Data for the Q1 survey was gathered in January by Chicago-based FPL Associates on The Roundtable's behalf.
(Source: The Real Estate Roundtable)
Customer services dominated the UK outsourcing market in 2016 while the sector remained stable in the face of high economic and political volatility, according to the Arvato UK Outsourcing Index.
The research, compiled by business process outsourcing (BPO) provider Arvato and industry analyst NelsonHall, revealed customer services contracts accounted for 17% of UK outsourcing spend over the year, with a total value of £1.04 billion (2015: £449m), up from 7% in 2015.
The majority of the deals were to be delivered in the UK, with just 4% of agreements going to offshore locations, compared to six% in 2015.
The findings suggest that integrating digital and traditional contact channels remains a key driver for customer service deals, with the vast majority (87%) of contracts signed last year featuring multi-channel delivery, compared with 59% in 2015.
Media and telecoms businesses were the most active buyers of outsourced customer services in 2016 spending £707 million, followed by retail firms which were responsible for £194 million.
IT application and network management were the next most popular service lines outsourced in the UK market, with deals agreed worth £906.7 million and £503.3 million respectively, according to the findings.
Debra Maxwell, CEO of CRM Solutions, Arvato UK & Ireland, said: “The findings of the latest Index reflect the fact that excellent customer service is a key differentiator for businesses serving an increasingly digital customer base. With customers now also in the driving seat when it comes to how they communicate with brands, providing a seamless approach to the customer journey has become the norm. A growing number of businesses are partnering with specialist providers to deliver a multi-channel service which brings together both digital and traditional channels.”
The overall UK outsourcing market remained largely stable in 2016, according to the research. The findings revealed a 7% year-on-year rise in the number of outsourcing deals procured across the UK last year, despite the overall value of the market falling by 5% over the period. Outsourcing deals worth a total of £6.2 billion were agreed in the UK over the period.
The research partners say there has been a shift away from the traditional large, multi-process contracts towards procuring smaller, more focused deals. Overall, average UK contract values fell by 11% year-on-year in 2016, with the average length of deals signed remaining constant at 53 months.
Outsourcing growth among financial services businesses.
The financial services sector saw strong growth in outsourcing activity in 2016, with the value of contracts procured reaching £769 million, up 11% on the previous year.
According to the research, the rise can be attributed to a sharp increase in BPO spending as businesses turned their attention to deals in policy services, HR and property and casualty claims processing. The findings show BPO contracts worth £621 million were signed across the sector last year, up 87% on 2015.
Patrick Quinn, CEO of Arvato Financial Solutions UK & Ireland, said: “The financial services industry remains under pressure to transform, both in terms of improving services for customers and finding new cost savings.”
“It’s clear from the research that a growing number of companies across the industry see outsourcing as a viable strategy to address these challenges through introducing new innovations and ways of working. There are some very positive signs for the sector’s health looking forward, with a high proportion of first-time outsourcing deals (57%) procured last year.”
The Arvato UK Outsourcing Index is compiled by leading BPO and IT outsourcing research and analysis firm Nelson Hall, in partnership with Arvato UK. The research is based on an analysis of all outsourcing contracts procured in the UK market during 2016.
(Source: Arvato UK & Ireland)
