Kiwi firms’ pessimism rises even before virus concerns

Pessimism among New Zealand firms has increased significantly, according to a new report, and is expected to be worse now due to the coronavirus outbreak.

Businesses expect the 2020 year to be ho-hum, with pessimism about the year ahead up 9 per cent from 1 per cent over the past two years.

The latest Mood of the Sales Leader report conducted by sales and leadership consultancy Indicator, which surveys 130 sales leaders in a range of industries at the end of each year, found just 77 per cent of companies planned for growth in 2020, down from 81 per cent in 2019.

The 2019 year was harder than 2018 for most companies, the survey revealed, with just 60 per cent reporting growth, down from a recorded 65 per cent a year earlier.

About 14 per cent of companies reported a decline in sales in the 2019 year compared to 12 per cent recorded a year earlier.

Sixty per cent of firms surveyed achieved growth in 2019 compared to 82 per cent that had expected growth in the year. In 2018, 65 per cent achieved growth compared to 88 per cent that had expected it.

Expectation versus execution among firms had been on the decline since 2017, the report outlined.

When the survey was first conducted at the end of 2017, the economy and outlook was bullish, but there had been a gradual decline across measures since, Indicator chief executive Mike Stokes said.

Increased competition — noted as the biggest challenge — was found to have disrupted businesses in all sectors, followed by clients with reduced budgets. Businesses also reported “Government“, “the economy“, “margin erosion “and “tech innovation by competitors” as the biggest risk to their organisation’s sales success.

“Everyone is finding it somewhat harder,” Stokes told the Herald. “In the last couple of years there has typically been a slide across everything. Competition and disruption is happening more and more . . .”

Stokes believed the downbeat sentiment throughout the business community would be more pessimistic today, due to coronavirus.

“We operate a sales leadership forum and we have about 70 sales leaders who we see every month, we’ve just seen them this week, and significant numbers of those members were talking about how coronavirus is having an impact on their business.”

The members spoke about the virus affecting capacity restraints, operational logistics and getting product here as having a big sales impact, he said.

“Sales leaders are typically an optimistic bunch, but I would say that they are cautiously awaiting outcomes.”

While pessimism was at an all-time high, Stokes said it was not “off the cliff”. However, the 23 per cent not planning for growth in 2020 was a big number.

“What we’re seeing is, particularly through competition and technology changes, that if [businesses continue] to do the same things [they] will be lucky to see the same results. For companies that aren’t adapting or

Everyone is finding it somewhat harder. Mike Stokes, Indicator CEO

changing the way they sell, market or provide customer service, then they will struggle.”

No single industry stood out as more pessimistic that another in the survey, though tourism operators were notably the most optimistic, he said.

Stokes expected this to no longer be the case since coronavirus, which had brought about mass booking cancellations to accommodation and tourism operators, and the temporary ban on travellers from mainland China.

The missed growth targets by firms in the past few years showed businesses were not adapting fast enough to competition and technological advances, he said, and as a result of tougher business conditions domestically, the survey showed more firms were looking to export to make up a larger portion of business.