Disruption has a way of sparking waves of innovation that redefine how we live, work, and spend.
For the consumer sector, the pandemic was a powerful example – it reshaped spending habits and brought forward new behaviours by years. Now, this varied landscape is once again experiencing a transformational shift, creating opportunities for businesses ready to adapt.
In recent years, the consumer space has been marked by a move away from traditional leisure and towards more unique social experiences, alongside the growth of wellness-focused offerings and hyper-personalisation. However, the sector also faces a tough market environment, with the cost of living weighing on demand and high operating costs squeezing margins.
Periods like this create rare windows for growth capital investment. The brands gaining traction now – those built around the sector’s structural shifts – are the ones most likely to define consumer habits in the next decade. Drawing on the full scope of support from investors will make all the difference.
Firm foundations
We see an enormous opportunities for consumer businesses, and those that can capitalise on the trends shaping the sector will reap the rewards of forward thinking. When we meet companies in this space, certain qualities stand out in the ones that go on to succeed.
Resilient business models are key, especially given the sector’s volatility. Businesses that can show clear profitability, build loyal customer bases, and adapt quickly to changing consumer preferences, can still grow even in tough market conditions. We recently invested in Spinners, a competitive socialising operator that has established a loyal following at its existing sites – giving it a solid foundation as it looks to grow its footprint to new locations. Having a clear pathway to expansion is crucial, whether this is from new sites, strengthening digital channels, or diversifying revenue streams.
A differentiated offering is also vital to enable consumer offerings to stand out in such a competitive space. Businesses need to be sure they can establish a unique angle – as an example, we were attracted to Much Better Adventures, an online travel company that had carved out a unique position in the market by offering curated, socially responsible, and expert-led adventure travel experiences worldwide.
Strong leadership is another trait we see consistently in successful consumer businesses. Experienced management teams with deep market knowledge and a history of execution are best placed to seize opportunities and steer their companies through periods of change.
Growing pains
Unsurprisingly, businesses in this sector are hungry for investment. An injection of funding can serve as a critical capital buffer, helping them through leaner times while still investing for the long term.
However, growing consumer businesses face a wide range of challenges as they expand – from retaining quality as they scale up and adapt to more complex supply chains, to protecting their entrepreneurial culture and implementing the right technology infrastructure to handle higher volumes.
Businesses seeking investment should therefore think carefully about the wider support an investment partner can provide. This should go beyond just a cheque in the post – founders that win investment should also be gaining a strategic partner that can help them navigate these hurdles.
Investor integration
As a strategic partner, investors should sit at the heart of a business’s planning, helping to define clear expansion strategies. This can include guiding founders through the rollout of new sites and the development of new products, underpinned by comprehensive market and customer analysis.
For consumer businesses, which often face tight margins, investment partners can also assist with operational efficiency, advising on supply chain improvements and helping to keep costs in check.
Technology is another area where investors can help. With so many tools available, it’s not always clear what matters most. Investors can bring valuable experience, advising businesses on the technology platforms that are most relevant to their priorities and guiding them through the integration of new tools – everything from CRM to data analytics.
And investors can provide vital financial guidance too. From robust forecasting and budgeting to setting the right performance targets – ensuring businesses have the discipline and visibility needed to deliver on their growth ambitions.
Turning to talent
Beyond these areas of support, consumer businesses are ultimately people businesses – and getting the right team in place is another crucial ingredient for long-term success. While many investors can help companies manage recruitment processes, the best go further.
By drawing on their previous experience working with other businesses at a similar stage of growth and spotting hiring trends from across their portfolios, engaged investors can offer founders a deeper level of support. This can include identifying specific talent needs, building briefs and job scopes, and advising on the HR systems and compensation structures that are most appropriate to attract and retain top talent in line with a business’s individual growth strategy.
Times may be tough for consumer businesses, but we are optimistic for the future. New trends continue to shape the market and businesses looking to power ahead of the curve should be looking for more than just capital – they should be bringing on board supportive partners with the expertise, track record and long-term vision they need to help unlock the opportunities ahead.
Greg Blin
Investment Partner
