University of Maryland’s Robert H. Smith School of Business points to the top trends influencing business in the New Year.
The “Amazoning of America,” McDonald’s table service and a lower corporate tax rate are among business developments to watch in 2017, according to a group of professors at the University of Maryland’s Robert H. Smith School of Business.
Here’s what they said:
We may need a social responsibility emoticon: In 2016, we saw the negatives of social media in the number of ugly fake news stories. Some of the stories could have influenced the outcome of the presidential election while others could have resulted in tragedies (think Comet Ping Pong Pizza). In 2017, expect to see more efforts by social and traditional media to fact-check stories and to refute fake news rapidly. There will also be pressure placed on government officials to present deeper analyses of policy than possible in a 140-character tweet. — Henry Lucas, the Robert H. Smith Professor of Information Systems
McDonald’s to serve up table service: What if it’s a hit with consumers? For McD franchise owners, that could mean the need for more staff — staff that can serve and communicate well with guests — a table recognition system similar to what Chick-Fil-A runs, perhaps a better interior design to make guests stay longer, and so on. For anyone in competition with McDonald’s, e.g. Chick-Fil-A, which in my opinion already does a great job delivering to the table, it may be time to consider how to compete. — Oliver Schlake, clinical professor and distinguished fellow at the Academy for Innovation and Entrepreneurship
Next up in the Amazoning of America: There has already been much attention to Amazon’s new concept store, Amazon Go, since it was announced a few weeks ago. Contrary to the widespread hype, I don’t think the concept (basically a convenience store without checkout registers) will revolutionize grocery shopping—at least not in the foreseeable future. The assortment at Amazon Go is much smaller than conventional supermarkets and thus it won’t be perceived as a big threat to them. Instead, the new store concept will put tremendous pressure on convenience stores, many of which compete for the same business of selling convenience foods and are already struggling with how to stay competitive. — Jie Zhang, professor of marketing and the Harvey Sanders Fellow of Retail Management
Amazon.com may revolutionize how consumers shop for non-perishable basics. Revolutionizing how consumers shop for more expensive specialty items and perishables, which consumers prefer to see, touch and feel, will be harder. — Janet Wagner, associate professor of marketing and director of the Center for Excellence in Service
Futuristic consumerism: With Amazon Go coming online, we can finally skip the checkout line. But it gets really interesting when you put some trends together: Automated shopping online for food that is being delivered by a drone directly to your table? Now we are in an interesting territory. — Schlake
Drone life: What if unmanned aerial vehicles start to deliver things? If you are 7-Eleven, luckily you are already testing the technology. If you are Domino’s Pizza, perhaps your pizza needs to be lighter, since UAVs still have a weight limit on what they can carry. As a homeowner, perhaps it’s time to create a landing platform and get rid of the trees. If you own a gas station, perhaps a UAV-charging station would be central to the business of the future. At Smith, I run our online MBA introductory class on future business models with unmanned aerial vehicles, and many strange-sounding ideas from two years ago are now hitting the marketplace. — Schlake
Rising rates and the outlook for real estate: We’ve seen the bottom on mortgage rates with the Federal Reserve announcing a series of intended rate hikes over the next two years. Housing demand could slow as a result, however, economic stimulus could blunt some of the rate hike effects. Housing prices should also moderate a bit, however, the wildcard is whether inflation starts to accelerate, which would push home prices up. — Clifford Rossi, professor of the practice in finance and executive-in-residence
It may be a bumpy ride for stocks: Investors have raised concerns about China’s corporate debt levels since at least 2010, and worsening Chinese debt ratios in recent years appear extremely risky by U.S. standards. In the U.S., recent lackluster earnings performance in the S&P 500 is underscored by poor sales growth. As the U.S. Federal Reserve increases interest rates and oil-producing nations attempt to boost oil prices, we are looking at strong headwinds to corporate earnings growth in the East and West, and global economic prospects appear grim. U.S. stock prices are difficult to justify based on current global fundamentals. — Nick Seybert, associate professor of accounting
A lower corporate tax rate? Expect tax reform, particularly on the corporate side, that lowers the corporate income tax rate to somewhere between 15 percent and 20 percent. The change also will encourage firms to repatriate foreign cash and end the benefits of stockpiling it abroad. However, that will not create the enormous stimulus that has been promised because most of the cash is in the U.S. economy already and most large firms already structure their operations to reduce their taxes well below the current statutory rate. — Michael Faulkender, associate professor and director of the Master’s Program in Finance