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Key Points:
Cost pressures and past inflation remain central business challenges Blanket price increases are seen as risky to brand and volume AI offers efficiency and value-creation opportunities Canva and Atlassian (ASX:TEAM) highlight contrasting AI adoption outcomes
Chris Petzoldt of Pretian Squared shares the view that the current environment presents new challenges for businesses grappling with rising costs and persistent cost-of-living pressures. According to Petzoldt, while the Reserve Bank's recent interest rate hike has fuelled speculation about further price increases, the situation is more nuanced than during the inflation spikes of 2022 and 2023. Many companies have yet to reverse previous price rises, and indiscriminate price hikes now could harm volume and brand reputation.
Petzoldt urges companies to adopt a more differentiated approach, cautioning against blanket price increases. He states that businesses should assess customer segments, product roles and sales channels before deciding on any adjustments. Passing on costs blindly risks eroding customer loyalty, and companies must be smarter about how they implement price changes, with a focus on long-term value creation and capture.
Addressing the impact of AI disruption, Petzoldt cites Canva and Atlassian as examples of how technology is reshaping the sector. Canva reported 35% annual revenue growth and a doubling of enterprise revenue, successfully integrating AI into its offerings. In contrast, Atlassian (ASX:TEAM) has faced a 50% share price decline this year, reflecting investor concerns over the effectiveness of its AI strategies.
