Retail has a long history of relying on mass channels and traditional thinking about value creation for consumers. When it comes to innovation, the industry has mainly pursued new initiatives within the boundaries of past success, opting for short-term thinking rather than a futuristic focus. All this is changing now.
The consumer goods industry, meanwhile, has long embraced innovation, but it’s been mainly focused on product innovation. We’re starting to see efforts shift toward the digitization of the entire manufacturing value chain with the rise of Industry 4.0, however, as well as the rise of new technology-driven players whose sophisticated use of technology will only grow more mature.
Amid dramatic changes in the consumer and global business landscapes, retail and consumer goods companies need to set aside their addiction to their past successes. Remaining relevant in the age of uncertainty means being open to new insights instead of being mentally closed by existing ones. This is especially true in a world affected by Covid; learn more about rethinking the customer experience in a world of social distancing.
The upcoming decade will be a transformative one for retail and consumer goods, full of opportunity and unprecedented change. A simple question for the industry remains: Are you willing to disrupt yourself? Of course, some trends are more relevant for retail and consumer goods companies than others. Success is about anticipating the right trends instead of mindlessly adopting the speed of change.
The business landscape for retail and consumer goods is at a tipping point. World economies are growing more volatile amid economic power shifts. The global middle class is expanding dramatically, and populations are quickly aging. Amid the dominance of e-commerce giants, there’s also the rising popularity of small brands and local products.
Changing expectations around consumption
Platforms are now becoming the new foundation for organizations, and personalization and convenience are the keys to future success. Among consumers, mindless consumption is shifting toward a circular and regenerative mindset. Urbanization is putting pressure on city centers as space is limited and housing demand is growing. In this volatile world, where humans are continuously connected with a fast-changing digital environment and living in new dynamic urban are¬as, consumption patterns and demands will undergo dramatic change.
Successful retail organizations and brands will need to address changing customer expectations around consumption by focusing on the role they play beyond product sales. The future belongs to businesses offering honest products and enabling meaningful consumption. This will introduce a new dimension to future business models.
Global consumers are more than ever looking for products that are good for, or at least do no harm to, society, the environment and their health. They increasingly prioritize product longevity over buying something disposable. As a result, successful business models of the future will not be about selling more products but about empowering consumers to lead better lives. They’ll focus on helping consumers make the right choices for themselves, the environment and the planet.
Evolving technologies and personalized offerings
New technologies will play an important role in shaping the future of retail and consumer goods. Because neither industry has historically been a fast technology adopter, there is a gap to overcome. Just as virtual and online shopping experiences have become more customer-focused and efficient, technology also offers the possibility of enhancing the physical shopping experience and producing consumer goods at a personalized and sustainable level.
The age of the consumer is upon us. Empowered consumers will increasingly seek personalized experiences and meaningful brands. High quality and business transparency are no longer unique selling points but commodities. Retail and consumer goods can no longer think of customers in terms of homogeneous segments. What consumers want and need today will be very different from the wants and needs of tomorrow. Creating healthy margins will be all about meeting specific consumer needs as the one-size-fits-some mindset inexorably shifts toward one-size-fits-none. In the always-connected environment of on-demand instant gratification, every engagement will be driven by high-speed predictive analytics and simplified, frictionless shopping experience.
This will blur the boundaries between retail and consumer goods manufacturers. The future will bring an ever-growing rise of direct-to-consumer models, demanding new ecosystems and borderless partnerships.