1.Back to the high street
Online retail is winning a growing share of the consumer cash, but that does not mean traditional brick and mortar shops will die out altogether. In fact, even digital behemoths are now establishing a physical presence – Amazon’s purchase of Whole Foods supermarkets is one example.
“Today we are seeing some of these digital giants entering the physical world,” says Claus Kjeldsen, chief executive at the Copenhagen Institute for Futures Studies (CIFS) think-tank.
“When Amazon offers Prime members a 10 per cent discount on groceries in their physical stores, they are simultaneously nudging Spotify customers towards the Amazon Music Unlimited service included in their Prime subscriptions – creating competition across market boundaries.”
Successful shops offer experiences and environments that cannot be found online, such as attractive design, events and the opportunity to sample goods. Meanwhile, the purchase of more “boring” items increasingly takes place online, often via subscriptions.
2. Healthy trends
Consumers are becoming increasingly conscious and conscientious consumers: demand for healthy and/or environmentally friendly products is soaring.
“Consumers expect brands to offer them a new kind of luxury, either in the form of products that create a better me or that help the consumer create a better world,” Kjeldsen notes.
Millennials look at ingredient labels a lot and try to buy fresh and natural foods. Organic sales are booming (see chart), while sales of heavily processed foods, canned foods and sugary drinks sold in the US are already declining. Instead, growth industries include health and wellness, be that keeping to an ideal weight or getting enough sleep.
3. Driving-less future
In previous generations, owning a car was an affirmation of freedom and personal identity, desired at a time when the explosion of suburbia required more commuting and affordable when fuel prices were low. Ride-sharing and car-sharing apps have made driving less necessary, and possibly less attractive than alternatives. And the cost per kilometre of sharing a car is almost half that of owning a car, which is used around only 5 per cent of the time and spends the rest of the day parked somewhere that may involve paying for a parking slot.
This is in part a manifestation of the sharing economy, where everything from holiday homes and office desks to children’s car seats and electric drills now available to rent.
4. Exclusively yours
Type almost any item into a search engine, and you will be presented with a multitude of different options, all readily available to buy. Exclusivity and personalisation are increasingly important for consumers who want to stand out from the crowd – no matter the sphere.
Letting people customise their breakfast cereal is the selling point of mymuesli, whose customers can design their unique breakfast from 80 organic ingredients – or pick from one of 50 pre-mixes. Launched online in 2007, the company has now expanded to include physical stores.
Personalisation can be more subtle, too. ABOUTYOU, a Hamburg-based “unicorn” – a non-listed digital start-up valued at over USD1 billion – uses personalised data to offer suggestions of outfits and trends in the same way as the pages of a fashion magazine.
That is only the beginning. In the not-too-distant future, technologies like facial recognition and biometric data will allow retailers to anticipate customers’ needs based on mood, posture, heart-rate and even brain waves, while 3D printing will offer speedy customisation.
5. Power of influence
Forget traditional advertising. Today, sales are driven by influencers.
ABOUTYOU has gone further than most, launching an awards ceremony for the most creative and influential social media stars, which is now broadcast on national television in Germany.
“The majority of customers know us through social media where we have pioneered testimonials provided by ‘influencers’. At first, we approached potential influencers before we were well-known, and we offered to provide them with clothing; they post photographs of themselves saying their outfits can be bought on ABOUT YOU,” explains Tarek Müller, one of the co-founders.
“Now that we are well-known among our target group in Germany, potential influencers approach us and tell us what clothes they would like to model. We have a couple of hundred influencers, and they are paid a commission on the sales of items coming through their recommendations on social media.”
Influencers’ popularity and success is in part down to their ability to portray a desirable lifestyle, and partly to the element of personal recommendation.
“Consumers want to engage with brands that help them lead the lives they desire and to consume products in their own way — to be treated like a person instead of a number,” says Kjeldsen at CIFS.
“The key to success in the future will lie in providing consumers with convenient and seamless ways of engaging in transformational consumption with products that help them improve themselves or the world around them.”
