We tend to overestimate the changes that will occur in the next 2 years, and underestimate the changes that will occur in the next 10. That’s just human nature. So what can happen in the next decade?
One way to put it in perspective is by looking back. Most would agree that things were very different in 2007. The iPhone was first introduced in June that year, and the term “smartphone” was just starting to take root. In fact, only 1% of the world’s population owned a smartphone back then, whereas today there are more than a billion smartphones shipped each year. And in case you don’t remember, this is what a one of 2007’s most popular “smartphones” looked like.
BlackBerry Pearl 8100
In 2007, Facebook was just a budding social media platform – another term that barely existed, by the way – with roughly 10 million users. In the decade since, Facebook has amassed 1.32 billion active users and is now almost part of the internet fabric. Services that we take for granted today – fast mobile internet, Netflix, Amazon, Spotify and Uber weren’t even founded or just getting started ten years ago. Needless to say, these and many other changes have permanently shifted the behavior of consumers worldwide; how we think, how we live, how we shop.
So what will the future look like for the consumer industry? Instead of guessing blindly, we can get an understanding of what the future might hold by taking a closer look at current trends and recent shifts. A year ago, McKinsey & Company presented research on consumer trends and their impact. The graph below illustrates a few ongoing trends, and maps them according to their impact (“how significant will this trend be?”) and predictability (“how likely is this trend to continue?”).
If we take a look at the upper right quadrant (high impact, high predictability) a picture begins to take form. One of the most impactful changes in recent years has been the shift to mobile. The number of worldwide mobile internet users surpassed desktop users in 2014, and more and more services are expanding into mobile, or exclusively going mobile. Consumers are used to the ease and convenience of conducting their daily lives through smartphones, and are now expecting physical retailers to follow suit.
The “I want it fast and I want it now” attitude of millennials is fueled by the speed, ease, efficiency and convenience of the world in which they were raised. Where some might see a store as a place to purchase things, millennials put a higher value on the experience, interactivity and entertainment aspects of shopping.
But aren’t they just buying everything online these days? Not really. While online sales continue to grow in double digits, it’s important to understand that 92% of all retail purchases still take place in brick-and-mortar stores. A recent study by Accenture discovered that 82% of millennials prefer brick-and-mortar – as long as it’s fun, interactive and up-to-date.
The leading consumer companies of the future will also be technology leadersWhile some might worry that showrooming – where consumers browse in-store and later buy online – is eating away revenue, research shows that the opposite, webrooming – where consumers browse online, buy in store – is equally prevalent. The lines are blurring between retail and e-tail, and the companies that acknowledge, address and exploit these changes will reap disproportionally large returns. As stated in the McKinsey & Company report, the leading consumer companies of the future will also be technology leaders. That is, in order to meet these evolving consumer expectations, a new set of capabilities are needed.
One company that is tackling this issue head on is the global shopping mall company Westfield. In an interview on the company’s journey ahead CoCEO Steve Lowy noted that “for physical retail to continue to be relevant, it has to adapt. And the adaption has to occur in a number of ways“ referring to the companies massive effort to converge physical and digital. ”The malls have to adapt to be incredibly exciting places to be,” he concludes.
A pioneer in converging physical and digital retail is Sephora. Over the last couple of years the cosmetics retailer has continuously experimented with digital integrations while still investing and improving the physical store experience. The mobile-first approach turned out to be a winning strategy for the company. Five years ago, Sephora joined in on the launch of Apple’s Passbook, and launched a mobile-first, digital gifting offering in just two months.
“Our focus… [is] not about trying to reinvigorate a brick-and-mortar strategy that’s not working,” Sephora Americas president and CEO Calvin McDonald told GCI Magazine. “That’s not the Sephora way. It really is how we’re imagining the brick-and-mortar to continue to evolve our experience for the client, which is a full ecosystem of dot-com, mobile, and the brick-and-mortar.”
We can look back on the last 10 years to gain perspective about what consumer trends and technological advancements the next decade may bring. High impact trends like ubiquitous internet, the mobile world and the consuming patterns of the millenial generation are fundamental shifts, and not to be confused with temporary fads.
Perhaps most importantly, it’s vital to understand that this 21st century consumer is already here, and will only become more and more prevalent as we head into 2017 and beyond. No doubt, retailers who stay on top of these changes – and find innovative ways to incorporate them into the shopping experience – will continue to thrive in this century.