By  on September 25, 2017
Hyper-connectivity is one factor propelling the paradigm shift at retail.

The year America celebrates its 250th birthday — 2026 — will be a period where demographic shifts, changing values and hyperconnectivity will have changed the retail landscape from an affluent model to one that is influencer-based.That’s according to a new report from A.T. Kearney, the global strategy and management consulting firm, on “America’s Next Commercial Revolution: Influence vs. Affluence.”The report said the “unprecedented number of store closings, dying malls and retail bankruptcies” are all foreshadowing major shifts on the retail front. The multiyear data analysis of demographic and “personagraphic” research on what American consumers and business will look like indicates that brands and companies will no longer be able to rely on the affluence-based model that allows them to scale production. In the new paradigm shift, where influence from a single voice can affect a large company or entire market, it will be the values-based brand or brands that master personalization that will enjoy the fastest rate of growth, according to the A.T. Kearney report.“As a result, the mass market of the future will thrive on three fundamentally different principles: influence, personalization and trust,” the report said, noting that consumer brands and retailers that can appeal to future consumers will be those that take advantage of new technology-enabled ways to influence and sell. That makes engaging consumers in the digital world “more critical than ever,” according to Greg Portell, lead partner at A.T. Kearney’s retail practice and the principal author of the study.Portel said that under the new influence model, individual consumers can effect change and build community by influencing his or her peers, as well as retailers, consumer products goods manufacturers, media and governments through social media to both amplify the power of their voices and facilitate the formation of ad hoc coalitions to address different causes, regardless of the individual’s financial position. That’s far different from the affluence model where consumers believe their self-worth has a direct relationship to what they buy. Portell calls that the mantra of “I am what I own.”By 2026, there will be six generations, including four high commercial impact generations. The two at opposite ends are what the report has dubbed the Silent Generation, those born between 1928 and 1945, and the Alpha Generation, those born between 2017 to 2023. With the oldest at 81 and the youngest at age 9, neither has major buying power. The four in the middle are Baby Boomer, Gen X, Millennials and Gen Z. Collectively, these four generations are older, less traditional, more diverse and more urban. Not only will living arrangements and domestic identifies be different, the households will be more centered around urban areas, and income inequality — the gap between the top 1 percent of U.S. earners and the bottom 90 percent — will continue to grow.And the changing consumer base will mean the concept of value will incorporate more than just the product itself to include factors such as ethics, trading partners and sourcing of raw materials, and even the political position of board members of public companies, the report noted. The report also said that currently 25 percent of Gen Zers actively look for brands and retailers that do good for the world, and another 26 percent said they would avoid brands or retailers that did something that violated their moral or ethical code.The study noted that food and beverage firms are the earliest and most successful adopters and beneficiaries of the new personalization model. It concluded savvy retailers and manufacturers are the ones who will quickly focus on “who” a consumer is than on what he or she “does.”And with consumers becoming “critical data feeds” as information from social network participation replace traditional buying and browsing histories, trust will become the new consumer currency. Under this scenario, consumers will trade personal data in exchange for what they consider “value-added” personalization.The report provided five suggestions on what companies can do: Use data to understand your customers on their terms; create new models and metrics to describe your target market; redefine scale; think about trust as your customers do, and maximize the value of your workforce.

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