Will consumers “shop” your brand, or “buy” your brand?
It’s a critical distinction Shyam Gidumal, principal of the consumer products and retail market segment at consultancy EY, said consumer-facing brands and retailers will have to prepare for in the next five to 10 years.
EY sees the beginnings of a shift between consumers that are highly engaged in their purchases, versus those that are not, Gidumal said at WWD’s Retail 20/20 conference in New York City last week.
Advances in data processing, data storage, locational access and universal connectivity are still in the early stages, Gidumal said, but they are fueling the retail revolution. “Change will never be as slow as it is today ever again,” he said. “We see technology so ingrained in day-to-day life, that it will become all but invisible.”
The way consumers use that technology, as well as work, eat, play, live, move, stay healthy and shop are forces that are likely to change consumer-facing industries, too.
“The various ways these forces interact will lead our different future,” Gidumal said. These eight forces, he added, will disrupt the nature of the consumer business in new and revolutionary ways.
Gidumal described a new tech-based world where discreet digital profiles will eliminate worries about I.D.s, cards and keys. Augmented reality and virtual reality will further increase connectivity between consumers and brands. Data and technology will enable supply chains to be more flexible and agile. Supply chains will become shorter and decentralized. And brands will use consumers as content producers, as social influence will be both a leisure pursuit and an income stream.
In this scenario, experiences become the new status symbol. “We see consumers owning fewer things, instead focusing on lifestyles, services and experiences. We see them opting for on-demand subscriptions beyond digital content services to meet real time needs for clothing, food and other goods,” Gidumal said.
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So, what does this mean for retail? “You’re seeing the seeds of the next big dislocation in the consumer journey,” he said. “If you go back not more than a few years, consumers invested their attention in 100 percent of their purchases—whether it was a toilet roll, an airplane ticket, a rental car or a fashion accessory.”
Today, however, EY sees a growing distinction between purchases that consumers pay attention to—or what EY calls “shopping,” and those they don’t engage with at all, or what would be considered “buying.”
In some segments, Gidumal said the consumer will become more engaged. Shopping will be experiential and retail destinations, be it physical or virtual, will become increasingly personal. “Consumers will be more selective about the brands they interact with, supporting those that share their life. There will be a close connection between the consumer’s sense of self and things they will shop for,” he said.
Consumers’ expectations in the shopping process will increase dramatically, too. Whether the consumer shares their data or allows it to be used, consumers expect that their personal information will enable an experience that is customized to their needs and satisfaction.
On the buying side, Gidumal said the consumer will be completely disengaged.
“The buying process will be automatically curated and completed through AI technologies that involve personalized, sophisticated and connected algorithms to sort, search, select and buy items, removing the consumer from the process all together,” he said.
To navigate this, Gidumal explained, companies should imagine how their business would be different if a meaningful portion were selected through an intelligent bot.
“Think of the operating model implications on the nature of your brands, products, price points, merchandising mix, consumer acquisition strategies, supply chain, talent, internal processes and internal technology,” he said. “How would you create and curate the consumer experience to attract their attention in the shopping segment? How would you curate and create a consumer brand to differentiate in the automated system? Every aspect of the consumer business would be disrupted.”
Today, most companies are still viewing the world through old distinctions like brick-and-mortar and online. Gidumal added that many businesses are often trapped in the organizational and compensation systems that were built around old ideas.
“Companies are continuing to try to protect what they were as opposed to become what they need to become,” he said. “Consumers have already changed, so any company that is still protecting who they were and not savagely transforming to become what they will need to be in the future has already been left behind.”