The financial crisis of 2008 sparked what was for the majority of industries the most difficult economic downturn in decades. The tough economic conditions have no doubt shaped policies in most boardrooms, but there are many other longer term trends-demographic, technological, regulatory, to name a few-that are conspiring to shape the industrial landscape of the future. So what are these trends? The Diplomat asked leading market research firm Synovate to take an industry-by-industry look.
IT & Telecommunications
The “internet of things” (a concept first floated in 1999) will win mainstream acceptance and become a reality for many people. The internet will reach out past our homes, via portable computers and “smart” phones, and also beyond these devices to many more everyday objects, to form a network of things: appliances, cars, foodstuffs, clothing, and of course ourselves. Consequently, says Chris Michelle-Wells, Research Innovation Consultant, “the internet becomes more and more transparent, or ubiquitous, so there’s really no such thing as being offline”. Michelle-Wells explains further by saying “these networked things will either be able to communicate with each other, or if they are suitably “dumb” (i.e. a tin of peas) then their position and identity will be known to smarter connected things. And information about all these things can be gathered and sorted by key multi-purpose devices – in the near future, this device is likely to be a smart phone.”
Via these phones, we’ll be aware of what (and who) is around us, how relevant or meaningful each is to us, and have a range of ways to contact or communicate with these things. “Imagine being a tourist in another city and having your phone give you directions on where to eat, where to buy your favourite brand of shoes, and letting you know an old high-school friend happens to be three blocks away”, says Michelle-Wells. And it will tell you all this information as an “overlay” (called augmented reality) you’ll see when you look at the world through your phone’s camera (see here for an example). In the same way, using face-recognition technology, this technology can be applied to people (see here for something that will either scare or amaze you, depending on your point of view).
Chris Ovenden, National Director – IT & Telecommunications, agrees that mobile handsets will play an increasingly central role in our social and business lives. “The internet is no longer in the home office or wherever the PC is located in the household, it is always turned on and travels with the consumer. We will no longer have to take newspapers and magazines to coffee shops, but instead take our smart phone and surf the internet”, says Ovenden. Similarly inside the house, books are no longer the standard for night time reading, instead consumers can take their iPods and iphones and surf the internet for stories and other content. “As a result”, says Ovenden, “media will continue to become more fragmented, publishers will continue to lose influence, and companies that own brands will continue to change the way they interact with their customers and will invest more of their advertising budgets in online media.”
Banking, Insurance and Finance
While the global financial crisis has certainly encouraged people to watch their spending, save more, and re-focus on the simpler things in life, the way we transact and bank continues to push new barriers. Geoff Reiser, National Director – Banking, Finance and Retail, says that “greater change is likely in the next few years as technology enables us to be more mobile and cashless. The use of online banking, ATMs, and electronic payments at retailers is just the beginning of hi-tech banking.” Geoff believes the future is likely to be more cashless and more mobile. Consumer confidence in security is an ongoing concern. Before too long we will all be able to use mobile phones to access account details, make payments and transfer funds. There is already great uptake of this in parts of Asia.
“We may also see a future lifestyle with a ‘cashless wallet’ where our mobile phones replace our wallet”, says Reiser. A special mobile phone SIM card will contain information from the cards that normally sit in our wallets, including our credit cards, store loyalty cards and memberships. Customers using the system will simply wave their mobile phone in front of a contactless reader, which then automatically debits their account. Reiser sees plenty of benefits of this technology in our time poor lifestyles. “It would certainly make it fast and simple to buy a coffee, magazine or train ticket.”
The world is experiencing a global industrial revolution as developing nations become the workshops of the industrialized world. The emerging industrial powerhouses will naturally be focused on different trends. “For example”, says Jeanette Deetlefs, Synovate’s National Director – Motor, “the need for sustainable energy and green thinking is clearly identified and recognised in developed nations. In contrast, developing nations are struggling to keep crime under control in their economically polarised populations and are striving to build a middle class as people move out of poverty.” In emerging economies, cars become a symbol of affluence and freedom. Their environmental footprint is less of a concern.
But needs are also diversifying within the rich world. Many consumers, delaying the onset of family obligation, are seeking gratification. The 1970s “Me” generation redux? In a sense. But today needs are more sophisticated and diverse. Consumers are looking to express their individuality.
In the automotive market, these trends will mean energy efficient and sustainable energy vehicles; car sharing schemes; increased use of public transport with car use meeting needs for self expression and fun, rather than purely transport; a move to smaller vehicles to accommodate smaller families and single parent families; and improved customer experience as this becomes the true differentiator between brands and serves to expand the vehicle experience beyond purely transportation. It will also involve small vehicles having to offer the luxuries and features traditionally found in larger cars. The changing nature of the buyer could change the distribution channel, perhaps with direct distribution from vehicle manufacturers to customers. And the changing nature of the vehicle will redefine build quality and change vehicle maintenance requirements. Finally, consumers will move to more versatile vehicles as they need to meet needs beyond those met by public transport.
Retail & FMCG
Change in the marketing of consumer goods has not moved as quickly as it has in many other sectors over the past 50 years. Still, many exciting developments have emerged in the past five years in the fast moving consumer goods (FMCG) sector, and this will continue. Retail formats will fragment to meet the needs of different consumer segments and also a more ‘retail experience’ for consumers. We will see more specialist retailers catering to a particular segment or niche, such as growth in fashion stationery outlets. Look for ongoing specialisation, with trends such as “needs-based displays,” such as drinks fridges that display one set of drinks in the morning around breakfast, and another in the evening around dinner.
According to Andrew Powell, National Director Retail, “Retail theatre in merchandising will become increasingly important as a means of differentiating the offer and connecting with the consumer on a more emotional level, by creating a stronger multi-faceted sensory experience.” Brands and formats will diversify, and the days of “one size fits all” will disappear.
Undoubtedly, internet FMCG trends will change. Today’s online booking forms for home delivery of grocery brands will give way to exciting new developments such as mobile store information, interactive online store displays, online building of new products and reverse-bidding for grocery items. “User blogs are already outpacing traditional FMCG advertising in determining how new products are developed, for example”, says Mike Cassidy, National Director FMCG. Home brands or generics will take on a different meaning. Cassidy explains, “Retailers will look to increase the margins achieved by their home brands, and therefore will become brand-builders in their own right, or even owners of leading brands – Walmart could buy Coke for example”.
Finally, we see consumers moving back to basics – wanting the wholesome goodness of their grandmother’s generation – rather than the manufactured and false convenience of their parents’. This will manifest itself in, for example, fresh good direct from farm to table (not warehouse), brands having genuine stories that consumers identify with, and consumers buying more “raw ingredients” than processed goods.
Travel, Tourism, Sport & Leisure
Marquis Pohla, Synovate’s National Director – Travel, Tourism, Sport & Leisure, believes more focus will be placed on work-life balance in the future, but because of the demands of the corporate world this will not reduce working hours significantly. As a result, time will continue to increase in importance and consumers will actively seek ways to reduce their time spent on essential activities, such as housework and grocery shopping, to spend time on things they enjoy. “Entertainment and leisure will continue to play an important role in people’s lives as a reward for their hard work”, says Pohla. “However, customers will grow tired of the same experiences and will gravitate towards brands that will challenge the status quo and create new experiences that could potentially exceed their expectations.”
The internet is becoming the main source of travel information, given its ubiquity and unmatched breadth and depth of data, all instantly accessible. Online bookings will also increase, with consumers able to find the best deals either directly through travel provider websites or via travel portals such as Expedia. “Over time, the travel agency market will shrink, but travel agents will continue to play a key role for a segment of the market in terms of total holiday planning and advising on niche destinations”, says Pohla.
With the advent of carbon accountability, governments will need to ensure that national infrastructure can support sustainable practices and solutions. Sustainability will become the buzz word, and systems need to be in place to ensure that being sustainable is possible at industry, corporate and personal levels. Veronica Mayne, National Director – Public Sector, thinks “the broad spectrum of consumers are more likely to embrace behavioural change if it is easy, and if it comes at no or minimal cost to them.” For corporations, the dynamic is the same: the driving force behind embracing green solutions is the bottom line, and unless there is a corporate reputation advantage to be realised, they too will not undertake significant change.
Mayne believes that for governments this means thinking now about smart grid systems for electricity infrastructure, to allow households and businesses to drive power generated by PV cells back into the electricity networks. It also means carbon offsets schemes need to be supported and encouraged and public transport systems need to be put in place and expanded to cater to increasing populations and the growing urban sprawl. “In fact”, says Mayne, “thinking further about advancements in automobile engine technology, governments need to be ready to consider infrastructure to support battery operated vehicles, to allow recharging abilities for vehicle owners, thereby delivering the ability for drivers to use battery power over longer distances.”
Mayne sums up by saying “a government that does not invest heavily now in a sustainable future from an infrastructural perspective, will be paying the price in carbon tax later. And ‘later’ is not too far away.”
Synovate, the market research arm of Aegis Group plc, generates consumer insights that drive competitive marketing solutions. The network provides clients with cohesive global support and a comprehensive suite of research solutions. Synovate employs over 6,000 staff across 62 countries. More information on Synovate can be found at www.synovate.com