When I was at law school I was told that the main benefit of the course would be that I would learn to 'think like a lawyer'. Independent thought and critical analysis were virtues in this highly intellectualised world of academia, tradition, and precedent cognition. While I learnt a thing or two, the most enduring memory of my legal days were a quote from the venerable Oliver Wendell Holmes, who said that 'a mind once stretched by a new idea never returns to its original dimensions'. A little like popcorn.
Unfortunately, an industry which is largely reliant on old statutes and case law failed to continuously inspire these popcorn moments for me. However, I think it did leave me with certain notions of evaluation, skeptical analysis, and hopefully a little perspective. This kind of education is today available across the internet of things - to consumers who are increasingly choosing to smarten up.
In my mind, every exposure to multivarious perspectives, minority judgments, or dissenting opinions is bound to educate us as a populus, and you don't need to go to law school to achieve these smarts any more.
What I mean is that the internet has one of the greatest curricula that has ever been devised, and people around the world are using it for information-sharing, and dissenting opinions on brands, their claims, and alternatives. This peer to peer sharing of insights, evaluation and skeptical analysis are leading to smarter consumption patterns. While consumers may not all be 'thinking like lawyers' the population at large is becoming more savvy, more insightful and increasingly evaluative in their consumption patterns. We are growing up to be smart consumers.
Mobile communications, transparency tyranny, the global financial crisis, augmented reality, peer-to-peer sharing, supply chain awareness, our digitised selves, global distribution systems, and green values have all created a perfect storm where customers are increasingly thinking for themselves, and doing it by themselves. From collaborative car sharing schemes, to farm to table trends, to freecycling, and the dematerialization of the sense of ownership, we are seeing a paradigm shift in the way we relate to 'things'.
The old school second hand sales person who could wave a price sticker in your face and tell you that you were up for the deal of a life time is no longer in a position of power, because price is no longer opaque. It is easier to get a second, third, fourth or 500th opinion on your medical conditions today because of websites like patientslikeme.com, to compare prices before going in-store, and to even compare deals on the go via your mobile device. We can now scan product bar codes, and receive multiple different price options, which is totally disruptive to a retail supply chain which traditionally has relied on several tiers of middle men, distributors, whole sales deals, and geographic exclusivity. These barriers are increasingly being broken down by the internet of things, and the way smart consumers choose to make decisions.
Australian consumers are now in a state of dissarray with the latest consumer confidence numbers showing a sharp decline for the fourth successive quarter. Natural diasters, continued rise in utility costs, interest rate uncertainty, rising cost of petrol and talks of yet another global enonomic meltdown eclpsing that of the GFC are doing little to alleviate the concerns of consumers as Aussies are now more pessimistic than ever about the health of their economy.
As a result, personal savings & credit growth are now at their highest since the 1980's characterised by a cautious consumer with an increased propensity to save as they continue to shun spending and pay down debt. Post-GFC consumers are increasingly financially savvy, responsible and value orientated.
This has been all bad news for Australian retail as figures released in August showed the worst retail growth in fifty years. The 1.6% annual rise in spending is the worst result since 1961-1962, an era when
there were no credit cards and shoppers used pounds, shillings and pence. It is clear that we are entering a period of structural adjustment in retail. Out-dated retailers and practices incapable of delivering sufficient customer value will pave the way for new and surviving businesses that will be far more innovative, and offer far better consumer value.
www.macrobusiness.com.au/2011/09/the-creative-destruction-of-retail/
It is important to note however, different sub-sectors have had different reactions. Household goods have traditionally outperformed but have seen the sharpest shock since 2007. Clothing and accessories was on a declining trend for 14 years until 1997, where for a decade since, growth rate was sharp. Other retailing (includes pharmaceuticals, cosmetics) has remained strong since the GFC. Indexed real per capita retail spends showed a 0% change in May 2011.
In an increasingly uncertain economy, consumers have become more inquisitive, cynical, demanding and unpredictable in an effort to stretch their money facing increased costs of living. Shoppers are changing the way they spend their money, what they spend it on and where they make their purchases. Consumers are spending more carefully in the search for greater value, willing to try different brands, adopting more convinient shopping methods and channels, interacting with other consumers through new forms of media and seeking more engaging retail experiences.
Shoppers have become more open to changing their purchasing behaviour due to promotions, using coupons, shopping at value retailers and actively searching for deals when they go shopping.
http://au.nielsen.com/site/documents/NielsenGlobalShoppingSavingReportOctober2011.pdf
Although traditional outlets and their obvious face2face advantages will always be a mainstay, especially with older generation consumers who value the "personal" aspect of business, consumers are increasingly turning to technology for all aspects of their purchase needs.
Numerous niche communities e.g. discussion forums, blogs, feedback forms that have sprung up to cater for increasingly information-hungry and connected consumers are just one example of how technology trends have become an integral part of consumer purchasing dynamics. Readership has increased 300% in the past 4 years as consumers play a bigger personal role in the assessment of the relative value of different products and services. In a recent survey, 52% say blogs play a critical role in making a purchase and 56% use blogs with a niche focus to be their main source of information. Shoppers are increasing their use of social media to value product recommendations from friends, look to fellow internet users for opinions, to "follow" or "subscribe" to a retailer to learn about products , services, brands and special deals.
Its no surprise that consumers are also turning to online channels as opposed to traditional channels to get better value, avoid crowds and queueing and to have access to a wider range of products. Online shopping usage has increased almost 5 fold since 2004.
http://www.salmat.com.au/content/documents/news-insights/2010-consumer-trends-report.pdf
The saving economy has resulted in private labels growing steadily as consumers become more willing to trial different, cheaper products. In July 2011, Coles slashed the price of its home-brand bread to $1 a loaf following the price cut of 2 litre milk to $2, representing the strongest sign yet of the growing opportunities for home brands.
A 2010 global online survey conducted by the Neilsen Company reveals that 60% of consumers across 55 countries say they are stocking cupboards with private labels. Store brand share is typically strongest in commodity categories and those with little differentiation e.g. first aid, wrapping materials. 88% of shoppers globally said they intend to keep buying private label even after the economy improves. In Australia, private label is much more established, which account for up to one-quarter of all supermarket sales.
Generic options/ private labels now account for 25% of the value share of supermarket sales in Australia (2010). In a report released yesterday by the Australian Food and Grocery Council, the share of Australian supermarket private-labels is expected to rise to 40-50% by 2020. (2020 Industry at a Crossroads - Australian Food and Grocery Council) (State of the industry 2011).
Retailers need to be far more innovative with their customer value proposition if they are to survive the ongoing structural adjustment. Retailers could consider the click-n-brick model, think Apple's physical stores. The physical store serves the necessary customer interaction roles - pick up and testing of goods, handling exchanges and refunds. The upside is that there are fewer of these stores, they require less floor space and fewer staff. Transactions will take place mostly online.
Department stores and retailers should look towards a more efficient use of floor space by learning from ALDI, or using a combined warehousing and retailing model, like Costco or Ikea, or even mastering the online purchase space.
http://www.macrobusiness.com.au/2011/09/the-creative-destruction-of-retail/
If you're seeking to get an update on consumer trends and thought leadership marketing at your next event or conference, why not click here to enquire about Anders' speaking availability?
What do you think about the future of the smart consumer? Leave your comments and thought leadership ideas below.
WE WILL EQUIP YOU WITH THE VIDEOS AND MATERIALS YOU NEED TO SUCCESSFULLY PITCH ASN.
0 Comment