Consumers are more unpredictable than ever as millennials become the critical demographic.
The deceptively simple question – what do customers want? – has many answers. Christophe Zinke, Leader of KPMG’s Global Strategy Group in China, says: “In Shanghai, what customers want is to have food delivered to their door within 30 minutes – and if it’s late they won’t accept delivery and you won’t get paid because they only release the money on WeChat when their order has arrived.”
In Nigeria, what customers want is an app that allows them to participate in Lagos’s famous Balogun market, so they can buy stuff, haggle and chat with people without facing the rigours of travel or heat.
In Brazil, consumers are intrigued by hairceuticals – haircare products that claim to reduce hair loss by blending natural and medicinal ingredients – with Mintel estimating that the clinical shampoo market expanded by 37 percent between 2010 and 2015, while the country’s economy was struggling.
In India, more than in any other major consumer market, what most consumers want is to order something online – and pay cash on delivery. Data from market research firm Nielsen found that, at the end of 2015, 83 percent of online shoppers in that country had paid for their purchases in cash.
What almost of the world’s consumer markets have in common is that they move faster than they used to. Alex Baldock, CEO of British retail group Shop Direct, which owns very.co.uk and Littlewoods, goes as far as to say: “You have three seconds to seize the customer’s attention. It’s called thumb-stopping. The three second audition.”
This phenomenon is often attributed to Millennials but their growing influence is only one – albeit the most dramatic – of the social forces changing the consumer goods industry. At the same time, the world is experiencing a rapid growth in the middle class (especially in China, India and Africa), an ageing population, urbanisation, more women in the workplace and smaller households. All of these factors are playing out in different ways in different geographic markets and in different sectors.
The 2017 Top Of Mind survey finds that executives recognise that tomorrow is likely to be radically different to today. Among the 459 companies that expected market disruption to increase in the next 2 years, 51 percent identified changing consumer behaviour as the most disruptive trend. The changes in behaviour that companies expected to have the most impact were declining customer loyalty (37 percent), increasing preference to shop online (33 percent, although this factor was of much greater concern in the Middle East), the growing expectation for immediate service and personalisation of the customer experience (both identified by 30 percent of companies).
It’s clear from these findings that manufacturers and retailers know that change is coming – at a scale and speed unprecedented in the history of the consumer goods industry. It’s also clear that many of them recognise what needs to be done: 34 percent aim to attract new customers by creating more personalised customer experiences, 31 percent plan to increase advertising online and on mobiles and 29 percent plan to personalise their marketing communications.
Tactics for customer growth
The other tactics being deployed to win customers vary from an increased focus on social media (28 percent), creating experiences that would resonate with Millennials and Generation Z consumers (27 percent), adding more authentic brands to the product mix (25 percent of those surveyed, but a more pressing priority for companies in the food and drink sector) and investing more heavily in mobile channels and apps (24 percent).
These percentages suggest that many manufacturers and retailers are facing the future – and trying to shape it – rather than denying it, but is the industry doing enough? Willy Kruh, Global Chair of Consumer & Retail at KPMG International, wonders if boardrooms understand the urgency – or the scale – of the demographic changes that are already remaking the industry.
“Millennials have turned the world upside down. Apple, craft beer, Airbnb, Uber have all been driven by them. Their behaviours, although not homogenous geographically, have certain common threads; being digital native, not going into bricks and mortar, driving online sales, putting a premium on experience and wanting things delivered and done – that’s why they’re known as the Do It For Me generation. Let’s take Airbnb as an example – it started 5 years ago, just two guys who were looking for a decent place to stay, and now it’s got twice the market cap of Hilton Hotels. There are hundreds of these examples.”
Read more on page 21 of the 2017 Top of Mind Survey report (PDF 1.3MB).