The future of consumerism will drive the new retail scenarios. We are seeing a significant shift happening to consumerism, and your bottom line may already be feeling it. How will you generate new demand if consumers don’t want to be sold anything? Seminal events have accelerated digital transformation by at least 5 years, shaking the foundations of value creation for retailers. More than a moonshot, retailers must embark on an intergalactic mission to find new ways to create value.
Put it however you like: in the soup, up against it, up the creek, with your back against the wall, you are out of time. And at risk of losing your customers unless undertaking a mission to new, sustainable, composable retail business models. If 2020 has taught us anything, its that our organizations must be composable, anticipating and changing with society. During the global pandemic retailers that had been steadily investing in and progressing through digital transformation could more quickly adapt. Your customers are not stationary, and the next crisis is around the corner.
But to anticipate, we must first build understanding.
First Consumerism Variable – Sense of Self (I AM)
In 1987 artist Barbara Kruger created a famous work of art called “I Shop Therefore I Am”. In it, she implied that the public was no longer defined by what it thinks, but rather by what was owned.
How can we understand today’s consumer and their Sense of Self? Let’s investigate a few aspects:
- How concerned are they about the extent of climate change? (sustainability, carbon footprint) Retailers can proactively address these concerns, the co-op REI announced that it has completed its commitment to become carbon neutral in its operations in 2020 — a goal that was set in 2006
- Where do they find inspiration? (social media, influencers)
- How aware are they of social issues? (diversity, ethics and inclusion)
- How do they imagine or reimagine their lifestyles (current and future ambition)
Second Consumerism Variable – Safety and Security
McKinsey recently reported that, across all countries, survey respondents, when deciding where to shop, look for retailers with visible safety measures including enhanced cleaning and physical barriers. In addition, they buy more from companies and brands that have healthy and hygienic packaging and demonstrate care and concern for employees.
How can we understand today’s consumer and their Safety & Security? By exploring these areas:
- What is their perception of stability (economic, political, physical)
- What is the status of health and healthcare (are we still in a pandemic, is healthcare available)
- Are they impacted by climate change from events like the terrible wildfires in Australia and the western US
- Do they trust in institutions (public or private)
Third Consumerism Variable – Financial Security
We’re buying less because the actual act of purchasing is no longer feeding our sense of self. One example is consumer debt, once seen as the way to reach self-actualization through the accumulation of things, is losing its allure. The amount of new revolving credit extended to individuals through credit cards went down 31% between February and March, the most extreme drop since 1989. According to Visa, credit card spending toppled in all categories except food and drugstores, while savings rates grew from 8% in February to 13% in March — the highest since 1981. No one knows how long COVID-19 measures will be in place (or if they will be reimplemented) and very few people feel secure in their economic futures.
How can we understand today’s consumer and the impact of Financial Status on self?
- First, what is their perception of economic status for example, are they already living above their means?
- Do they possess spending power from income, savings, debt, or a good credit score?
- Have they already accumulated assets such as homes, cars, stocks?
- Are they employed, and do they feel secure in their employment status?
But what happens when consumers stop generating so much demand? The pandemic has struck so deep, for so long, that many people have made shifts in behaviors that may be long term or even permanent. Gartner clients can leverage our most recent research, The New Retail Scenarios: Digital Acceleration and Consumer Behavior Change the Mission that explores 3 aspects of well being that will drive the future of consumerism. It then extends into 4 new retail scenarios based on the impact of consumerism and retailers use of digital versus physical services and execution.