20 March 2019
Millennials Have the Future of Retail Right in the Palm of Their Hands
- Photo: Millennials: Digitally-bred and expecting online functionality in the real-world retail environment. (Shutterstock.com)
- Photo: Gaming-spawned: Bike-sharing.
- Photo: New Coke: The zombie brand king.
- Photo: The Consumer Goods Forum Global Summit: Bringing together retail chief executives and technologists.
With the post-1980-born generation soon to have the whip-hand when it comes to dominating global consumer spend, retailers need to factor in the preferences of these digital natives if they truly plan to stick around for the long term.
The most recent Global Summit of the Consumer Goods Forum took place in Singapore in the wake of a KPMG report that boldly stated: "Today's consumer and retail market is beyond disruption. As a sure sign of this, 70% of Chief Executives believe that the next two to three years will be more transformational than the last 50." Sensationally overstating the case or an apt reflection of the current realities of the retail landscape? Well, that was just one of the issues addressed by this annual mega-gathering of retail chiefs, financiers, senior governmental figures and academics from around the world.
Championing his company's take on the emerging new world order, Willy Kruh, the Global Chair of KPMG's Consumer & Retail Division, said: "As companies face continuous disruption, internally and externally, those that cannot authentically connect with their customers will get left behind.
"This rate of disruption means that most current business models will not survive, meaning that many physical stores will have to close or be reinvented, while channels relationships will change and there will be an increasing focus on social purpose – with the latter development driven by millennials, a demographic that now accounts for US$2.75 trillion in global sales every year."
Focusing more on the particular challenge represented by millennials, Kevin Lee, Managing Partner of China Youthology, a Beijing-headquartered specialist in generational trends analysis, said: "Born between 1981 and 1996, they are digital natives, having grown up on and with the internet. For the first time, their identities were formed and expressed online before they were offline. Social media use does not reflect their identities but helped constitute them.
"The values they have learned online also affect what they do offline. The bike-rental schemes we see popping up around the world, that let you just pick up a cycle and then drop it off after use? It is really drawn from gaming, a realm where players can use and then discard tools and weapons as they see fit. It is incumbent upon retailers to know, in particular, just what appeals to this demographic."
Addressing the wider issues facing retailers, Emmanuel Faber, Chief Executive of Danone, the French health-oriented food group, said: "Assumptions that have been held for 50 years or more are now being challenged by consumers, many of whom are actively looking for alternative ways to buy food. Never before has there been such a wide range of local brands, many of them produced by businesses with a clear sense of purpose. If large retailers and manufacturers are unable to match that purpose, they will continue to lose share, point by point."
Sharing just how his own business is meeting that particular challenge, James Quincey, Chief Executive of the Atlanta-based Coca-Cola Company, said: "We currently operate in 207 countries and territories and we are continually learning lessons in all of them. In particular, we have been keen to reinvent our analogue practices in line with the digital age.
"To that end, we have aggressively built a consumer-centric portfolio. Implicit in that is our obsession with understanding consumers, listening to them and learning about what beverages they want, what they want delivered in them and what they want from the packaging, while also getting a handle on their health and wellness concerns.
"For much of our history, we have been a one-product company. Now we are a total beverage company. We create, nurture and set out to keep our brands relevant. In so doing, we need to have the courage to recognise when that is not working and to kill 'zombie' products."
For David Taylor, Chairman, President and Chief Executive of Proctor & Gamble, the Ohio-headquartered multinational consumer-goods group, retail success was as much about factoring in technological changes as it was about maintaining brand equity. Expanding upon this, he said: "Technology is now dominating the way that consumers connect with retailers and manufacturers. While it may well never again be business as usual, this particular disruption brings with it real opportunities.
"Only 45% of the world's population has access to the internet right now, but that will increase to about 76% within the next 12 years. Our research also shows that shoppers who go online spend more both online and offline. Similarly, the world will be home to an additional billion people by 2030, while millennials will be reaching their peak earning years, with more than two billion of them then over the age of 50.
"Growth in retail, meanwhile, will come via data / analytics, innovative partnerships and sustainability plans. Combining our data with that of our retail partners will allow both parties to better understand the precise requirements of local markets, as well as giving us the facility to improve our production planning."
While "disruption" was the word on most speakers' lips, Ian McLeod, Chief Executive of Dairy Farm, a Hong King-based food processor and wholesaler, was a little more sanguine about the future of retail. Arguing that the sector had faced analogous challenges in the past, he said: "I first heard that retail was dying back in 1999. While physical stores have been closing of late, the largest online players have now themselves started to move into offline.
"For the incumbents to survive, though, overcoming the tendency towards complacency and denial is vital, with staying relevant to the consumer very much the key. In the three decades I've spent working in retail, I've seen us thrive thanks to rapid feedback on decision-making and implementation. What is happening now, however, is that the decision cycle has been abbreviated dramatically, a development largely driven by technology.
"We have to grow and adapt to change, while learning how to manage data and applying AI techniques. We also need to recognise just how quickly we are becoming a cashless society, with instant payment being made both online and via mobile. Significantly, 80% of Chinese retail is already cashless, with Bingo Box [a chain of unmanned convenience stores now operating in 30 cities across China] even cashierless. If you want to see the future of retail, don't look West – look East."
The Global Summit of the Consumer Goods Forum took place at Singapore's Marina Bay Sands Convention Center.
Ronald Hee, Special Correspondent, Singapore