Traditionally, businesses have used the term “markets” to refer to economies. Hence the terms “developed market” or “emerging market” are usually associated with countries at a certain level of development. However, given the changing times and consumer paradigms, businesses may need to shift their focus to smaller “markets.” Cities, for example, are expected to grow further. A United Nations study projects that by 2050, 68% of the world’s populations will live in urban areas, with corresponding effects on infrastructure and the environment, as well as consumption behaviors.
Because of new technology and needs, consumers are already changing the way they work, live and play. Smart technology is continually transforming cities and consumers, as discussed in an EY article, “Will the next global market be a country, city or individual?” The article shares some insights from EY ASEAN and Global Emerging Markets Leader for Consumer Products and Retail Chandan Joshi on his predictions for future cities, businesses and consumers.
THE CITIES OF THE FUTURE
Technology has brought an unprecedented wave of transformation across the world, disrupting almost every aspect of life as we knew it. Even concepts as basic as money and finance, for example, are rapidly evolving with developments such as mobile cash, bitcoin and cryptocurrency, digital banking and online shopping.
Tomorrow’s cities may evolve in very different ways, and be markedly different from existing ones. While city planning has always been the purview of the government, we will see increasing public involvement in city development in the future, especially as connectivity and data-sharing increase among consumers, governments, companies and infrastructure providers. Community-based and participatory approaches to designing future cities will become increasingly popular, as ready access to data raises awareness, understanding, and involvement in urban issues among citizens. We are already seeing this with some applications that rely on crowdsourced data such as Waze, which helps manage traffic flow in the city.
We are also likely to have more areas shifting from multi-use to every-use. Currently, there are spaces where commercial and residential uses intermingle. It is very likely that future cities will have spaces where the lines will blur between work and leisure, retail and entertainment, personal and communal, which means that real estate providers will have to consider ways to make developments more multifunctional, flexible and modular to meet future needs. The rise of telecommuting and other flexible work arrangements will change the way people work, and the way spaces are utilized. The optimal use of scarce real estate space will become an increasingly important theme in the future.
Higher levels of connectivity will also mean more virtual interaction, making it increasingly easier for people to form virtual communities that disregard location. As people come together due to shared values and interests, traditional marketing geo-demographic indicators such as age, gender, location, economic bracket and others will decrease in relative relevance.
THE CONSUMERS OF THE FUTURE
While physical and virtual boundaries continue to blur, and data and technology become even more integrated into daily living, the focus on individual consumers will likely remain constant. Even if virtual communities become the norm, consumers will still expect to be served as individuals, perhaps to an even more bespoke level. The traditional sources of customer insights that companies currently rely on, such as market surveys and focus groups, may rapidly become obsolete when customers expect customized service based on their meal plans, exercise needs, social activities, medical conditions and other personal data. With the increased use of data infrastructure and analytics, future businesses may be able to identify the precise needs of consumers in real-time.
One example of such services was explored in London and Los Angeles, where participants in an EY FutureConsumer.Now program looked into the potential of vitamin-fueled, bespoke energy shots tailored to specific individuals based on their nutritional needs, and manufactured at point of sale using recipes that leverage real-time biometric data. Imagine the possibilities where you can walk into a shoe store and have footwear made-to-order on the spot quickly using 3D printing technology or similar platforms.
Additionally, we are already seeing how more and more consumers are transitioning to subscription or shared models, such as with ride-sharing, content-sharing, homesharing and similar platforms, rather than direct ownership. Consider the recent announcement by Google of its Stadia gaming service, which allows consumers to access game libraries online without needing to purchase their own gaming consoles or expensive computer setups. As more people buy into the sharing economy in the future, there may be increasing demand for such services as pay-to-wear apparel lines, pay-to-use sports gear or even furniture. This also poses an increasing challenge for companies to make the consumer experience as convenient and pleasurable as possible.
THE BUSINESSES OF THE FUTURE
While technology is disrupting all industries and sectors, it is likely that the greatest impact will be on consumer products and retail. Many consumer goods companies today are already proactively adapting to change by further individualizing their products and services to scale. However, many companies also still need to invest in their data infrastructure, analytics capabilities and supply chain flexibility.
Supply chains of the future will need to be more agile, not just in terms of managing demand and developing product innovation, but also be able to address the real-time needs of customers, as captured and interpreted by their data analytics capabilities. Some companies may need to restructure and decentralize operations to be more neighborhood-based. While this means serving a smaller number of consumers at a time, it also means increasing customer satisfaction.
Shifting from macro to micro markets may also have an impact on resource allocation and sustainability. This highlights the possible need for businesses to develop more resource-sustainable products, while at the same time leveraging sophisticated technologies like blockchain to streamline and better manage operations across their entire network.
THE FUTURE IS NOW
The greatest change for companies to undergo is not in terms of their operations, but in their mindset and cultures. They need to see the future as bringing yet-unforeseen opportunities, rather than unanticipated threats. They need to see that consumers no longer just buy products, but buy experiences. The key is to BE the change leader, rather than a victim of change. By being at the forefront of innovation, companies can take an active and significant role in shaping the world for future consumers, possibly leveraging on technology to develop new solutions or even uncover new and untapped markets that may not even exist yet.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.
Ramon D. Dizon is the Transaction Advisory Services (TAS) leader of SGV & Co. Smith Lim is a TAS senior director at SGV & Co.