The past 15 years have seen a considerable shakeup of the consumer industry as old players gave way to new ways of engaging consumers and doing business. The coming 15 years are expected to see a continuation of the trend as new technologies and ways of connecting challenge incumbent businesses. In a bid to explore the trends and their impact on the consumer industry, McKinsey & Company drew up a list of the most important trends and analysed their impact vs. the predictability of their effect.
15 years is a long time as technological innovation speeds turnover. In 2000 Kmart was the third-largest US retailer, with $36 billion in sales; Facebook didn’t yet exist; Anheuser-Busch was the world’s largest brewer; and Alibaba had only just formed. Today, Kmart has been halved in size while the new giant within the sector, Amazon grew its turnover from $2.8 billion to $89 billion; Facebook is a multi-billion dollar company with 1.5 billion users; Anheuser-Busch has been bought out by its competition; and Alibaba filed the largest IPO ever, valued at $25 billion.
The next 15 years are also expected to see changes of the guard as new technologies and innovation, as well as demographic shifts, rebalance the playing field as well as shake up the players. In a recent article from McKinsey & Company, titled ‘The consumer sector in 2030: Trends and questions to consider’, the consulting firm explores the demographic, political, behavioural, structural and technological changes on the horizon as well as the expected resultant trends for those factors.
Demographic wise, the middle class will increase significantly, almost tripling by 2030 (as emerging-market growth more than offsets stagnation in developed markets). The level of women participation is projected to increase, while 65 million more people per year will be living in cities. The rich, leveraging their wealth, will become still ever richer.
Geopolitical dynamics too are expected to change, with economic power shifts as the Asian economies catch up to that of the developed world, while globalisation will remain in power. Rising cost of labour and commodities are projected, as well as climate change effects. For consumers, a range of behavioural changes are expected, including shifts in discretionary spending, demand in personalisation, as well as a further expanded sharing economy. Technology is also expected to play a significant role in the coming decade, with mobile penetration hitting 75% by 2030, while trends in 3D printing, robotics, automated cars, and big data are set to continue.
Trends impacting consumer industry
Identifying the importance of these trends will be essential to making the decisions that will shape whether a business flourishes or perishes in the mid-term. McKinsey’s research, based on a number of factors, explores how the trends will likely come to affect consumer companies. The firm notes that individual companies within different markets will likely be affected differently and contextualisation remains key.
High impact hard to predict technological developments include 3D printing, advanced robotics and virtual reality, as well as the internet of things. Technologies such as analytics for marketing, mobile proliferation and social media consumption are more likely high impact events. Consumer demographic changes that are high impact and relatively easy to predict include the middle-class boom, an aging population, urbanisation, the rich getting richer and women in the work place. Low impact easy to predict changes include millennials taking over and the shrinking household size.
A behavioural change likely to have high impact and is easily predicted is the continued focus on convenience. Lower predictability, but high impact changes, include rising commodity and labour costs, the sharing economy, demand for personalisation and shifts in discretionary spending. Climate change, economic interconnectedness and economic power shifts are unlikely to majorly affect the consumer industry and also remain hard to predict.