With more companies forming direct relationships with consumers, retail needs to redefine its purpose and work out how to create value.
Digital has created new ways for startup companies to sell consumer goods direct to the end user. From razorblades to underwear, they’re bypassing retailers and winning market share from traditional consumer products (CP) companies.
Online retail as a percentage of total retail sales is growing rapidly across all countries. The impact has been highly disruptive, but is this just the start of a far more radical shift?
What if digital assets, rather than physical products, became the norm? Consumers could then use that digital source code and home manufacturing technologies, like 3D printing, to make the end-product themselves.
You could manufacture your own toothbrush, designed for the unique shape of your mouth. Digital sensors would gather and share your live dental hygiene data with designers at the CP company, who would use it to make your next toothbrush more effective. You’d ”manufacture” a fresh one each day, in your bathroom.
Rather than buying a product (a toothbrush) you’d subscribe to a solution (personalized, optimal dental health).
Our FutureConsumer.Now program is exploring the ways consumers could use this kind of technology – and hundreds of other drivers – to reshape their lives. We want to understand how some of the fundamental assumptions that have defined consumer-facing industries for decades could change, and what that means for companies now. Will digital turn consumer products companies into consumer solutions companies? And where would that leave retailers?
As part of the program, we’ve been hosting hackathons around the world and using them to create and model possible futures. In some of these future worlds, we’ve explored how consumers might work directly with manufacturers and make production more local – for example, with vertical urban farming – or become the manufacturer themselves.
At the London hackathon, one of our teams developed a world in which basic staple foods could be delivered for additive printing, thereby meeting the consumer’s in-the-moment nutritional needs, while hydroponic technologies make it easier to grow fruit and vegetables at home.
One of the hypotheses our teams worked with is that shopping and buying could diverge, becoming very different activities.
Buying would be something our AI would largely deal with on our behalf – driven by algorithms, machine learning and data: a domain for cold logic.
Shopping would be a conscious, immersive and enjoyable experience, and something we’d happily invest our time and emotions in. ”Retailtainment” would emerge as a channel of engagement. To meet us in this space, brands would have to reflect our values and make themselves feel like an indispensable part of our identity.
Many of us already choose to own less, with rental subscriptions the norm in many areas of life. We pay to access music and cars, and in the future will do the same with clothes and gadgets. It’s not so much the objects we own that will confer status, but the experiences we have. In our Berlin hack, we created a world where consumers choose objects and subscribe to services that let them feel at home wherever they are.
The quality of the end-to-end relationship between retailer and consumer will become more important, and much deeper. The actual exchange of goods will be only a part of the journey. At our London hackathon, the value of service in the buying process was paramount, so brands incentivized brand ambassadors – regular consumers, not just celebrities – to act as service providers.
Consumer needs are changing, and the retail world that provides for them must change as well. Savvy retailers will use technology and data to become part of the consumers’ lives for the long haul, offering more than just products – offering solutions.