Is the next global market a local neighborhood?

By

Chandan Joshi

EY Global Emerging Markets Leader, Consumer Industries

Strategic thinker. Global business leader. Helping create value at the intersection of the consumer and technology worlds.

4 minute read 18 Jun 2018

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Consumer-facing companies will need to rethink their approach to emerging markets if they want a share of tomorrow’s growth.

The emerging markets of the future will not be regions or even countries. By 2030 an estimated 5.1b people will live in cities, representing 60% of the population.[i]

This concentration of people in dense, urban spaces will have profound effects on the infrastructure and environment of most cities. And it will challenge the strategies and operating models of many consumer-facing companies.

There would still be a distinction between emerging markets and developed ones, but the dividing lines could be very different, more nuanced and less visible. Consumers living in global cities thousands of miles apart could have more in common with each other than they do with those who live upcountry in their own geographic region.

New cities, new consumers

As cities grow and change, the way their citizens live will change, too. As part of our global FutureConsumerNow program, we’ve been exploring the implications of accelerated urbanization and more than 150 other drivers, like advances in AI and the evolution of engineered food.

By modeling alternative “future worlds” at a series of global hack-weeks, the program is revealing how the lives of consumers could change over the next 10 years, and what that might mean for companies today.

As we do this work, it’s increasingly clear that many of today’s assumptions about emerging markets will no longer apply. Here are four insights to share at this stage of the program:

1. Virtual tribes will live in hyper-connected collaboration ​​

New technologies will make it easy for people to form “tribes” with like-minded others, regardless of their location, and to inhabit virtual spaces that feel incredibly real.

Having said that, the real-world location will still matter, and there is enormous power yet to be unleashed from hyper-connected urban communities with a high level of data sharing.

One world that we modeled in Berlin suggested some of the complex ways that consumers, governments, companies and infrastructure providers could work together, sharing data among each other and “morphing” the city, so it works better for everyone; for example, by reflowing traffic to help people and goods move around more easily.

The benefits of total data-sharing in this world were incredibly powerful. But to achieve them, the needs of the individual were often overridden by the collective needs of citizens. Would that be acceptable?

2. Supply chains will compress and become more sustainable

One of our London worlds suggested some different ways of thinking about the challenges faced by a developed city in a resource-scarce world.

Future consumers in this world wanted to make choices that were resource-sustainable across every area of their lives — and had sophisticated technologies and 100% supply chain transparency to help them achieve this goal. As a result, supply chains would become shorter and narrower; urban farming — often in vertical spaces — would become common. With this supply chain compression, consumers would also becoming more directly involved in the making process, and would drive toward more customization and higher sustainability.

This was a feature of several of the future worlds we modeled, not just in London.

3. Home will be an experience, not an address

Future consumers will increasingly access the goods or assets they need through subscription models, rather than ownership. This will apply to obvious areas — like transport — but also to new and unexpected categories. For example, why buy clothes and worry about storing or moving them when you can have whatever you need delivered to your door, wherever you are, on a pay-to-wear basis? Future consumers will be increasingly nomadic; services like this will help them to feel “at home” anywhere. In fact, home will be an experience, not a place. The challenge for consumer-facing companies is to make that experience seamless and pleasurable.

4. From multi-use spaces to every-use spaces

The dividing lines between work and residential areas are breaking down already, and in some cities were never that strong anyway. For future consumers, the lines between work and leisure, retail and entertainment, personal and communal, will blur. Real estate will need to become multifunctional, flexible and modular to adapt to evolving needs.

Questions to refocus

As location becomes less about concrete structures and more about a flexible state of mind, consumers will start to build their own “communities” around what matters to them. To win their business, companies will have to use new technologies and supply chain strategies.

  • Is your company agile enough? Future profitability could depend on your ability to serve relatively small numbers of consumers in close proximity within a neighborhood. Global scale may confer zero advantage.
  • Is your logistics strategy relevant? If more consumers are living in homes that are highly dense and increasingly vertical, last-mile delivery and routes-to-market would have to change.
  • How will you evolve your emerging market strategies? Today, most companies are focused on driving reach and penetration. But this will likely change as the ability to provide premium products and services becomes a growth driver in emerging mega-cities.
 
 

Summary

As consumers form their own communities, companies will need new technologies and supply chain strategies to win their business.

About this article

By

Chandan Joshi

EY Global Emerging Markets Leader, Consumer Industries

Strategic thinker. Global business leader. Helping create value at the intersection of the consumer and technology worlds.