9 minute read 4 Apr 2021
Runner crossing finishing line on track

Future Consumer Index: how CEOs can prepare organizations for the future consumer

Authors
Ahmed Reda

EY MENA Consumer and Technology, Media & Entertainment and Telecommunications (TMT) Sector Leader

Leader in the Consumer and TMT industry, focused on advising clients in the digital age. Father of three angels. Passionate about supporting future leaders. Enjoys travel.

Ravi Kapoor

EY MENA Consumer Products & Retail Consulting Leader

Problem solver. Focus on the human aspect of change to enable empathetic transformation programs in organizations. Team creator. Model railroader. Spiritualist.

9 minute read 4 Apr 2021

Our latest survey finds that people want a different future, even after the COVID-19 vaccines roll out. Here are five ways by which leaders can meet consumers where they are headed.

In brief
  • People are becoming more worried, not less, about the impact of COVID-19.
  • Essentially, consumers want to change their lives once the pandemic is over.
  • Companies now need to be proactive and accelerate their transformation.

Consumer products companies have adapted well to the COVID-19 pandemic. The consumption shift to the home, together with the increased importance of health and hygiene, has boosted growth and profits for many. These have changed much faster than anyone thought possible. After a turbulent year, it could be tempting to take your foot off the pedal, at least for a while. But that would be a mistake.

The consumer you’ve adapted to serve today is not the consumer that will make you profitable tomorrow. As people around the world emerge from the pandemic, they plan to fundamentally change how they spend money and live their lives. Our sixth EY Future Consumer Index finds they are more worried than four months ago about their health, their families and their futures. Many expect life to get harder, not easier. People’s concerns and what they value will continue to evolve, including:

Affordability is becoming critical

58%

of consumers saying price will drive their choices three years from now.

Can you use your recent performance to accelerate the transformation of your business, to get ahead of the emerging needs identified in our research? It won’t be easy. It requires going beyond making your current portfolio more affordable, demonstrating the benefits of your products, innovating incrementally, and experimenting with direct to consumer channels. You must be bolder about meeting the needs and expectations of the changing consumer.

The COVID-19 pandemic is continuing to have a transforming impact on the lives of consumers. While the boom in at-home consumption is unlikely to last, other consumer changes will only accelerate.

Purpose matters more than ever

70%

of consumers believe brands must positively change the world.

Consumers are more concerned, not less

So, what’s changed since our EY Future Consumer Index last October? Despite the stabilization and recent decline in the impact of COVID-19, as vaccines are increasingly released and administered, people are more worried than ever.

Four months further into the pandemic, the percentage of people who think they will live in fear of the COVID-19 pandemic for at least another year has risen from 19% to 27% and 56% of those surveyed say they are more likely to shop with retailers that require employees to take the vaccine.

In October 2020, around 72% believed that the pandemic had changed their life significantly, while only 68% people believe so now. And 62% of those who say that the COVID-19 pandemic has changed their life believe that it will remain changed even after the pandemic has been brought under control.

Consumers embrace data sharing

77%

of consumers would share personal data for healthier product recommendations.

People are increasingly concerned about the health of their family, access to necessities, and personal finances. This differs across the MENA region.

Consumer concern about the impact of the COVID-19 pandemic on their lives is rising in most countries (Please note that we will add the relevant month vs the waves)

Consumers will continue to make deep and permanent changes to their lives. Some of these shifts have been forced on them, but many are the result of choices to live differently. Some 65% of consumers in MENA believe that post-vaccine life will be better than before the pandemic, and 51% say that the COVID-19 pandemic accelerated changes they had always wanted to make. This is reflected in their attitudes around online shopping, product affordability, personal health, and sustainability.

How consumer behavior will change

Beyond the pandemic, consumer spending will reflect the different ways people expect to live their lives, how they will make choices, and what really matters to them. Most consumers will prioritize affordability (25%) or their health (24%). Others will focus on environmental (20%) or societal purpose (19%), but a minority intend to catch up on lost time and live in the moment (12%).

The importance of future consumer priorities differs among countries

While geographic differences around affordability, health, sustainability, social impact and experience define our consumer segments, these issues concern all consumers across MENA.

  • Affordability: around 67% plan to be more aware and cautious of their spending in the longer term and 58% say price will be the most important purchase criteria for them three years from now.

  • Health: around 65% of consumers want to make healthier choices in their product purchases in the longer term; 41% say health or “what’s good for me” will be the most important purchase criteria for them three years from now.

  • Sustainability: some 57% will prioritize the environment and climate change in how they live and the products they buy; for 22%, sustainability will be their most important purchase criteria three years from now.

  • Social impact: around 63% will be more likely to buy from companies that ensure what they do has a positive impact on society; 48% will buy more from organizations that benefit society, even if their products or services are more expensive.

  • Experience: around 49% will be less inclined to get involved in experiences outside the home on account of health and safety concerns; 86% have changed the way they stay entertained.

A CEO agenda for the future consumer: the global point of view

The CEO Imperative series, which looks at the global perspective, provides critical answers and actions to help leaders reframe the future of their organizations. It identifies five steps to help you transform more quickly.

Over two-thirds of companies (68%) plan to spend more on transforming their business and operating models in the next three years1. Yet they may want to be even bolder, as only 28% say that their business model is the area, they will change most in response to current trends2. Here are some key actions for CEOs to meet consumers where they are headed:

1. Redesign your business around how people live, not what consumers buy

CEOs have long talked about putting the consumer at the center of their business. Only a few have come anywhere near achieving this. One reason is consumers have been reluctant to share the data required; another is companies have lacked the capabilities to make the right use of it. The pandemic has driven an explosion in the sharing and use of consumer data: for example, in MENA, around 77% of people will share data in exchange for healthier product recommendations.

Consumer products companies need to become listening organizations, using powerful analytics and artificial intelligence (AI) to manage a repository of data that provides a single version of the truth for each consumer served. A listening organization has the ability to meet the constantly changing consumer needs and can adapt products and services for segments it wants to engage.

2. Compete for shoppers wherever and whenever they are

There have never been more ways to reach shoppers, or more brands scrambling for their attention. During the pandemic, 87% of consumers have changed the way they shop. This will continue, but only 36% of companies are currently investing to accelerate the digitization of customer journeys and business processes3.

If you don’t leverage all the possible ways your business can engage with shoppers and understand how to optimize each one, you’ll struggle to win. Capitalizing on the changing ways of shopping requires tracking and connecting with people across social and digital media and within your own channel ecosystem.

3. Rebuild your supply chain around the consumer

Channel shifts, stockpiling, store closures, and border issues have wreaked havoc with the consumer goods supply chain over the last year. And 50% of companies expect the supply chain to be the part of their business that changes the most over the next 12 months4.

The supply chain of the future can act as an engine for growth and a key competitive differentiator. But it must be agile, flexible, efficient and resilient. It also needs to be digitally networked, so that visibility improves. Leaders should reimagine their supply chain operating model. There are strategic choices to make about what gets done locally, regionally and globally; how warehouses and manufacturing sites best fit into the chain; how to create real-time, end-to-end visibility and monitoring; how to rationalize SKUs; and how to reduce environmental impact and waste.

4. Change your operating model to make it “asset right”

Many consumer products CEOs have experimented with outsourcing and partnering during the pandemic, often as an agile response to supply chain disruption. This should continue and accelerate, as it’s the only way to meet changing consumer expectations with the speed and efficiency the future demands, without taking on excessive risk.

You need a clear vision of which capabilities give you differentiated value and where you want to outsource or share value creation with an ecosystem of partners. This is the “asset right” model that will give you the ideal blend of in-house, outsourced or partnered capabilities. Today, while 72% of consumer products leaders are making significant investments to develop and manage their business partnerships5, 82% have not yet clearly defined their role in future ecosystems6.

5. Look at value through a wider lens

As channels and occasions blur, companies need to look beyond siloed profit measures and at the wider impact on their business. For example, consumers have embraced home delivery, but they don’t like paying for it. It is their number one frustration with online shopping. Given the rapid growth of e-commerce since the beginning of the pandemic, the business case for re-evaluating your e-commerce model to create profitable cost to serve has never been more important. The fact that most consumers are willing to share personal data makes the e-commerce business case even stronger.

While such activities viewed in isolation may not make sense, they’re essential to your success when you look at them in the wider context. They create immense value outside their direct profits (or losses). So, look again at all your capabilities and take a “systemic approach” to profitability.

  • Methodology

    We surveyed 1003 consumers across the UAE and Saudi Arabia during the first week of February 2021 (4 February 2021). The survey questionnaire covered current behaviors, sentiment and intent.

Summary

In all industries, a crisis opens up a window for change. The COVID-19 pandemic has changed how companies work across the world, but they can’t stand still. Those that are bold now will sustain the gains they’ve made and shape a more profitable future.

About this article

Authors
Ahmed Reda

EY MENA Consumer and Technology, Media & Entertainment and Telecommunications (TMT) Sector Leader

Leader in the Consumer and TMT industry, focused on advising clients in the digital age. Father of three angels. Passionate about supporting future leaders. Enjoys travel.

Ravi Kapoor

EY MENA Consumer Products & Retail Consulting Leader

Problem solver. Focus on the human aspect of change to enable empathetic transformation programs in organizations. Team creator. Model railroader. Spiritualist.