Retailers and consumer goods companies could unlock $2.95 trillion in value for the industry and consumers over the next decade by accelerating digital transformation, according to a new report by Accenture Strategy. Investments in new, digitally-driven business models will give consumers greater choice around how they purchase goods and services, and enable companies to deliver profitable, differentiated experiences.
Accenture Strategy’s ‘Painting the Digital Future of Retail and Consumer Goods Companies’ report, based on analysis for the World Economic Forum, quantified the impact of digital transformation on consumer industries over the next decade. The study identified current consumer appetite for new purchasing experiences, the business models that have the highest potential to unlock new value, and how organizations and policymakers can prepare themselves.
“Globally as well as in India, technology has disrupted many facets of the customer’s life. As consumers crave for their own unique experiences, companies will have to re-visit their business models and continuously innovate. By effectively leveraging disruptive technologies, companies will be able to deliver the desired consumer experiences” said Anurag Gupta, Managing Director & Lead – Consumer Goods and Retail, Accenture Strategy, India. “To be successful in this ever-changing environment, consumer goods companies and retailers will have to build additional capabilities and partnerships to develop deeper understanding of this fast changing consumer. Leveraging advanced data sciences to mine for deeper insights is no-longer an option but a necessity”.
Consumer appetite for new purchasing experiences
Today, over half (51 percent) of Indian consumers would allow companies to collect their personal data via intelligent devices in return for a better experience or financial reward. Another 65 percent would subscribe to a service that constantly looks for the best pricing deals on their behalf, and actively recommends which company to switch to, and when.
Fifty-six percent of Indian consumers would use sensor-based digital services that pre-emptively address their needs without human intervention. Another 58 percent would subscribe to brands that analyze their shopping history to select products especially for them, and orders them automatically.
“The retail and consumer goods industries will change more in the next 10 years than they have over the past 40,” said Oliver Wright, managing director, global consumer goods lead, Accenture Strategy. “As expectations around cost, choice, convenience and experience continue to increase, consumers will challenge the industry to evolve and innovate which will drive huge growth in digital commerce.”
To reach the next frontier of digital commerce, retailers and consumer goods companies need to explore the following transformative business models which are already being welcomed by Indian consumers:
Sharing economy (the next-generation rental market) – Convenience and experience over ownership, at a fraction of the price. Seventy-seven percent of Indian consumers said they would use a rental subscription for clothing, renting an item for an occasion and returning it after, instead of purchasing it outright.
Personalization economy (‘surprise me’ subscriptions) – Expertly curated products tailored to the individual and automatically delivered. Eighty-five percent of consumers said they would use this subscription for clothing, where an expert personally selects items they might like based on previous purchases.
Replenishment economy (auto-replenishment) – Smart sensors detect when a product is running low and automatically re-orders and delivers it. Eighty-nine percent of consumers would use auto-replenishment for household goods like detergent. Another 88 percent would consider it for fresh food items.
Services economy (‘do it for me’) – Services are outsourced so someone else does the heavy lifting. Eighty-three percent of consumers would use this service for their laundry – pick-up, wash-and-fold, and delivered back to their door.
As a by-product of industry transformation, there is potential disruption for people and society which companies, policymakers and regulators need to actively address to:
Minimize impact on local communities – With an increasing number of retail stores downsizing or closing due to the rise of digital commerce, local communities need to respond by businesses and government establishing economic development strategies and partnering with communities to repurpose physical space as hubs for experiences, leisure and lifestyle activities.
Reskill the workforce – Emerging technologies will drive a range of efficiencies which will significantly change the nature of the industry’s workforce. Business leaders and policymakers must focus on accelerating reskilling people, creating partnerships with educational institutions, and influencing public policy to meet the needs of the future workforce.
Ensure sustainability – Meeting consumer demand for rapid delivery needs to be achieved in parallel to minimizing environmental impact. Shifting to electric vehicles and exploring load-sharing can help while also enhancing delivery efficiency. Furthermore, innovation in packaging design and supporting recycling infrastructure is also critical, helping to build a more circular economy.
“In a rapidly evolving environment where customers demand for better products and experience is on rise, organizations would need to be ready to unlearn and continue to innovate. Collaborating with relevant partners to offer customers increased value at a fast pace would be a key mantra for the winning them over,” said Gupta.