The FINANCIAL — Global businesses that capitalize on major changes in consumer behavior can generate significant growth over the next few years, according to a new report from Accenture.
The FINANCIAL — Global businesses that capitalize on major changes in consumer behavior can generate significant growth over the next few years, according to a new report from Accenture.
The report, entitled “Energizing Global Growth: Understanding the Changing Consumer,” concludes that companies able to capitalize on these changes with speed and agility could capture a portion of the trillions of dollars in growth that businesses globally are likely to see over the next few years as the result of changing consumer behaviors. Accenture estimates that just 20 sectors most associated with these changes are set to enjoy growth of US$2.4 trillion by 2016.
“Many companies expect to outgrow their national economic environments over the next few years,” said Mark Spelman, a managing director at Accenture. “To be able to achieve their expectations, companies should look not just to new markets, but also to how consumer behavior is changing and then put in place the capabilities necessary to capitalize on those changes.”
The report is based on four individual studies: an online survey of 10,000 consumers in 10 countries across five continents; a survey of 600 business executives in those same 10 countries; an assessment of the world’s top 3,000 listed companies by market capitalization and their revenue growth compared with the industry averages over various timeframes; and a macroeconomic analysis conducted in conjunction with Oxford Economics to assess the impact of changing consumer behavior.
Among the key changes in consumer behavior the report identified:
Consumers are increasingly “connected” – often online, interacting with companies and other consumers to research and purchase products, share advice, and praise or criticize a business. Nearly three-quarters (73 percent) of the consumers surveyed said they use the Internet to research or purchase products or services more than they did three years ago. Consumers are also increasingly using social media as a tool in the purchasing process.
Consumers are increasingly “demanding” – seeking products and services customized to meet their specific needs. Approximately two-thirds of consumers surveyed said that it is important to be able to buy what they want when they want it (68 percent) and to be able to customize the product or service to be exactly what they want (63 percent).
Consumers are increasingly “conscientious” – seeking sustainable goods and services, they are focused on where and how their products are made and on doing business with companies that make a positive social and/or environmental impact. As Accenture said, half (51 percent) of consumers surveyed said they consider the environmental impact of the product or manufacturer before purchasing a product more often than they did three years ago.
Accenture also found that while nearly three-quarters (73 percent) of business executives said that consumer behavior has changed markedly in the last three years, a similar proportion (74 percent) said they do not fully understand the consumer changes that are under way – and even more (80 percent) said they believe that their companies are not taking full advantage of the opportunities these changes present.
Recommendations for Capitalizing on Consumer Behavior Changes — The report makes recommendations on how companies can achieve growth and outperform competitors by effectively addressing changing consumer behavior, taking their lead from “growth leaders” in their industries:
Invest in advanced analytics tools – and the relevant workforce skills – to assess these changes and interpret consumer data. Armed with such data, companies will be better equipped to enhance the consumer experience with more-tailored customer service. For instance, the analytics program of a leading media-rental company enables it to recommend movie and TV titles based on an individual consumer’s preferences and rental history.
Have the strategic mindset to recognize and adapt to disruptive consumer change and competitive threats. A global car-rental company replicated the business model of new players offering hourly rentals. By meeting disruption head-on, the company has been able to use its scale and scope to reduce the threat of new competition while improving customer service.
Put in place “flexible” organizational models that enable the company to be more agile and act quickly. This might entail acquisitions, divestments or partnerships to complement existing capabilities. For instance, a US-based grocer understood at an early stage consumers’ growing emphasis on healthy living and carried out numerous mergers and acquisitions to become a global leader in natural foods.
“To achieve the necessary growth that leads to success in a slow-growth world while operating in the midst of widespread changes in consumer behavior, companies must strive to be become more agile – to connect the scale advantages of the large with the tailored approach of the small, the traditional benefits of the old and the cutting edge of the new,” Spelman said. “By achieving the right balance between sets of extremes, businesses can shape consumer change to their advantage – and help trigger higher levels of consumer expenditure, which, in turn, can energize global growth.”
The report also shows that consumers in emerging markets have exhibited greater behavior change in the past few years than have consumers in developed markets. For example, consumers in emerging markets were at least twice as likely as those in mature markets to have increased their interaction with companies online over the past three years (62 percent vs. 25 percent) and to be increasingly considering the environmental and social impact of what they buy (64 percent vs. 32 percent).
At the same time, companies in emerging markets consider themselves better-prepared than those in developed markets to seize the opportunities of changing consumer behaviors. Executives in the emerging-market companies surveyed were more likely than those in developed-markets companies to say they completely understand how consumer behavior is changing (32 percent vs. 17 percent) – and also more likely to develop a response to these changes by investing more in consumer-facing activities such as advertising, marketing and retail channels (82 percent vs. 50 percent).
“Many of the opportunities generated by changing consumer behavior will replace, rather than add to, existing revenues,” Spelman said. “Proactive and agile companies look set to seize market share in slow-growth markets. Incumbent companies face a real risk of being displaced by these new competitive threats unless they focus on enhancing their understanding of consumer behavior.”
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