Retailers and consumer goods companies could unlock £2.2 trillion globally 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 organisations and policymakers can prepare themselves.
“The next decade will be a golden age for consumers, with technological innovation creating a variety of shopping experiences that will give consumers the simplicity, convenience or excitement they crave,” said Chris Donnelly, senior managing director, global retail lead, Accenture Strategy. “Out of the £2.2 trillion in value the report identified, consumers have the most to gain – just over £1.5 trillion – through cost and time savings. The success of retailers and consumer goods companies to unlock value will be dependent on their ability to gain a deep understanding of consumers, embrace disruptive technologies and adopt innovative business models.”
Consumer appetite for new purchasing experiences
Today, 39% of UK consumers would allow companies to collect their personal data via intelligent devices in return for a better experience or financial reward. Another 37% 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.
Nearly a quarter (24%) of UK consumers would use sensor-based digital services that pre-emptively address their needs without human intervention. Another 21% would subscribe to brands that analyse 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 UK consumers:
- Sharing economy (the next-generation rental market) – Convenience and experience over ownership, at a fraction of the price. Thirty-six percent of UK 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.
- Personalisation economy (‘surprise me’ subscriptions) – Expertly curated products tailored to the individual and automatically delivered. Twenty-nine 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. Fifty-two percent of consumers would use auto-replenishment for household goods like detergent. Another 46% would consider it for fresh food items.
- Services economy (‘do it for me’) – Services are outsourced so someone else does the heavy lifting. Thirty-seven 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:
- Minimise 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 minimising 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.
“To thrive in the next decade, organisations must aggressively pursue innovation and be willing to disrupt themselves. The winners will be those organisations that prioritise adopting a partnership mindset to offer customers new value, innovatively meet consumer demand for new services, and implement advanced data sciences to derive deeper customer insight to enable better decision-making,” said Donnelly.