|Source: Accenture. Four business models shaping digital commerce - sharing, personalisation, replenishment and services.|
Retailers and consumer goods companies could unlock US$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 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 Alison Kennedy, MD, Accenture Strategy. “Out of the US$2.95 trillion in value the report identified, consumers have the most to gain – just over US$2 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.”
Singapore consumers look to be more advanced along reaping digital benefits compared to the rest of the world. Today, 41% of Singapore consumers, compared to the global average of 36%, would allow companies to collect their personal data via intelligent devices in return for a better experience or financial reward. Brand loyalty is at stake. Another 47%, again above the global average of 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.
Forty percent of Singapore consumers, versus the global average of 28%, would use sensor-based digital services that pre-emptively address their needs without human intervention. Another 36%, 10% more than the global average, would subscribe to brands that analyse their shopping history to select products especially for them, and then 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 Kennedy. “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 Singapore consumers:
1. Sharing economy (the next-generation rental market) – Convenience and experience over ownership, at a fraction of the price. Sixty-six percent of Singapore consumers (globally, 52%) said they would use a rental subscription for clothing, renting an item for an occasion and returning it after, instead of purchasing it outright.
2. Personalisation economy (‘surprise me’ subscriptions) – Expertly curated products tailored to the individual and automatically delivered. Sixty-four percent of consumers (globally, 48%) said they would use this subscription for clothing, where an expert personally selects items they might like based on previous purchases.
3. Replenishment economy (auto-replenishment) – Smart sensors detect when a product is running low and automatically re-orders then delivers it. Seventy-eight percent of consumers (globally, 63%) would use auto-replenishment for household goods like detergent. Further, 73% would consider it for fresh food items, which is more than the global average of 58%.
4. Services economy (‘do it for me’) – Services are outsourced so someone else who does the heavy lifting. Sixty-eight percent of consumers (globally, 50%) would use this service for their laundry – pickups, wash-and-fold services, and delivered back to their door.
There is however potential disruption for people and society which companies, policymakers, and regulators need to actively address to:
· Minimise the 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 Kennedy.
Find out more about the Accenture Painting the Digital Future of Retail and Consumer Goods Companies report
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*Accenture Strategy created a value-at-stake methodology to quantify the impact of digital transformation on the retail and consumer goods industries, and consumers, in digitally developed economies over the next decade. Consumer insights were taken from Accenture Strategy’s latest Global Consumer Pulse Research which surveyed 25,426 consumers across 33 countries during July and August 2016, including 360 Singapore consumers.
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