According to Accenture Strategy’s new report “Painting the Digital Future of Retail and Consumer Goods Companies” there is $2.95 trillion in value awaiting retailers and consumer goods companies in the next decade if they can accelerate digital transformation
How? The report highights that investments in digitally-driven business models that give consumers greater choice in purchasing goods and services while enabling companies to deliver profitable, differentiated experiences.
“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.
To reach that next digital frontier, the report identifies four key areas of industry transformation:
1. Sharing economy (the next-generation rental market): Convenience and experience over ownership, at a fraction of the price. Thirty-seven percent of U.S. 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.
2. Personalization economy (‘surprise me’ subscriptions): Expertly curated products tailored to the individual and automatically delivered. Thirty-two percent of consumers 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 and delivers it. Forty-seven percent of consumers would use auto-replenishment for household goods like detergent. Another 43 percent would consider it for fresh food items.
4. Services economy (‘do it for me’): Services are outsourced so someone else does the heavy lifting. Thirty-five percent of consumers would use this service for their laundry—pick-up, wash-and-fold, and delivered back to their door.
Topline findings include: 37 percent of U.S. consumers will allow companies to collect personal data via intelligent devices in return for a better experience or financial reward; another 37 percent will subscribe to a service that looks for the best pricing deals and actively recommends which company to switch to, and when.
More than 26 percent would use sensor-based digital services that preemptively address their needs without human intervention while 24 percent would subscribe to brands that analyze their shopping history to select products especially for them, and orders them automatically.
Donnelly provided more insights in a Q&A on the report’s findings:
brandchannel: What impact will all this digitization have on the social fabric, i.e., the ‘haves’ vs. the ‘have nots,’ who are already distanced by technological innovation?
Donnelly: Rapid technological change has just as much of an effect on society as it does on business. As a by-product of industry transformation, there is potential disruption for people and society which companies, policymakers and regulators need to actively address:
• Minimizing impact on local communities: As an increasing number of retail stores downsize or close due to the rise of digital commerce, local communities need to work hand-in-hand with businesses and government to establish economic development strategies that protect and advance local communities and populations. This includes partnering with communities to repurpose physical space as hubs for new experiences, such as for leisure and lifestyle activities.
• Retraining the workforce: The range of efficiencies being introduced by emerging technologies will significantly change the nature of the industry’s workforce. To address these challenges and capitalize on opportunities newly available through digital, business leaders and policymakers must accelerate reskilling people, create partnerships with educational institutions, and influence public policy to meet the needs of the future workforce.
• Ensuring sustainability: Consumer demand for real-time, high-speed delivery must be met in parallel to minimizing environmental impact. This includes shifting to electric vehicles and exploring load-sharing, as well as enhancing delivery efficiency. Innovation in packaging design and supporting recycling infrastructure is also critical, and can help build a more circular economy.
bc: Beyond using intelligent technologies to streamline personal choice and stimulate the buying economy, what are the best outcomes from $2.95 trillion in value that could be realized?
Donnelly: Consumers and businesses alike have a significant amount to gain through innovations in retail and e-commerce. Business impact will be reflected in the value generated by transformative business models, as well as the operating profits achieved from shifting to these new models from traditional brick-and-mortar operations. Out of the $2.95 trillion in savings identified in the report, just over $2 trillion will be consumers’ savings in cost and time.
bc: What are the ‘transformative’ retail business models that are poised for growth?
Donnelly: Our report identifies four business models with most potential to unlock growth in the retail sector, all of which revolve around anticipating consumers’ needs so that they can spend less time and energy on shopping. These include ‘auto-replenishment’ services, like Amazon Dash, and the rise of a services economy where consumers can outsource chores such as laundry.
bc: How are technological leaps and innovations affecting the goals/values of business/brands in a digitally evolving world?
Donnelly: The retail and consumer goods industries are poised to change more in the next 10 years than they have over the past 40, thanks to technology. As digital innovation accelerates and as online disruptors steal market share from traditional retailers, companies will need to fundamentally rethink their purpose to ensure future relevance.
bc: So who stands to win?
Donnelly: The organizations that will thrive in the next decade will be the ones that value and aggressively pursue innovation, embrace disruptive technologies and adopt a partnership mindset to offer customers new value.
Consumers today value choice, convenience and personalization much more than they did in the past—and the brands that thrive in the digital age will be the ones that are best able to respond to technology-driven changes in consumer demands.
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