RCA ‘On Tour’ blog

Changing consumer. Changing expectations

This latest blog explores changing consumer needs and expectations resulting from major demographic shifts in our society. The blog is presented in two parts, the first dealing with the demographic changes themselves and the technologies which are emerging to cater for these customers.

The second blog takes a closer look at how these trends are driving innovation in the retail, food and drink sectors.

Let’s meet our new consumers

It will come as no surprise that the pace of innovation in the shopping and leisure spheres has not abated. If anything, it is accelerating. Once emergent technologies are moving into the mainstream. We all now know about algorithms and are beginning to see how they to control the world we live in. An ad pops up. It’s for something you had been thinking about, it’s not chance – its’ just a smart, connected world that ensures that every message hits its target.

If this is the world our customers live in, what can we learn from it to improve the experience for our customers? And more importantly who are our customers of tomorrow? Let’s see what we can find out about them. To begin, we must accept that the Baby Boomers (born 1946-1964) and Generation X (born 1965 – 1980) who have dominated the world for so long are losing their grip – in more ways than one.

The new emphasis is upon The Millennials (born 1980 – 1995) and their younger brothers and sisters Generation Z (born 1995 – 2012). Taking Millennials first, why are these young people so important? Firstly because, by 2017, Millennials will have more buying power than any other generation. Secondly because by 2025 they will represent 75% of the workforce. These young people, currently aged between 21 and 36, are changing from those who are starting out to those who call the shots. And, as many of you will know, their behaviour and values are very different to previous generations.

So, what do we know about Millennials?

  • Many rent homes or live with their parents
  • They are used to sharing and, for them, ownership is an increasingly outmoded concept
  • Community is important
  • Ethics influence 70% of their decisions
  • They are true digital natives
  • And, importantly for our community, they will choose an experience over ownership of something in 78% of instances.

Generation Z, the younger ones, have a 4 second attention span.

  • 60% of them want to change the world
  • Their parents tend to think of them as ‘ultra-worthy’
  • They expect instant gratification
  • They are looking for real people and real messages in advertising

So if these are our customers – where do they spend their ethic-hunting, world-improving, experience-hungry free time?

Next generation destinations 

The High Street and shopping centres of old are unlikely to be their chosen stomping ground. That’s where older people, and M&S, hang out. Eating out is huge for these young people, often because they don’t have their own nest to build in. A whole new generation of destinations is emerging to cater for them, eating, chatting, meeting up with live music, exhibitions, workshops, you name it.

Time Out Market, Lisbon

 

Still mostly confined to the larger cites these developments are starting to appear across Europe: in London, Berlin, Milan, Exeter, Cardiff and elsewhere.

Mercato Metropolinato, London

 

Dinerama, London

 

Dinerama some of us visited last year as part of one of our ‘On Tour’ safaris.

Expect to see many more of these in the coming months – hip, ethical, fast to build and easy to finance. This is all part of the maturing face of street food.

Technology changes everything

What else defines the strange and unfamiliar world these young people will live in? Forget talk of bricks, clicks, multi-channel, omni-channel. We’re past all of that. We find the object we want, in the colour we love, with details that nobody else has, and we’ll pit the high street against the web in our search for the best deal. Brand loyalty is a rare commodity – unless you truly add value.

Whilst shopping has become something many of us now mostly do from home, in bed even, the store owners are introducing swathes of smart technology to help drive footfall back into their shops. Let’s take a look at some of these increasingly common technologies:

Firstly there’s The Internet of Things. This is the technology which means that everything speaks to everything. Your fridge knows when it’s out of milk and orders it for you.

It‘s why M&S have introduced an e-boutique in Amsterdam which will model you, digitally, on-screen in the clothes you have hung on its virtual rail.

M&S e-boutique, Amsterdam

 

And Barney’s new store in New York sends promotions to you directly in store via i-beacons using your smartphone – based upon the objects you have been viewing at home – online.

 

Barney’s, New York

 It’s also why Singapore is the first city in the world to run a fleet of driverless taxi. 

Driverless taxi, Singapore

 Artificial Intelligence is also coming out of the shadows. Uniqlo in Australia has introduced a bespoke T-shirt making service which uses behavioural tracking and observation to design a shirt for you that matches your mood – right now.

Uniqlo, Sydney

 

Google is developing an app which photographs your food, identifies the ingredients and portion size and comes up with the calorie count. 

Prototype 2 app from Google

 

Augmented reality is also moving into the mainstream. Some of you may recall earlier smart mirrors which could tell you if ‘your bum looks big in this’. This has now moved to new levels with Neiman Marcus introducing the Memory Mirror that recognises the customer, what they were trying on last time, makes suggestions for new outfits and can show it on you in different colours.

Neiman Marcus smart mirror

 

Smart payments are becoming the industry standard with contactless cards, Apple Pay and others. This is a technology that we are adopting with enormous enthusiasm and to the expense of those, like Sainsbury’s, who missed the boat. Amazingly, from the first of January, every taxi in London will be required to provide cashless payment. 

Waitrose cashless store, West London

 

I was struck during the RCA’s excellent visit to Twickenham Stadium earlier this year of the benefits to both customer and operator of contactless payment. In short, the average chip and pin payment takes 20 seconds, cash 15 seconds and contactless 5 seconds. We all win.

 

Mobile merchandise sales, RFU Twickenham

 

Drones flying all around us. Once the stuff of Science fiction – now moving from military to mainstream we are promised drone deliveries arriving in 2017. But how will they deliver to flats?

 

Domino’s Pizza, New Zealand

 

 Robots, also the stuff of Science Fiction, are now helping with inquiries at airports, railways stations and hotels. To help with our resistance to speaking to robots (which clearly makes us look completely mad) many of them are being dressed up in unusual costumes – like this dinosaur running reception in this hotel in Tokyo.

Virtual Reality is appearing in shops and shopping centres all over the world. This now mature and reliable technology is helping to sell everything from holidays to football boots as the VR content brings a more wonderful world to life in the comfort of our local mall or living room.

Mercedes Benz Virtual Showroom, Tokyo

 

3D Printing has also come of age, you can have bespoke spectacles and sunglasses printed to fit your head, or ear phones to match your unique and delicate ear. 3d Printing has also moved into high end cuisine where the art of the object is becoming as critical as the flavour.

3d Printing Cocktail Bar

 

Don’t get left behind

We need to realise how quickly these technologies are migrating from the surreal to the everyday. The concept of a driverless car was until recently considered dangerous and certainly foolish. But for the new customers who are the focus of this blog the idea of car ownership is becoming more surreal than that of a driverless car or a minicab ordered on their smartphone, and shared along the way to save a few pounds. Very soon it is we who will appear out of date.

Part 2 of this blog follows shortly.