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06/28/2017

The new forces shaping the retail industry are…

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Affluence is out. So are the days of the mass market.



A new report projects 10 years out and reveals three fundamental principles that are shaping tomorrow's consumer packaged goods and retail industries: trust, influence and personalization. In a preview of its 2017 Global Future Consumer study, A.T. Kearney predicts the death of the scale economy that focuses on catering to affluence in favor of one driven by the influence of industry stakeholders, particularly by the hyper-connectivity of the younger generations.



"The 'mass' market is over, for all intents and purposes," said Greg Portell, A.T. Kearney consumer & retail practice leader for the Americas. "Embracing trust, influence and personalization as the new commercial mantra for success will be key for all brands and retailers, global and local, in the future."



The Global Future Consumer study incorporates insights about the future from six consumer generations: the Silent Generation (1928-1945), Baby Boomers (1946-1964), Generation X (1965-1980), Millennials (1981-1997) and Generation Z (1998-2016). It notes that for the first time in history, 2027 will see six generations making up the consumer market, with dramatic upheaval expected across brands and retailers.



The largest of these six generations will be Gen Z, of whom 50 million in the U.S. alone will reach adulthood within the next 10 years. Gen Z is spearheading a wave of change that has been building for decades. The study highlights changes in the drivers of consumer behavior away from ownership, status and brand loyalty and toward trust, influence and personalization.



The findings pertinent to Western consumers — and also driven by Millennial and Gen Z values — include a major loss of trust in large corporations and brands. Consumers in North America and the European Union in particular are demanding that brands have clearly defined and transparent values. And those values should be consistently demonstrated in everything branders do and in every product or service they bring to market.



Marketing for brands is shifting significantly, too, as reflected in another of the study's findings: the rise of influence over affluence. (Influence is the ability to move markets through the amplified power of an individual voice.) The study defines two types of influencers: macro influencers, such as social media celebrities with millions of followers, and micro influencers, individuals with thousands of followers who are even stronger personal influencers within their virtual communities due to their presumably greater authenticity.



The trend toward personalization — in product offerings as well as marketing methods — has emerged from these larger macro demographic, cultural and economic trends, according to the study. Increasingly tech-savvy consumers, aware that data is the real new commercial currency, are willing to share more personal information and engage in a more intimate relationship with brands. "However, in return they expect more personalized and heightened experiences," the report stated. "The role of traditional marketing segmentation is at best limited, the imperative being to customize to the level of 'markets of one.'”