Over the past 12 years, following the global financial crisis, people have lost faith in politicians (see voters everywhere…) and bankers (see 1% interest on deposits vs. latest authorised overdraft interest rates of 40%).
Consumers have also learned to second-guess even (!) mainstream media in their endeavours to avoid fake news… Whilst the Internet provides alternative views, consumers have to weigh up what can include extreme viewpoints in order to ‘average out’ the ‘truth’, at a time when there is no time…
In effect, having spent a lifetime outsourcing their thinking to these ‘pillars of society’, the erosion of trust means that consumers now have to think for themselves. They have to develop skills in critical thinking, the ability to think clearly and rationally, and understand the logical connection between ideas, all within a context of just about surviving…
Little wonder that in forcing them to become savvy, consumers now apply this critical thinking to evaluating everything that they ‘buy’. In other words, consumers have had to become savvy buyers, demanding demonstrable value for money in purchasing products, services and ideas.
Whilst they are still prepared to buy what they can afford, they will only do so if the purchase always delivers more than it says on the tin…
In terms of demand, consumers are unable to trust unemployment data when they experience reality in the form of a gig-economy, with people being ‘employed’ on a zero-hours basis, while politicians quibble about definitions of ‘employed’. In addition, being told that inflation is running at 1%, when everyday living prices are perceived to be growing faster, with little or no increases in remuneration, is creating an additional damper on purchases.
In fact, a combination of these factors has already resulted in ten years of flatline demand because a constant fear of losing jobs, and distrust of official stats like real unemployment and real inflation rates, have made consumers too scared to spend…
Meanwhile, despite increasing savviness of our consumers, who are informed better than ever via social media about what really matters, we jeopardise our relationships with our best consumers, our regular users, by obvious moves like shrinkflation, diminished quality, and portion-reduction of sugar-containing products ‘to help you limit intake’ whilst in reality simply staying below the sugar tax limits. Such moves were risky over the past decade, but in the savvy-consumer twenties, they will be unwise in the extreme…
Thanks to their access to product-comparison sites, savvy consumers are now even better placed to judge what is best for them, at what price, and the value it represents vs available alternatives. Moreover, thanks to social media, the consumer’s ability to ‘tell a friend’ is amplified. Traditionally, it was a case of: Please me, and I will tell one friend, disappoint me and ten are informed. Add social media and these effects can be multiplied tenfold or even one hundredfold, at least…
Accepting that we are entering the ‘Distrusting Twenties’, suppliers and retailers now have a choice. Either continue ‘as was’ or give consumers the real facts to enable them to make true like-with-like fact-based choices, providing offerings that are demonstrably better, just, than alternatives available in an open market.
In practice, the way forward has to be via a fundamental and realistic revisiting of consumer demand in our product categories. An objective assessment of our brands, and those of the competition, in terms of satisfying these consumer needs then has to be made. The hard choice will be the culling of all brands and SKUs that fail to meet these criteria, eliminating all ‘me-too’ offerings and product overlaps in our portfolios, or suffer dilution of focus and resource in the process.
For retailers, the exercise will result in the acknowledgement of large space redundancy, a clearer definition of what the discounters represent in terms of competition, and above all an appreciation of what Amazon can and will do in its determination to apply its combination of consumer centricity, innovation and patience in securing and retaining 50%+ of all purchases, everywhere…
In combination, we are talking about over-capacity bigtime for those not prepared to acknowledge the power of the savvy consumer in the Distrusting Twenties…
All else is detail…
