Over the past decade, the consumer sector has transformed beyond recognition. Former giants of retail like Woolworths, Toys R US, BHS and Comet are no more. Nokia has gone from enjoying its most successful year in 2010 to becoming a mere footnote in mobile phone history. Industry-defining figures like Steve Jobs and Karl Lagerfeld have sadly departed, leaving huge voids and immeasurably strong legacies. Amazon has become a global technology behemoth with sales of over $250bn – coming a long way from its roots as an online book seller. Philip Morris International, known for being the world’s largest manufacturer of cigarettes, has committed to a smoke free future within ten years. Discounters like Aldi, Lidl and B&M have become mainstream… and vegan sausage rolls have made national news!
The last ten years have been trying times for our sector. But for every closure and CVA, there has been a forward-thinking business adapting to the changing landscape in an exciting and innovative way. So, at the end of one decade – and on the cusp of the next – here are MBS’s top ten predictions for the future:
1) Data: Machine learning, AI and enterprise data systems are currently still in their infancy in our sector – and data is very often a siloed tool, the sole preserve of the marketing department. This will not be the case for long. In the next ten years, as data scientists and engineers become more established as business leaders, we can expect to see data as the cornerstone of every company’s operations. The reach and importance of data-focused roles will continue to increase – and we predict that we will see the first CEOs from a data background within a decade.
2) Diversity: In 2019, the consumer-facing sector still fails to represent its customer base in its leadership teams. Female, ethnically diverse, LGBTQ+, disabled and young leaders are all conspicuous by their absence – and it is for this reason that diversity is so high on our agenda at MBS. In the coming years, we predict (and sincerely hope) that diversity continues to dominate conversations and remains high on the list of priorities for businesses in our sector. Some of this change will be driven internally by committed and forward-thinking non-executive boards. Other elements will be pushed by activist investors who understand the value of diversity in delivering shareholder value. Additionally, and importantly, we expect to see increased consumer scrutiny around the makeup of leadership teams. When it comes to choosing who to give their business to, we predict that the consumer will demand internal diversity – and won’t be quick to forgive companies who don’t swiftly evolve their leadership balance. On all aspects of diversity, our sectors can and will perform better.
3) Rethinking consumerism – sustainability: The last two to three years have seen sustainability become a significant factor in generating brand loyalty. Global blue-chip companies are making bold pledges: airlines are committing to carbon neutrality; FMCG brands are promising to switch out plastic in their packaging and grocers are committing to reducing greenhouse gas emissions. We predict that the next ten years will continue in this vein, and we will see brands fundamentally rethinking their value proposition to meet consumer demand on environmental impact – in much the same way Unilever started many years ago under Paul Polman’s leadership with their Sustainable Living Plan. Driven by a young, environmentally-conscious consumer demographic, brands and businesses across the sector will continue to turn their attention to promoting green messages and embedding them into their business strategies. Plant-based alternatives – such as Beyond Meat, Rude Health and Oatly – will further disrupt the market, forcing manufacturers and retailers to reconsider their offering and marketing strategies. M&S are making great strides in this area already, with their vegan Plant Kitchen range as well as vertical farming stands being rolled out in their bigger stores. In fashion, brands will focus on the ‘circular economy’ by promoting re-sale and recycling. H&M and John Lewis have already launched clothes recycling schemes, rental fashion is on the rise with the likes of The HURR Collective and Burberry’s recent collaboration with the second-hand luxury site TheRealReal has set the tone for the rest of the luxury sector. Consuming less, but better, may once again become the new norm.
4) Ethics: As well as sustainability, broad ethical choices will become increasingly important to the consumer. Visibility on data usage, animal welfare, treatment of workers and food wastage will become progressively more visible to customers, who will use this as a basis for purchasing decisions. Additionally, as organisations embrace AI and data-led technology, companies will be faced with unprecedented ethical challenges – not least the prospect of widespread redundancies as a result of automation. We expect that non-executive boards will play an increasingly important role in governing the ethics of a business – and even predict the creation of ‘chief ethicist’ roles to guide companies through ethical minefields and decision making.
5) International: For too long now, businesses in our sector have considered the world as one territory, with strategies and propositions only nuanced at a local level. Looking forward, we expect to see organisations creating standalone national entities to ensure they can be competitive in local markets. If global organisations can find a way to protect their IP, yet have the humility to create multiple, independent businesses – all with autonomous decision-making rights and a truly independent local board – then they can be more successful in international markets. There is no better example here than Yum! in China (a standalone listed business from the US company). Yum! China now has more than 8,480 stores and 450,000 employees – making it one of the biggest hospitality companies in the world. Countries like China, India, and emerging markets throughout LATAM, Asia and Africa, have some similarities and common traits, but on balance, probably have more that divides than unites them. Companies who understand this and structure their business accordingly are the ones that will come out on top.
6) Supply chain and logistics: The supply chain function – often unloved today – will become the key point of competitive differentiation in our sector. Whilst historically the brightest and best brains in the industry have been deployed to tackle marketing, strategy or finance challenges, we are already seeing a new wave of intellectual horsepower being deployed in traditional ‘trucks and sheds’ roles. We predict that investment in supply chain infrastructure will continue to be as important as front-end infrastructure in the next decade.
7) Services: Following the trend set in the 2010s, high streets will become more and more about services and hospitality: vets, wellness centres, hairdressers, yoga studios, co-working spaces and gyms will all become part of mainstream retail. We expect that the quality of services provided by retailers will become the key non-price differentiator going forward.
8) Specialty: The days of generalist brands and retailers are coming to an end. Increasingly, customers want to know exactly what a brand stands for – so they can buy into it (or not) wholeheartedly. This thinking will continue into the next decade. For brands, a focus on ‘authenticity’ will prevail; words like provenance, craftmanship, hand-made and artisanal will no longer be the preserve of high-end fashion exclusively. In retail, customers will expect to be served by subject matter experts who have significant domain expertise – if not, why bother when you can access so much information online? Stores will continue to evolve to include specialist features, such as Adidas’ Oxford Street flagship. The fully-digitised store has integrated cutting-edge technology to its in-store offering to provide a truly specialist experience. The store offers augmented reality, interactive mirrors, a ‘running lab’ and instant purchasing options through an app. This, we predict, will become the future of our high streets: fewer stores, with more value added to each one.
9) Experiences: Experiences will continue to trump physical product. Be prepared for a new wave of experience-led hospitality businesses to push boundaries, and remember: if it’s Instagramable, it will sell.
10) Digital disrupters: In the past decade, businesses like Deliveroo, ASOS and Uber have transformed the way we live our lives. This meteoric rise of pureplay digital businesses will continue unabated, driven by consumers who value personalisation, efficiency and convenience. The grocery industry will be disrupted by meal solutions companies like Gousto; secondhand cars will be bought and sold by online by brokers such as Cazoo; clothes will be rented or exchanged through platforms like Depop and Vestiaire Collective. We predict some bold M&A as traditional consumer companies try to secure their future by acquiring their digital competitors – but, post acquisition, will they give them enough space to continue to grow, develop and innovate within a more corporate ownership infrastructure?
Who knows whether or not these predictions will come true but for those of you still reading the MBS News at the end of the next decade, there is a prize for anyone who sends me a critique… on whatever system succeeds the email!
2019 – Over and out
We’d like to express our thanks to the entire MBS community. In particular to you – our readership – for your continued engagement and support during 2019. We hope that the MBS News, The Weatherman and our weekly columns have served as useful tools in keeping you updated and informed on developments and issues in the industry. Thank you to those who continue to send us news bites for the dailies and a special thanks to those who were willing to be interviewed for columns. Of course, any feedback is always hugely appreciated.
At MBS, we enjoyed another record year in 2019. We made placements in over 25 countries (from Austria to Australia!) and our team has grown to over 30, drawn from every corner of the globe. We are especially delighted to have been able to promote our own ‘home-grown’ talent into leadership roles within MBS, with Huw Llewelyn-Waters, Sam Seigler and Thirza Danielson becoming Directors of our Consumer Goods, Travel Leisure & Hospitality and Retail practices respectively.
We are hugely proud of all of our candidate placements in 2019 – and can’t wait to see the impact our candidates will have addressing some of the most critical challenges of key brands and companies within our sectors in the coming decade. In particular, we hope that our pro-bono work advising some of the organisations leading change for the good of our sector – The IGD, BRC, WiH2020 and Pennies to name but a few – enable them to continue to excel at their industry-changing work.
Lastly, from all of us at MBS, we wish you all the very best for the festive season. Merry Christmas, and a Happy New Year! Looking forward to 2020 and the decade ahead!
Moira.benigson@thembsgroup.co.uk | Elliott.goldstein@thembsgroup.co.uk | @TheMBSGroup
This is the final Weekend Edition of 2019. The next column will be on Saturday 4 January.
The final MBS News will be on Monday 23 December, with a Weatherman Christmas Special on Christmas Eve.