Many factors are reshaping consumption habits, with individuals opting for quality over quantity and diverse purchasing methods. To thrive in this evolving landscape companies must grasp the drivers of change, anticipate their impact on offerings, and redefine success for the future. Consumer spending, constituting 60% of global GDP, serves as the linchpin for economic growth. This symbiotic relationship underscores the significance of understanding and adapting to shifting consumer behaviours. In this blog, we’ll explore the shifting landscape of consumer behaviour, the driving forces behind these changes, and how businesses can adapt to thrive in this new era.
The Changing Face of Consumption
Consumer spending is the engine that drives economic growth, constituting a significant portion of global GDP. However, the previous two years of lockdowns have left an indelible mark on consumer priorities. The Future Consumer Index reveals that 54% of consumers across 27 countries have experienced shifts in their values and perspectives, opting for simpler and less consumerist lifestyles.
As consumers embrace a mindset of “buying less, buying better,” businesses must reassess their value propositions. The traditional approach of encouraging more consumption is giving way to a focus on experiences, digital products, and sustainability. Reselling, renting, and repair services are gaining traction, allowing consumers to moderate their consumption without sacrificing their lifestyles.
Five Drivers Reshaping Consumption Patterns
To navigate this evolving landscape, businesses must understand the drivers shaping new consumption patterns. These include the evolution of households, a preference for experiences over products, extended product lifecycles, digital-first products and services, and increased impact transparency.
Three key trends emerge from these drivers:
- Decline in Physical Products: Experiences, digital products, and longer product lifecycles are reducing the overall volume of physical products in consumer spending.
- Changes in Basket and Product Sizes: Frugality is becoming a status symbol, leading to a shift from bulk buying to buying “better, not more” and embracing asset-light lifestyles.
- Simplicity and Transparency in Consumer Choices: Artificial Intelligence aids consumers in making informed decisions, emphasising simplicity and transparency in purchasing choices.
Rethinking Growth and Progress
As consumption patterns shift, the metrics used to measure progress and growth must also evolve. There’s a growing call to transition from traditional financial metrics to a sustainable economy, which considers the health of people and the planet as indicators of success.
Five drivers reshaping perceptions of growth include abundance business models, immersive virtual economies, a focus on sustainability, social scoring, and the convergence of private and public services. The license to operate for companies will increasingly depend on their ability to generate positive social and environmental outcomes alongside profit and growth.
Reshaping Business Success
The evolving definition of success demands that companies adapt their strategies, business models, and operational structures. Key drivers reshaping measures of success include peer-to-peer collaboration, “true cost” pricing, the idea that wellbeing confers status, consumer co-creation, and AI-augmented leadership.
The future presents opportunities for companies to:
- Create New Value Pools: Beyond traditional revenue and margin, companies can create value by contributing to communities, supporting wellbeing, and having a positive impact.
- Meet Needs in New Ways: Technology enables companies to scale, unlock new manufacturing techniques, and shift toward service-based models that prioritise consumer expectations and peer-to-peer collaboration.
- Rethink Contribution and Impact: Success may be measured by a company’s role in the community, contributions to employee wellbeing, and addressing environmental issues.
By understanding the drivers of change and rethinking what success looks like, businesses can not only adapt but also shape their own future. The key lies in having the ability to recognise opportunities, meet consumer needs in innovative ways, and contributing to a sustainable and prosperous future. CadDo’s decision intelligence enriches and joins your financial and non-financial data, creating a flexible digital twin and transforming it into an actionable analytics-ready powerhouse. Our solution bridges the gap between data accumulation and analytics, paving the way for informed decision-making and maximising the potential of your data infrastructure. CadDo turn the challenges of understanding your consumers and growth drivers into opportunities for growth and innovation.
