Five imperatives for change every business should consider

To win over future consumers, retailers must rethink all assumptions, from whom they are competing against to whom they should collaborate with.

DESIGN Orchard, a new development on Orchard Road comprising a retail showcase, incubators and event spaces bringing over 60 local brands together, recently opened its doors.

A part of the masterplan to develop Singapore's famed shopping precinct into a vibrant lifestyle destination, this move reflects a growing appetite for local products with a Singapore story as global brands become more ubiquitous across shopping malls.

Indeed, consumer behaviours and attitudes are shifting - and so are the foundations that the retail industry has been built on.

To sustain competitive advantage, what do retailers need to do now to reshape their business and generate value from the consumer of tomorrow?

At a recent EY-led hackathon, the purpose of which was to imagine a future world for consumers in Singapore, participants agreed that consumers are increasingly aspiring to have a more fulfilling and purposeful life and that technology will be key to empowering them to achieve that.

Future consumers will be inclined to utilise technology such as artificial intelligence (AI) to automate the mundane and leverage the time that they free up towards creativity and enjoyment.

Consumers will seek to optimise "inefficient time", such as that spent on activities ranging from domestic chores to queuing, and demand a frictionless life. In other words, efficient and frictionless user experiences will become a pre-requisite and consumers will expect to have their needs met, no matter how niche.

Although consumers will still value the opportunity to choose, they will increasingly trust AI to help them shortlist and manage their options.

In addition, the flexibility and autonomy of choice may gear them towards subscription models of consumption instead of providing large monetary and time commitments to own fixed product or service.

All of this has implications for the retail industry and beyond. As consumers consider optionality and personalisation, companies will need to prioritise individualised user experiences to mitigate switching costs in the face of dwindling brand loyalty.

Service providers that can integrate with other parties to create a seamless customer experience could out-compete independent providers.

At the same time, global platforms that match increasingly specific user needs with niche producers and service providers can gather a large loyal following.

Finally, regulators will need to find a new balance between upholding fair competition and data privacy with citizens' demands for tailored experiences.

Clearly, every consumer-facing business must recognise the need for transformation to remain relevant. Even those that are taking action now may need to be bolder and redirect or accelerate their efforts so as to move beyond protecting their current business to creating the business that they need to become.

To do so, businesses should consider the following five imperatives for change:

1. Challenge every assumption:Shift your business model from incremental improvement to exponential change

Today, most companies are trying to protect a legacy of competitive advantage by leveraging their scale and finding incrementally better ways to do what they do already.

But the degree of consumer change and its accelerating pace are turning heritage into baggage as trusted capabilities lose relevance.

2. Choose your "tribe": Focus your purpose on the stakeholders who matter to your business

Leaders today know that defining and articulating a sense of purpose is an essential part of engaging consumers and talent. Currently, companies anchor their purpose in a set of values that most people would agree with, like caring more for the environment or bringing families together.

Future consumers will be much more aligned with their "tribes", that is, communities of like-minded individuals, so tribal marketing that targets their niche interests and preferences will be more effective.

3. Win every micro-moment: Compete for "superfluid" consumers every time, all the time

Today, companies are trying to win and retain consumers by optimising the experience they deliver at every point along the path to purchase.

New technologies are turning that pathway into a longer and more winding road, crossing channels and blending physical, online and mobile.

Tomorrow's "superfluid" consumers will not follow a predictable pathway. They will purchase in micro-moments.

Instead of being loyal to a brand, consumers will want to feel part of something they have helped to define and create. Therefore, companies must be able to shape demand by continually adapting what they offer, when they offer it and at what price.

4. Deliver measurable outcomes: Replace brand promise with transparent impact

Traditionally, companies have engaged consumers by promising that their product or service will deliver a unique benefit.

The extent to which the promise is delivered can be hard, or impossible, to measure. Increasingly, consumers will look for measurable outcomes.

Consumer-facing companies can create new ways of generating value today by anticipating this shift from generalised brand promises to measurable, personalised outcomes.

5. Master the ecosystem: Focus exclusively on where and how you can add value

New technologies and business models are disrupting the value chains that companies have relied on for decades. Consumers will expect much higher levels of control, customisation and service, and it can be more difficult to meet these expectations profitably.

Today, many companies are responding to disruption by implementing more agile and demand-responsive networks.

Notwithstanding that consumers will always take advantage of the sunshine and head to a mall, the actual buying behaviors that retailers are familiar with today will look very different in future.

From consumer goods and health to technology and payment, consumer-facing companies will need to work together as ways of living evolve.

For retailers, it is time to rethink every assumption from who they are competing against to who they should collaborate with to win over the empowered consumer.

The writer is EY Global Emerging Markets Leader for Consumer Product & Retail and Partner, Ernst & Young Solutions LLP. The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organisation or its member firms.