Posted: 17 Aug. 2022 5 min. read

Five Big Ideas

Five big ideas with the potential to change the Consumer Products industry in the next ten years

Imagine a world where you exist as much online as you do in real life, where all your interactions - from the products you use to the services you seek - are built for you and where automation makes time outside of work go that little bit further each day.
 

‘That morning, your wearable watch collects your key health data and syncs it to an app that makes personalised recommendations for what you should eat, based on your readings, and books a tailored virtual exercise class for that evening. You also get some credits because you shared your data with a health service provider. That night, you come home to a delivery of groceries. Your home assistant knew you were running low on various products and ordered them. But you are too hungry to last until dinner and need a snack. No worries- any of the online food apps will deliver what you need before your exercise class. After your class, you pop your VR headset on and meet some friends from back home in a sophisticated wine bar.’
 

It may sound farfetched and not everything in the future will be this different. There will still be 24 hours in a day and meeting face to face with friends and family will continue to shape our behaviours too, but it is important to think big and creatively when it comes to predicting the next consumer disruption.
 

When we think about the next big trends that will disrupt the consumer products industry, it is helpful to think about them in terms of two competing undercurrents. The first is ‘Think Fast’ – with constantly iterating technologies and increasing ease with digital interaction, the world is speeding up and becoming more efficient, personalised and on demand. The second is a net result of this – ‘Think Slow’. Automation and greater use of technology are also liberating us to take a slower, more conscious and thoughtful approach to life with the ‘me’ at the heart of it.

1. A world of digital goods

Some argue the metaverse isn’t so much a place but a point in time when consumers start to value large components of their digital lives more than their physical ones. What happens to traditional consumer products sales when consumers are willing to pay as much or more to dress, equip, consume, and experience digital offerings as they have for analogue ones? Technologies, such as blockchain and nonfungible tokens (NFTs), are opening new paths to digital scarcity and ownership, and some see a trillion-dollar market.1 The companies currently capitalising on this opportunity are experienced in software economics and run platforms. Should digital goods become a major source of competition, it remains unclear if consumer products businesses can adapt.
 

What does this mean for the Consumer Products industry?

According to our survey only one in four executives mentioned their company is exploring opportunities to sell digital goods.2 As consumers’ digital lives increase both in terms of time and value spent, businesses should prepare to serve them in an increasingly digital form and space. For example, consumers will expect companies to produce digital versions or NFTs of their physical products. Even if the product is physical, the importance of the experience consumers have across the entire path of their interaction with the product will be increasingly virtual and underpinned by a deep personal data exchange. That data will be secured in one-to-one relationship systems between the consumer and the business, ensuring products and experiences are tailored to match consumers’ preferences. The intersection of the physical and digital worlds creates new opportunities for consumers to interact with products before the goods are manufactured or bought. Seeing what a piece of furniture or piece of clothing looks like in a virtual version of their living room or of themselves will help shoppers decide if they want to buy the products. Augmented reality tools, with assistance from biometric sensors and data will be used to that effect.
 

2. Ambient computing driving auto replenishment

Our interactions with technology are becoming easier and more seamless. Instead of technology needing to be on or immediately in front of you, it is becoming so ubiquitous it can be around you, everywhere and always. Cheap sensors, cameras, high-speed connections, screens, projectors, speakers, and more are all making it possible. A major benefit is that interaction with intelligent systems can be passive as well as active. We expect to see a future that further blurs this line, with the rise of ambient computing meaning more data coming in from more sources — such as artificial intelligence (AI), the Internet of Things, wearables, and biometric sensors. Imagine common household goods digitally enabled, which could come to life in the environment automatically when consumers use them. 
 

What does this mean for the Consumer Products industry?

As consumers’ trust in businesses’ ability to use their personal data to better serve them increases, consumer products companies have an opportunity to use the power of data to change the dynamic within the supply chain by disintermediating retailers and going direct to consumers. Using ambient computing technology, consumer product companies will be able to anticipate their consumers’ needs before they even know they need a product. It is perfectly plausible that all non-perishable products from haircare to cleaning products could be tagged and automatically resupplied by subscription when running low. In this vision of the future, consumers will not even have to think about running errands. The parameters for auto replenishment will be set by consumers based on a series of personalised requirements, such as diet, size and composition of the household and so forth. Auto replenishment will be the next evolution of the subscription services model as it will deliver a more intelligent and precise solution to anticipating consumer needs. Seventy seven percent of executives surveyed think consumers will auto replenish fast-moving consumer goods in 10 years.2 The question that arises then is, who benefits? Will consumer product companies disintermediate retail with direct-to-consumer channels interacting directly with consumer AI agents? Or will retailers benefit as they use their superior end-consumer data to provide their own offerings in ways that appeal to AI agents making more ‘optimal’ decisions?

Seventy seven percent of executives surveyed think consumers will auto replenish fast-moving consumer goods in 10 years.

3. Edge manufacturing enabling co creation

Renewed interest in shorter supply chains, as well as additive manufacturing technologies like 3D printers, could move production closer to consumers. This opens the possibility for custom products and for co-creation with consumers. For decades, consumer product companies have pursued the benefits of scale. What happens when traditional models of mass production no longer appeal and customisation becomes more important than brand? How will traditional companies compete if access to designs and materials becomes open-source?  …and the technology to personally manufacture one’s own products becomes ubiquitous? With advancements in additive manufacturing and local production, consumers desire for personalised products will become a reality by bringing more of the manufacturing in the home, allowing for greater co-creation between the brands and their consumers.
 

What does this mean for the Consumer Products industry?

Businesses should continuously evaluate changing consumer preferences regarding sustainability, price sensitivity, and a willingness if not a preference for ‘doing it themselves’ assisted by additive manufacturing. The prevalence of IKEA furniture showcases that consumers are not opposed to building furniture themselves, especially at the right price point. Subsequently, some personal care companies have been shipping consumers ingredients that they can mix with their own water to create dish soap and other household goods with the sustainable benefits of reducing shipping loads and packaging. In the future, it might be that instead of ordering replacement parts for an appliance, a consumer will instead be sent the additive manufacturing specs in order to 3D print the part at home. Additive manufacturing will not replace a manufacturer but will instead strengthen the bond between consumers and producers by creating a more real-time and dynamic relationship.
 

4. Post consumption

No exploration of future consumer trends could avoid sustainability. Environmental responsibility is becoming a norm and not an afterthought. The rise of the conscious consumer has driven expectations of sustainability throughout the product development lifecycle: from materials sourcing, to manufacturing and packaging to delivering the product — all aspects of the supply chain will need to be designed to be sustainable. However, this trend is also highly nuanced. Consumers want to feel good but they also do not want to compromise. According to the Deloitte Sustainable Consumer 2022, although the majority of consumers recognise what makes a product sustainable i.e. it is biodegradable or made from recycled packaging, when it comes to making a purchase, consumers value durability over recyclability.3 Buying less by buying better. Some consumers will want fewer, more sustainable new items and will reuse them when possible. Others will be compelled to buy less as rising costs force more of their wallet to be dedicated to nondiscretionary spending. Governments could intervene with new sustainability regulation or even in the economy (or the economic system itself). By choice, circumstance, or mandate, all could lead to less consumption. Examining just one facet, what happens to the consumer products industry if disposable packaging is shunned and essentially prohibited?
 

What does this mean for the Consumer Products industry?

Only 22% of senior consumer products executives think that people will dramatically decrease their consumption to reduce their environmental impact over the next 10 years.2

Utilising blockchain for supply chain transparency / authenticity and AI for real-time supply chain optimisation, we expect buyers will feel empowered to buy sustainable goods —and to hold companies accountable for any lack thereof. Consumer product brands should recognise that this mindset will apply to both their company and the organisations they partner with. We expect that a standard nomenclature will be adopted by society to determine the environmental impact of consumer products, giving consumer access to transparent information to make informed choices. AI will change from a ‘reactive analyser’ to a ‘proactive decision-making’, empowering businesses to make sustainable decisions about their entire value chain without sacrificing their bottom line.
 

5. Experience trumps it all

Traditional consumer engagement with brands is dead. Consumers want dazzling experiences that cut across physical and digital spaces and are fully tailored to their needs. As a result, how consumers are influenced or hear about products is likely to change in the next ten years. AI deepfake videos will allow for hyper-personalised micro targeting, the evolution of the metaverse will create new opportunities for brands to market and connect with customers, and innovative experiences will be required to capture consumers attention.
 

What does this mean for the Consumer Products industry?

Again, this trend plays in favour of consumer products companies, giving them more opportunities to reach their consumers outside of the traditional retail experience. However, this is an area in constant evolution and companies should invest in novel and experimental marketing channels today so that they are ready to establish more meaningful interactions with their consumers as they turn to these new channels and adopt new technologies. Marketing and adverts will become truly personalised, featuring how the individual consumer could benefit from using a product. Imagine watching an advert where you are called out by your name and told why this new probiotic will help you achieve the new year’s resolution you posted on social media. Through the use of AI computer vision and deepfake technology, this will all be possible. Brands who do not personalise their content will fall behind their competition. Moreover, we expect that over time the price of digital ‘real estate’ will skyrocket driven by artificial scarcity. 

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References

1Major metaverse movers talk standards | Financial Times (ft.com)

22022 consumer products industry outlook

3Deloitte Sustainable Consumer 2022

 

Explore Deloitte’s 2022 consumer products industry outlook, to tap into the thoughts of over 100 senior executives from a mix of food and beverage, household goods, personal care, and apparel companies (most of which multinationals, all with more than $1 billion in revenue).

Key Contact

Céline Fenech

Céline Fenech

Insight Manager, Consumer Industry

Céline is a research expert with 17 years market intelligence and consumer research experience, predominantly focused on researching trends in the consumer goods and retail sectors. At Deloitte, she provides insights on consumer related sectors through the origination of research in the form of briefings, POVs and white papers. She is the lead author of the Deloitte Consumer Review series and the Deloitte Consumer Tracker, Deloitte’s own consumer confidence survey.