The brands and retailers who will find success in the current year and beyond are the ones that can successfully evolve along with consumers. For some, evolving might mean exploring new store formats or revamping their selection. For others, it could mean using new technologies or retraining their staff. In all cases, it will be about putting the customer first, and creating a more personal experience.
From the last 5 years until 2018, several consumer electronics (CE) products have risen and fallen. Keeping up with evolving technology and catering to shifting consumer trends have emerged as the two key factors that decide the success or failure of the products. The ability of manufacturers to quickly adapt, innovate, and differentiate themselves in the marketplace is often essential to success and driving brand growth. A key source of strength is consumers, who have benefitted from strong labor, rising incomes, record low unemployment, and low inflation. Households are enjoying growing wealth and consumer confidence remains elevated. Manufacturers are developing newer and bolder strategies to execute traditional levers.
The mindful consumer
The consumer is in the driver’s seat, enabled by technology to remain constantly connected and more empowered than ever before to drive changes in shopping behavior in both the physical store and digital retail landscape. From smartphones to refrigerators, CE shoppers do their product research across channels and devices. And while they might start their shopping journeys online, they want to experience product features and offerings in-store before they buy.
Consumers want to experience a brand, product, or service before they buy, and video is the conduit. Video is no longer an emerging or rising marketing trend; it is part of the now and the future. It is certainly not difficult to see why video has taken off. Humans are visual creatures by nature, and as the internet, social media, and technology have evolved, consumers are spending an increasing amount of time in front of the screen, elevating video as a preferred engagement medium. But a bit of change is in the air. Consumers do not just want engagement these days. They are also looking for an experience, especially when it comes to products they are interested in. Video is straight up changing how people shop. Essentially, consumers are going beyond third-party review sites and word-of-mouth referrals, and looking to video content to learn the good, the bad, and the ugly about the products they are pondering. This means it is time for brands alike to elevate the stories they tell using video. Since many users are not going to be able to physically touch a product before they buy it, brands need to come up with creative ways to help people experience it online. There is a whole community of creators testing and evaluating products. That means users will be validating any claims manufacturers make.
People turn to the internet and search engines to get a better understanding of what is happening in their communities, countries, and around the world. Consumers have become increasingly mindful of their purchases. More and more shoppers are choosing products that are sourced responsibly and are good for their bodies and the environment. They are more curious, more demanding, and more impatient than ever before. Essentially, people are getting more specific than ever in their searches and they expect and demand useful, relevant information quickly.
Consumers are also becoming increasingly wary of advertising and brand messaging. But over the past couple of years the general state of trust across the globe has imploded. The 2017 Edelman Trust Barometer Survey, an annual trust and credibility survey, showed the largest-ever drop in trust across the world’s four major institutions: business, government, media, and NGOs. It is more important than ever for brands and marketers to commit themselves to transparency and authenticity in all that they do. From embracing both positive and critical consumer feedback on public forums and social media, to losing the jargon and developing a more human voice, transparency and authenticity need to be baked into the strategy, rather than being afterthoughts.
The evolution of consumer behavior is a moving target, which means brands, marketers, and advertisers must adapt not only how they measure the usage of new devices and surrounding services, but they must anchor measurement to the individual consumer to observe and align with changing cross-device habits.
Manufacturers pursue innovation
Ease of operability and competitive pricing are the keys to any effective marketing strategy as determined by the CE industry. They are not wrong – this industry is rife with competition and shifting customer preferences now rest on innovation, compatibility, and pricing. In 2018 the influx of high technology has bestowed the smart prefix on many examples of home electronics. Brand names, while still relevant, are not the final say in a purchase anymore. As exemplified by the following five market trends, the factors extend beyond just manufacturing and marketing in the CE industry:
Newer, bolder paths to innovation. While many consumer products companies have looked to innovation as a source of growth, what is changing is how manufacturers are pursuing innovation. In addition to following traditional new product development cycles, many manufacturers are experimenting with new approaches, such as innovation through venture capital-styled incubators, crowdsourcing and partnering with consumers, renovation of previously successful products, and continued focus on good-for-you products.
Smart household appliances powered by IoT. CE companies are integrating their products with the Internet of Things (IoT) technology to produce a breed of smart appliances. These can be controlled with a smartphone app, which simplifies the appliance’s operation and improves the operator’s comfort factor. Another rung in this evolutionary ladder is personal assistants like Amazon’s Alexa and Google’s Home, which project their AI and machine learning capabilities to control functionalities and appliances around the house. As is obvious, smart appliances are in demand and their prominence and adoption has increased tremendously in 2018.
E-commerce and omnichannel retail bring in new customers. In the current scenario, any player in the CE industry cannot afford to have a weak online presence. With the growing influence of smartphones and the deep penetration of internet connectivity, CE companies can choose to not limit themselves to just brick-and-mortar stores. Instead, a well-appointed e-commerce website will not only attract the target audience but will also affect actual sales and improve brand recognition and customer loyalty. This, alongside the adoption of strategies like omnichannel retail, is all about paying homage to the target demographic’s changing preferences. Particularly, in the case of millennials, the most cost-effective way to recruit new customers can be found on the internet.
Honest attempts to reduce the carbon footprint. The new age consumer is more deliberating, concerned, and spoiled for choices than his/her counterpart from even just a decade ago. Meanwhile, the CE market has long held a very unconcerned approach toward the question of ecological responsibility. Today, amid a global discussion on ecological conservation and responsible manufacturing procedures, green has evolved to become an all-encompassing movement. Realistically, electronics manufacturers that invest in eco-friendly fabrication procedures and operational upgrades that do not contribute significantly to their carbon footprint will find this enlightened customer segment poised as their target demographic within the next 2 years.
Automation to ramp up production across the consumer electronics industry. In order to be an effective competitor, a CE company must first improve the efficiency and productivity levels at its own manufacturing facilities. This can be achieved with the introduction of wide serving automation and robotic inputs across production lines, inspection cycles, maintenance, and logistics. Also, this type of integration will tie in neatly with the growth of the allied automation and robotics industries, as the latter is projected to grow exponentially within the next 5 years. The singular concern will be the inclusive costs and the time needed to implement these broad changes.
Brand recognition influenced by customer outreach strategies. Stretching the connection a bit further will likely serve as the axiom for companies that understand the advantages of building a loyal consumer base, tending to it regularly, and keeping prospective buyers away from the competition’s marketing radar. When speaking of home electronics, a wide plethora of appliances are included. Thus, building a loyal customer base with the help of strategic customer outreach programs including contests, forums, social media engagement, and insightful content on well-appointed portals, will help a manufacturer engage an individual customer at different times for different sets of products and services.
Digitization continues to drive differentiation through efficiency and creativity. Digital technologies and applications have a wide influence on many consumer products companies, from interacting with consumers to operations and procurement. In some organizations, the company’s digital strategy is increasingly becoming part of its overall business strategy. Many could benefit from continually investing in digital technologies to deepen customer engagement, and enhance the consumers’ path to purchase. Investing in digital technologies is also benefitting companies in the industry by driving efficiency in supply chain. Trends in digitization and their potential benefits include promoting real-time customer engagement, promoting e-commerce, and blockchain applications.
All consumer-facing firms can expect AI platforms to radically alter their relationships with customers. Their traditionally crucial assets, such as manufacturing capability and brands, will become less central as consumers’ attention shifts to AI assistants, and the value of consumer data, and AI’s predictive ability soar. Push marketing (getting platforms to carry and promote a product) will become more important, while pull marketing (persuading consumers to seek products) becomes less so. The consumer will remain the target of brand-building efforts. Though the marketplace will be more efficient, manufacturers will encounter intense pressure to offer consumers the best deal. Consumers are overwhelmed with content. Be it through ads, offers, emails, texts, social media, and everything else, the industry has reached a point of content shock where consumers cannot consume much more content than they already are. Hence, the way brands devise their digital marketing strategy, to capture their audience’s attention, is changing. Brands are focusing on the micro-moments of their customers’ behaviors.
Retail industry – alive and kicking
The business reality shaping the retail industry outlook is quite different. Consumer spending is increasing and shifting among a range of formats and channels for differing reasons, an indication that the retail sector is evolving again. While not everything old is new again, it is evident that people continue to seek out both familiar and differentiated experiences on their path to purchase. Pragmatic adoption of advanced technologies presents retailers with ample opportunities to innovate across their value chains. These retail trends include:
- Retail store formats will be much more diverse. Expect one-size-fits-all (i.e., traditional) store formats to decline. Retailers are increasingly establishing a variety of store formats to address the needs of different markets and locations. A few retailers are bringing back the travelling salesman. Both Amazon and Best Buy are sending people into consumers’ homes to consult and recommend electronics they could use around the house. Retailers are focused on driving consumers into the store for big ticket, highly interactive purchases like TVs, where a benefit can be seen to shopping in a physical store. More and more the online channel is focused on transactional consumer interactions, especially of lower priced grab-and-go items such as phone cases, screen protectors, portable chargers, and wired headphones
- Inventive business partnerships have the potential to generate additional revenue streams while providing an ever-changing experience where the consumer feels in control of their journey. Personalization is still a key retail trend in 2018 and beyond, that is, personalization that enables shoppers to build products and customize them to the very last detail. For one, modern consumers are placing a lot more value on experiences over physical items or commodities. And so, when shoppers purchase tangible products, they want those items to either tell a story, fit into their lifestyle, be completely unique, or all of the above
- IoT connectivity could empower consumers to check the store inventory online while in transit and reserve products for purchase or pickup. Data’s role in retail decision-making will grow, especially as technologies like Big Data and machine learning continue to mature. Forward-thinking retailers are exploring ways to collect and leverage data in their sales, marketing, customer service, and operations. Making data and analytics, a competitive advantage for retailers and brands, begins with an ecosystem of shared intelligence. Allowing an open system and partnering with enabling technology vendors who genuinely want to help grow the brand is the only winning strategy
- Digital demand and supply networks might shorten timeframes and reduce costs for at-home or in-store deliveries. Augmented, virtual, and mixed reality may help retailers further create an endless aisle and offer more enhanced options for providing experiential engagement, in-store or at home. As more consumers embrace instant messaging apps such as Facebook Messenger and WhatsApp, retailers are expected to use these platforms to talk to customers and streamline communications. For instance, if a shopper wants to track their order, they can just ask the retailer on Messenger, and a chatbot can automatically retrieve the shipment information
Emergence of innovative stores. Brick-and-mortar formats and the need for human employees will not disappear amid the wave of digital shopping experiences. For many retailers, the workforce will serve an increasingly important dual in-store and online role. Despite the doom and gloom being reported in certain retail sectors, brick-and-mortar retail is alive and well. Traditional store formats may be on the decline, but innovative stores, ones that offer great shopping experiences, are continuing to emerge. Technology is fueling, not curbing, the rise of brick-and-mortar retail, thanks to modern point of sale and retail management systems. Mobile applications and cloud-based solutions are enabling merchants to quickly set up shop with a minimal investment. Because of this, there will be more independent stores entering the market. The internet has had a flattening effect on the industry, and as a result, even the smallest retailer has tremendous opportunity to launch and thrive.
E-commerce optimization. Internet retailing has become an increasingly important channel in CE in India. In 2018, the channel continued to experience strong volume growth in most categories, driven by high mobile penetration and the growing number of consumers opting to shop and browse for products online. Up until recently, customers had to sometimes accept slow deliveries or simply go to a shop if they wanted something quickly – but e-commerce has caught up. Today and in the future, getting items at speed, in real-time, will be more practical. This is the era of e-commerce optimization where, to maintain growth, businesses are innovating their growth strategy, for making their online experiences engaging and persuasive. E-commerce advertising is continuing to increase in expense and becoming a media platform is going to be much more critical. Brands that find ways to continue to engage their audience outside of just purchase points will start to gain ground, because those who do not will find the expense of bringing people back too great to compete. Customers have smartphones in their hands, and marketers have a wide set of marketing technology available. The key in 2018 will be bringing these two things together in order to both make shopping more efficient and one’s virtual cash register ring more often. 2018 is proving to be the year when data-driven decisions have become a must for e-commerce companies to thrive. With artificial intelligence being a hot topic for the future of marketing, trends like conversational commerce, using chatbots, and voice search have been closely associated with widely-adopted online shopping habits amongst millennials as well as other population segments. More and more stores are moving online and constantly taking measures to improve their online shopping experience and multichannel approach.
Hybridization. As the digital and physical shopping worlds further develop, an increasing importance is placed on the dynamic merging of both experiences. The brick-and-click (also known as click-and-brick and click-and-mortar) business model emphasizes hybridization over completely switching to digital. This is not anything new and has already been adopted by most major retailers. However, as customers more commonly view both worlds through a single lens, the need to innovate will continue to intensify.
Consumers are spending confidently throughout 2018. Global market growth is projected to reach a healthy 3.2–3.8 percent, with heated competition among store formats, channels, and players expected to continue. Consumers are enjoying an ever-increasing proliferation of choices, larger established brands reforming with both online and in-store operations; and newer online or application-based only entrants are emerging. Not surprisingly, consumers continue to hold elevated expectations for their shopping experience. The fact of the matter is that consumers are playing an increasingly powerful role in their buying journey, and brands and marketers need to embrace this if they are going to survive and thrive into the future.
Manufacturers have traditionally looked to innovate as a source of growth and will try newer and bolder strategies in the coming years. They strive to strategically capitalize on growth in emerging markets, and seek opportunities to acquire or partner with companies to enable access to consumers, leverage market solutions, and in some cases, access sources of raw material. Many are expected to take an agile approach to developing, testing, and iterating innovative ideas compared to traditional, highly structured, more time-consuming testing methods. Companies are often increasingly looking to expand across geographies and reach out to markets that can drive both sales and profitability. They are aligning technology in creative and efficient ways to optimize customer engagement and influence the consumers’ path to purchase. For a long time, manufacturers used to maximizing economies of scale because of their large fixed investments in production and brands, have zeroed in on one strategic question: how much more of the products can be sold? AI platforms will present a very different opportunity: to maximize the depth of the relationship with the consumer by offering a wide range of products, in other words, economies of scope. Investments in building trust with consumers and their AI assistants will be amortized by asking, what else does this buyer need? Superior marketing strategy will still matter; firms will acquire, satisfy, and retain consumers.
The retail industry outlook projects that emerging technologies, such as social commerce, virtual reality, IoT promise to transform the customer retail experience like never before. Optimizing operations is paramount in this environment. Dramatic revamping of demand and supply chain strategies is a key lever to pull, especially when adjustments are required to support new business models or innovation initiatives. Rather than merely optimizing value chains to drive out incremental costs, retailers are adopting advanced technologies to retain market share, so that inventory needs are available precisely when and where required. Moving ahead, technological investments will center on shoppers’ mobile devices, today’s first screen, and IoT technologies that further develop the smart store and deliver deeper analytics of in-store shopping behavior. Consumers no longer want to leave the house to buy commodities. Many merchants will try to engage customers by connecting with them in their homes. Companies which hand-deliver and set up electronics for consumers, will expand, and other retailers will ramp up their home delivery services. Hence, the future is bright for retailers who adapt to the needs of their customers. The merchants who will find success in the current year and beyond are the ones that can successfully evolve along with consumers. For some, evolving might mean exploring new store formats or revamping their selection. For others, it could mean using new technologies or retraining their staff. In all cases, it will be about putting the customer first, and creating a more personal experience.
One thing is clear – if manufacturers and retailers want to thrive in the coming years, staying stagnant is not an option.