Industry Stories
The Future of Consumption ─ A Closer Look
I have a friend who still has a Betamax player from the 1980s. During that decade he enjoyed picking up videos from the rental store to watch movies at home. After a while the rental store only carried tapes in the VHS format. About two decades later, the store, and many like it, closed. At that point, people were overwhelmingly choosing to order movies to watch on their DVD players.
Today, of course, that consumption mode has been largely replaced by movie streaming services. If you look at that vintage Betamax player, you will realize just how rapidly a seemingly healthy market can be disrupted. Technology has been impacting consumption - time and again.
What has changed, however, is that the new technologies are replacing not only physical labor and mundane jobs, but what our minds are capable of too. And unlike the three-decade transformation of home movie consumption, the pace and scale of technological change today is dizzying. Decades? Try months. The Internet of Things, mobility, artificial intelligence, robotics, virtual reality, augmented reality, chat-bots, sensors, and more recently, blockchain have precipitated new methods of consumption such as the sharing and the on-demand paradigms.
As organizations leverage technology to stay responsive to their customers, here are four considerations they would do well to address:
- Sustainability in sourcing and producing goods:
Catering to millennials is a double-edged sword. This youngest of consumer groups can be demanding in terms of instant gratification. But their other demands such as personalization and transparency about the provenance of the goods they buy have revolutionized the retail experience for the better. Blockchain, for example, is being embraced by a wide range of industries. To illustrate just how powerful and game-changing blockchain can be, let us take the example of the complex global fish market. With blockchain, a fisherman in Indonesia can record the date on which he caught the tuna and its quantity, and through the many trails in the global food supply chain, a shopper in the United States can, on her smart phone, verify the exact place, time, and circumstances in which the fish she is about to buy was caught. If a consumer at a supermarket can tell that the tuna was sourced irresponsibly, she won't buy it, causing a chain reaction that will impede questionable practices half a world away.
- Demand for an omni-channel experience:
Bricks-and-mortar or online retail? How about both? Technology has given consumers the power to decide when, where and how they access a product. Indeed, omni-channel has become the new normal as digital natives (mostly millennials) demand insurance, banking, and retail products anytime, anywhere. The challenge for those consumer-facing enterprises is not only to figure out how best to deliver seamless services both online and in person, but also to respond to every subtle change in the fast evolving consumption patterns.
Algorithms are recreating the retail store online through a virtual shopping assistant who makes recommendations based on past shopping history. But consider Amazon Go, a new type of grocery store, where you show up and walk around a beautifully laid out bricks-and-mortar location, pick out your food, and then walk out, while the groceries are delivered to your residence. Amazon, it seems, is leaving no stone unturned to make it fast and easy for customers. When their 30 minutes delivery through drones go into commercial operation, Amazon would have given new meaning to omni-channel. However, they are not about to stop here. Flying warehouses ("airborne fulfillment centers") are set to partner their drone delivery service, which is slated to crunch the delivery time further. So imagine sitting in a stadium, ordering a jersey and receiving the delivery before the game starts. This would definitely redefine omni-channel.
- Ensuring consumer privacy:
Being able to unlock your door and turn on the climate control system in your house from your smart phone, right before you begin your drive home is a luxury offered by the Internet of Things . Yet a recent report by an international research firm, Parks Associates, reveals that 60 % American households with broadband connections are concerned about the security of smart home devices, with 45 % being very concerned. Sometimes it seems that technology, especially involving connected devices, has outpaced the ability to keep it secure. IoT will become a commercial success only when companies offer robust security measures as part of their smart home devices.
Retailers are also on thin ice when it comes to privacy. Beacons and sensors detect when a customer enters a store and make shopping interactive through prompts and suggestions. In addition, data is also collected online. But how does a retailer use this information to offer a pleasant personalized experience with unknown quantities of information? The solution lies in ensuring transparency. Letting the consumer know when information is being collected and how it will be used, and giving him a choice to opt-in for a personalized interaction, and above all, establishing stringent security measures against hackers and data thieves.
- Reimagining the nature and quality of work for employees:
With increasing automation, the question is, what will folks who are freed up as a result, do? How can they be reskilled to complement the automated tasks? A recent study on AI adoption commissioned by Infosys has revealed that for the full benefits of AI to be realized, investment in the workforce including new job creation, education, and skills development are critical areas. Majority of the respondents, 80% globally, said they will re-train and re-deploy employees with jobs impacted, and 84% plan to train employees about the benefits and use of AI.
Of course we have positive experiences with job automation in history as well. In 1900, 40 % Americans worked the land as farmers. Today the country produces more food and grains than ever in its history, but thanks to automation, the American workforce is scattered across technology, banking, retail, healthcare, and other sophisticated sectors.
With automation set to impact millions of jobs in the future, governments will have to take a closer look at new industries that can be developed and realign education to the new needs of these industries and technology. I see the private sector playing just as important a role here in helping governments plan the future needs of infrastructure and investment, sometimes for entire industries based on changing requirements.
And what better place for such discussions and collaborations to shape the global socio-economic agenda than WEF Davos, from where I write. This gathering of representatives from governments, corporates, start-ups, non-profits and other influencers from across the world, helps ensure a multi-stakeholder dialogue to evolve our world in a responsible and inclusive manner.
