Four Keys to Serving the Future Consumer

Written by:



A.T. Kearney’s multi-year research initiative, The Future Consumer, convened a global series of consumer surveys and focus groups to explore evolving consumer expectations and behaviors. We then asked 270 global consumer and retail company CEOs, CFOs, and COOs to gauge the industry’s response.

At the 2018 Consumer Goods Forum Global Summit, we presented these insights and outlined four keys to serving the future consumer. Here is an executive summary of the session.

Foundational Change

Our consumer research points to a foundational change in the CPG and retail world.

Gen Z and millennial consumers? who will represent the majority of the world’s population by 2022 and nearly 70 percent by 2030 ? are fundamentally different than the earlier generations most consumer and retail companies were designed to serve.

Gen Z and millennials tend to define themselves less by what they own and more by how they live life, favoring brands and products they believe will augment their experiences.

The basis for forming relationships with consumers is also changing. New generations want to do business with brands they trust on a personal as well as transactional level. Personal trust cannot be asserted. It must be earned by showing consumers that you are attuned to their preferences and are prepared to meet their needs, as they define them, on their terms.

This in turn suggests that traditional mass marketing to broad consumer cohorts will need to be augmented by a much more personal connection. Indeed, Gen Z and millennial consumers in our focus groups were adamant: “You can’t define me. I’m not how much I earn, or where I live.” They fully expect to be treated as individuals and to be served individually.

Companies could traditionally prosper by tracking and leveraging known trends. But when success depends on serving one consumer at a time, mass trends become far less relevant. Instead, companies will need to be attuned to the myriad signals consumers send and be able to deftly reshape strategy in response.

Industry Response

In sum, growth increasingly depends on the ability to nimbly serve consumers precisely how they prefer. How are major consumer and retail companies responding? We asked 270 CEOs, CFOs and COOs at major consumer and retail companies across 10 countries. All have sales of at least $2 billion. Roughly one-fifth of the companies have annual sales of $10 billion or more. Combined, they account for $1.5 trillion in annual revenue.

The findings suggest that the industry’s response to transformational change in the marketplace is still mostly incremental.

Nearly two-thirds of the leaders understand that their products and services must become more personalized and customized over the next 10 years. But when asked how they will offer more personal experiences, the most common response was “data gathering,” followed by “omnichannel focus.” While these answers may be ”on-trend,” they lack the depth to stand alone as robust responses to the major changes now unfolding in the consumer marketplace. Data gathering is important of course, but most companies have no shortage of consumer data. How much will be gained by gathering more? And everyone is working on omnichannel, making it difficult for most companies to carve out a sustainable point of differentiation.

The critical challenge ahead is to collect proprietary data that can only be captured when consumers voluntarily share more of their own information. This goes beyond the basics of GDPR compliance. The objective is to gain far more personal insights so you can engage with consumers on a level that allows you to anticipate their needs, serve them much more personally, and hopefully make them champions of your brands.

Providing incentives for consumers to share data is not new. In fact, nine-out-of-ten of the executives say they are offering consumers financial-based loyalty programs and discounts as incentives to share their data. These tried and true approaches offer high execution certainty, can drive traffic and do provide data on how consumers are buying. But in our focus groups, consumers generally equate loyalty programs more with cost savings than with brand loyalty. There is some irony in this practice of consumer and retail companies paying the customers who presumably most love their brands.

To truly earn loyalty, companies must flip the current approach by making loyalty programs less about paying consumers to be loyal to you, and more about demonstrating your loyalty to your consumers on a personal level.

$345 Billion Growth Potential

The executives in our global survey seem to sense this opportunity. Collectively, they estimate that by nimbly building personal connections with consumers, their company could generate, on average, a 23 percent revenue lift. If their estimate is accurate, consumer-centric agility is worth a collective $345 billion in additional revenue for this sample group alone.

The larger question is whether companies will move out of their comfort zones to reap those revenues. Paradoxically, while most of the 270 top CPG and retail leaders in our study said their company needs to change its decision-making models to become more innovative, 89 percent admit they will continue to prioritize “cultural fit” over “disruptive thinking” when recruiting new talent.

In short, our global survey of top consumer and retail executives showed companies are taking few course-altering actions, suggesting the industry overall seems to be “stuck in idle” while settling for tepid earnings and flat organic revenue growth. To significantly elevate financial performance, companies will need to place more emphasis on agility.

Four Keys

Being agile means being willing and able to shift your priorities and practices quickly — versus doing things the way they have always been done. It requires constantly sensing changes in your environment and adjusting your direction.

Talk is cheap. What specific steps might companies take toward becoming more agile? Here are four starting points.


Key #1 Actively engage with consumers. Redirect some energy away from sifting through mountains of data, trying to gain insights into consumers, toward actively engaging with consumers on a personal level.

For example, Men’s Wearhouse, a US-based suit retailer, successfully tested an app that allows online shoppers to connect with a salesperson in the nearest store via smartphone. Consumers can learn more about items via a live video chat with the salesperson and, if they like, set appointments for store visits. The test demonstrated that online shoppers are more likely to buy an item after chatting with an in-store employee. By September 2018, The Wall Street Journal reports 3,000 in-store workers at Men’s Wearhouse and subsidiary Jos. A Bank will have this capability.

Key #2 Listen to consumers and innovate quickly. Roughly 70 percent of media spend in the industry is still traditional (TV, radio, print), despite growing concerns about efficacy. The fact is, as media proliferate, companies will no longer be able to power brands to relevance. However, more subtle methods are proving effective, particularly when they involve listening to what is happening in the marketplace.

One example of innovative social listening: Coca-Cola Japan has used a logo search engine developed by BrainPad — a Tokyo-based innovator in digital analytics — to spot images containing Coca-Cola’s logos posted by consumers on social networks. This provides insights into when, where, and with whom consumers enjoy Coke. Meaningful value is realized when consumer experience insights are integrated throughout a consumer engagement cycle. We recommend marketing take on the role of consumer-advocate across a company’s portfolio by pulling insights in, identifying emerging consumer needs, and translating these into action, with the goal of enhancing consumer experiences.

Key #3 Empower small consumer-centric teams. The operations and decision-making processes of established consumer and retail companies have become increasingly complex. Even when they spot a compelling opportunity, many companies cannot act on it fast enough to own it.

In contrast, Indie beauty brands like Anastasia, Aprilskin, 3CE, and Colourpop are taking market share through a combination of deep understanding of the target consumer, and the ability to launch trend-driven product 50 percent faster than traditional brands. How? Small teams are given autonomy to act on instinct? often without rigorous analysis? using a “test and learn” approach versus going “all in” on every idea. Some focus on a hero category, such as eyebrows, where they become a trusted expert among social media beauty influencers. This agile approach has delivered consistently trendier product that is resonating with the more experimental Gen Z and Millennial generations.

Key #4 Shape trends. Leading consumer and retail companies generally place great value in benchmarking and trend-watching. However, the competitive benefits of both are inherently limited as they are primarily backward looking. And because everyone has access to essentially the same data, your competitors are aware of the same information.

Far greater growth can be realized when you actually shape a trend. Peloton, for example, created a new trend by shaping emerging social, experiential, health and wellness trends into an interactive cycling fitness experience at home. Founded in 2012, Peloton has over 30,000 installs in 22 countries and is now valued at over $1 billion. It achieved that growth by creating a market that did not exist before.

Experimenting with these four keys offers will help consumer and retail companies actively prepare to serve the future consumer — not as demographic segments, but as individuals with whom you engage quite personally.



Scroll to Top
the Daily Report

Insights + Interviews right to your inbox.