Stirred, not shaken - Corona Pandemic and Consumer Megatrends
Will it be business as usual after a few months? Yes. Will the pandemic topple our future strategy? No, but it will alter that. The world is undergoing a situation currently like never before and the effects will last not just for a few days or months but this event is likely to change the course of several things around us.
Megatrends are a part of the futures studies basket of tools, to map the near to mid-term future. They are paradigm shifts sweeping across society, technology, business & governance. Current pandemic is going to affect the lens of the future (2-5 years) we held, before the event. Listed here are some trends and their nuances in the changed world and what potential shifts they can cause in the socio-economic fabric of the world. While the megatrends are global, the focus of the writeup remains to be on India.
1. Acceleration in Identity Reclamation
Globalisation had a long unstoppable run and flattened the world by erasing the cultural identities, templating people and the consumption. But a counter force has been slowly rising against this and shaping up personalities and populist narrative like of Donald Trump, Boris Johnson, Narendra Modi etc. who are reasserting their national and cultural identities. Current pandemic has created several setbacks for global exports from China, the brand China and overseas citizens of Chinese origin (especially in the USA where veterans are now guarding some of these settlements). 40% of the world's total manufactured goods and 50% of Apple’s total production comes from China. Situation is now changing as several companies have already moved out of China or are considering it. 67% European apparel brands have moved manufacturing out of China. While rising cost of labour and increasing government interference in China has been one of the reasons sighted but people like Trump has been vocal on shifting the manufacturing back to the USA. Pandemic has just added more fuel to the fire of ‘alien’ things, as people develop a stronger sense of regionalism. Nationalistic and cultural assertion will slowly turn the global supply chains into proximal supply chains. Geopolitically, lines will now be drawn harder on the business fronts.
India has already announced a Rs. 42000Cr booster package for domestic mobile phone manufacturing industry (conditions set are tough to be met by brands like Viva, Oppo, but can be leveraged by Lava, Micromax etc.). Incidentally, more than half of all mobile phones sold in india are imported currently as CKDs or SKDs. With China supply lines choked for a while, situations like the current pandemic will put current governments across the world to rethink their sourcing strategy. While many would look at India and South-asia for an alternative sourcing hub, equally potent situation is slow shift to local manufacturing, with the advent of high-speed, IoT enabled high-tech manufacturing.
New situation would slightly tilt the focus of R&D efforts in pharma, alternative medicines, textiles, water, sanitation and agriculture towards more indigenous and contextual solutions. Personalisation of medicines has been on the cards around the global labs, but before becoming personal they will become regional, at the least. Going forward, one can expect increased focus on local manufacturing and SME friendly policies while imports will be chided through tax load across several more categories. Make in India program which didn’t really work so far, will get a natural impetus going forward.
2. Abstinence as the new premium
This trend is a part of Holistic Wellness Megatrend. Society has already seen physical wellbeing to mental wellness shift. ‘Abstinence’ is one of the most recent trends under this megatrend. From ‘Dixit diet’ (16 hour fasting routine) to Mary Condo, consuming less, decluttering our lives and living with the minimum has been on the rise. American market has seen 600% rise in vegans over the past few years. Current pandemic is introducing a new word into the global lexicon - DISTANCE. Distance is meant to be physical, to stay away from the infection. However, this word of ‘distance’ will perpetuate into distance from consumption, faster than anybody thought. Unlike the rise of ‘lipstick economy’ (in the downturn, sale of cosmetics usually goes up to bring cheer without spending much), there will be a permanent behavioural shift due to prolonged global lockdown. Tourism will become more localised and the countries earning a large chunk of their GDP through tourism will suffer. USD270 bn spend that 150mn Chinese tourists did across the world will now reduce to a miniscule. Indian tourist destinations are likely to see the grand boom coming years as more Indians will flock there. When people consume less, they consume better quality stuff. Premiumisation, a trend that is already predicted to happen due to ballooning of Indian middle class from 150mn households in 2018 to 300mn households by 2030. However, the trend of Abstinence will fuel the premiumisation as a trend towards MAXIMAL MINIMUM- means shorter, smaller portions, lesser occasions of premium, power-packed high-end experiences. ‘Capsule clothing’, a thing of the elite currently, will walk mainstream. Events like current pandemic will enhance the body-care and mental wellbeing factor into premiumness of consumption. Sustainability and contactless processes, will become the biggest selling point of luxury homes and experiences. Healthcare itself will see a boom in India with super-speciality hospital chains (not multi-specialty) likely to boom with enhanced care protocols in the near future.
3. Compassion is the new brand-mantra
Business and brands need to become more compassionate and need to put it upfront. Compassion is a lesser known word in business. The core of Buddhism and of course a human value, has been on a resurrection trajectory for a while. Design Thinking uses an applied version of this in ‘Empathy’. Social media has been abuzz with artificially grown meat replacing the real one. Apart from some small acts of mandatory corporate social responsibility and a few rich people signing up for cheque-book philanthropy, we never saw the corporates seriously tilting towards a social-enterprise. With the pandemic becoming a serious one, every brand worth its name has been trying to portray a strong action to support the society. Radio Khaitan and Goa Breweries which make and sell liquor, are now producing hand sanitiser. A Mumbai based startup, Saral Design, that made sanitary pads for the poor has pivoted their setup to make 3 ply masks for the Corona times. Maybe this will open up another line of business for them in due course.
Taj hotels (part of Indian Hotels Company, Tata group) has opened its doors to doctors and health staff who had to travel long distances amidst the thinning occupancy in the lockdown. This will help the over burdened health machinery get some rest.
Brands would have direct and visible action such as supply-chain transparency, packaging and delivery overhaul. For a package to be delivered at home, now it matters less if x money is donated to charity, but what will weigh more will be, if the packaging and delivery rituals have been significantly altered in favour of hygiene. A denim jeans could attract attention if it said, 5000L less water used in preparing this product. But now, this would have to be augmented with the message of hygiene practices across the supply chain. Micro-actions that bear direct consequences to the end-consumer or immediate stakeholders, would be weighing heavier than the distant acts of compassion. Needless to say all the professions would have an added focus on ‘PEOPLE’ beyond ‘resource’. And the professions that are directly involved in wellbeing, from doctors to scientists in the healthcare industry to nutritionists to yoga therapists, would have non-linear growth. We have seen the role migrant workers play in Indian industries. Heartbreaking images of these migrant Indian rural workers walking hundreds of kilometres with families in the lockdown times, is not going to vanish easily from the memories. Providing for onsite dormitories for this migrant labour pool, just like China did in 90s, would be a great way for Indian industries to capture the lost ground.
4. Reconfiguration for rapid shifts
We have been holding this trend close to our heart as one of the most significant mover of things in the near future. It essentially points to sudden shifts in lay of the business/society and hence reconfiguration. Of course, we didn’t/couldn’t predict the current event but there were signs of potential large shifts for a few years. Black swans are and will become rather frequent. Demonetisation and surgical strikes by India were two different events from two different sectors (finance, defence sectors respectively). Now we have a situation that is asking for a fundamental shift in the way we do business (health concern). We almost had another health related disruption due to the air-pollution crisis in Delhi and other cities. However, it didn’t make much news because ‘only Delhi’ and ‘only India’ was affected (let’s say no major developed country was involved, though Pakistan, Iran etc did have similar air quality issues). Now imagine a similar a ‘black-swan’ flying down to meet us from the climate change side (flooding/tsunami), or capitalism cataclysm (fall of a some large companies), or resource-war amongst two important nations, or key supply line cut-off i.e.(tantalum, platinum and palladium. tantalum and niobium used in mobile phones are extracted from Coltan ores, largely sourced from East African countries). Countries and companies would have to prepare for such nonlinear events as a routine. Rise of 'survival-tech' will be a reality in all sense of the words.
We can foresee supply chains reorientation with blockchain enabled transparency, development of emergency supply-chains, distributed/democratised business systems. Just-in-time concept of inventory management will have to be completely overhauled as the world watches the global leader in healthcare expenses per person (USA) running out of medical supplies in no time. Strategy frameworks like ‘Jobs to be done’ becoming ultra-popular to handle the exigencies/non-linear event scenarios. Linear thinking methods that enhanced optimisation had their run. Jobs-to-be-done looks at multiplexed benefits to evaluate the overall business value.
Rise of spontaneous informal/formal global networks to tackle a massive challenge (like mayors of 40 top cities did for climate change) is one strong pointer going forward.
Pandemic like this Corona are surely a very different event of our lifetime which models itself as a heady mix of financial crisis, war, natural disaster and a human situation. It is going to leave an indelible mark in the topography of future strategy of organisations and countries at large. And no one can predict the future. But trend gestimates and hypotheses can prepare the organisations for potential swings when they occur.