In the wake of supply chain disruptions and climate concerns, we’re all questioning our past “abundance thinking” — the belief that we can get whatever we want, whenever we want it.
In fact, the Fjord trends 2022 questioned whether scarcity, shortages, disruption delays, austerity laws and sustainability factors are leading to the end of abundance thinking and driving forward a more measured approach to consumption.
As a result, retailers are having to rethink how to create new strategies for an economy in which consumers may buy fewer products — either because they can’t get the goods or because they don’t want to.
The immediate concern is consumers who cannot get what they want. As the pandemic continues to throw curve balls, product and staffing shortages aren’t going away overnight. As we look ahead, retailers will have to bring together all parts of their organizations, including supply chain, customer service and marketing, to satisfy their customers and support brand reputations. Even then, many bottlenecks are out of retailers’ control.
As shoppers feel the volatility of prices, delivery times, and unavailability of desired goods, they will inevitably be vocal online when they can’t get what they want. That’s why managing expectations remain critical. Remember, after almost two years of supply chain issues, consumers aren’t new to this. To some extent they have been trained to accept longer wait times for both daily essentials and big-ticket items like game consoles and furniture. This said, retailers should handle the challenges with care and be upfront about product availability and pricing by communicating clearly and efficiently to customers.
We are also seeing a growing segment of consumers who are thinking more carefully about the impact their purchasing decisions are having on the environment and society at large. This calls for retailers to create an agile culture of “continuous reset” and reinvention that is complemented with a genuine and purpose-led commitment to environmental, social and governance (ESG) principles.
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In a 2021 Accenture study, 50% of consumers said that they are coming out of the pandemic having reimagined their behaviors and values. They have reevaluated what is important to them in life and are increasingly focused on their personal purpose. This is having a direct impact on what, how and why they buy.
As we question the role of abundance thinking in retail, “less” doesn’t have to mean “loss.” Rethinking our default setting of abundance is an important first step. The second is to start collaborating with others in the ecosystem to tackle climate change — our most pressing challenge.
As a result, we can expect to see growing momentum toward “regenerative business” – one that replaces the traditional “take, make, dispose” model with a more circular approach. This path could involve exploring new practices such as dynamic pricing, micro-factories and hyper-localised manufacturing. It’s also likely that the “nature positive” movement will gain popularity in the coming years. Nature positive means enhancing the resilience of our planet and societies to halt and reverse nature loss.
Finally, retailers may need to measure success differently. With consumers buying fewer new products, and services making up a bigger part of retail revenues, traditional business metrics like Average Order Value (AOV) and Average Basket Size (the number of items sold in each purchase) need updating. Retailers should add measurements like engagement, perceptions of company purpose and values, and customer loyalty.
These factors help determine the value of a customer, not just transaction by transaction, but over a lifetime. They build a more nuanced relationship between consumers and their brands. And that is something that will serve everyone well as we venture into the post-abundance marketplace.