Thank you to everyone that attended our Radical Times – Radical Response event yesterday at the Congress Centre. The presentations have been sent out to all nVision UK clients this afternoon complete with speaker notes but we thought it would be useful to summarise the key points from each of the sessions here.
Our Managing Director Meabh Quoirin opened the day and provided the social context by examining the issue of radicalism from the perspectives of consumers, citizens and brands. The primary hypothesis of this session revolved around the concept of the “pop radical”.
Radical, in terms of the mood today, is calling for conversation. It is exploratory and discursive & iterative in emphasis; it is less didactic and unilateral. It is not about a revolution in the French sense. It’s all about asking the questions. Lots of questions.
Think also in terms of lots of bubbles. The big one that burst, but also lots of causes, questions and anger floating around which quite often disappear as soon as they’ve popped up. And there now appears to be enough momentum to know that the questions are going to keep on coming. So far, it doesn’t matter too much that there are not very many answers.
For so many of us, we might sympathise, identify with, stay interested in causes or the 99%ers, but most of us are only ever going to wear the t-shirt indoors. Pop is more about the mood than consumer movement per se. This almost doesn’t matter, for the new radical, in pop radical, it’s mostly about keeping the questions afloat.
The trend is about fundamental concerns (money, trust, shared reward). And in this context anyone can be a “pop radical”. The pop radical keeps on consuming. But he/she also keeps on asking brands & business to do a better, fairer job.
We are seeing:
- A lot of little explosions, not a big bang.
- Some real causes and calls for action, more about (often online) conversations and questions, less about anarchy (and no one needs to pretend they don’t want to consume).
- A lot of anger, some appetite for a better way – delivered in small chunks of change from progressive brands.
- A lot of attention paid to the inner rebel – there is a market for edgy evolution.
Our Economics Editor Richard Nicholls then provided the macroeconomic backdrop. It’s certainly an interesting time for a presentation on the economy. A year ago the UK economy and the wider global economy were recovering. Growth wasn’t spectacular and it was uneven and we all knew that the worst of the austerity was still to come, but we were in recovery. The economy was about where we’d expect it to have been at that stage of the cycle.
But there’s a little phrase that’s been appearing a lot recently in the economic news – Double Dip. The big question now is : how likely is this? Certainly more likely than it was.
A double dip could happen due to global factors or domestic factors.
If we look at recent and projected near term GDP growth rates for the UK then we can see that we are not far off a mild double dip already. If we just look at consumer spending – we’re actually already there. It wouldn’t take much to tip the UK into a technical double dip recession.
We’ve seen that consumer confidence does not support sustained consumer spending growth at present. The housing market remains weak. UK consumers have high levels of debt and are trying to pay them back. And fiscal austerity is hurting.
But this is not the nightmare scenario. Two mild quarters of negative growth would not be that dissimilar to what we’ve experienced lately. This would be worse than the central forecast, but it’s not the worst outcome.
A global double dip would be more painful. The biggest and immediate threat is the Eurozone crisis. The US could slip into recession as they embark on their own fiscal austerity programme and if it’s a severe one, it could drag the UK into recession too. But it is not likely to be too severe without collateral damage from the Eurozone crisis.
Most large emerging markets have been growing very rapidly. The forecast is for them to continue to do so – as many of them did throughout 2009. There have been murmurings of the potential for an over-heating and a slowdown in China, but the forecast is for continued growth.
It’s impossible to predict factors that could trigger a commodity price surge. But civil war in a major oil producing country would push up oil prices and inflation and harm disposable incomes.
So what’s the immediate outlook? Well firstly, it’s likely that GDP grew in Q3.
Unless we see a new commodity price surge, then inflation should fall back quite soon. If this happens it will enable disposable incomes to finally rise and encourage consumers to spend. So if we avoid a double dip then happier times might not be too far away.
A mild double dip is possible, but an increase in consumer confidence would reduce the likelihood of this. However, the biggest current threat to our economic prospects remains the Eurozone sovereign debt crisis.
We then heard from our Head of Research, Katie Toll, and analyst Kerry Rheinstein on the ‘End of Inefficiency’ and ‘Smart Networking’ respectively – two of our newest additions to nVitro, our library of emerging trends.
The End of Inefficiency is a fascinating proposition that rethinks the role of choice in the age of the algorithm. The age of price comparison is still relatively young. However, there is now such an array of price and quality comparison sites that it is hard to imagine making a purchase without consulting them first. In fact, this year, for the very first time, our nVision research shows that it is now a majority of consumers who are using the internet to compare prices and products.
Never before have consumers been so well guided towards good choices in our purchasing decisions. In fact, arguably, there is now no element of our consumption in which we would not seek third party advice to guide us to good decisions and we are increasingly trusting this input to refine and narrow our purchase choices.
But, in the story so far, the final decision has, in the main, been left to the consumer’s personal discretion. What is anticipated in this trend is that consumers will realise that they can actually optimise their decision-making by embracing systems and services which process choice options on their behalf. And, with limited or no further reference to them, select and activate the best one. This emerging trend therefore carries radical consequences for how certain products will be bought in the future and how brands might retain visibility with their customers.
Smart networking is propelled by the growing recognition of the indelible nature of online activity. This realisation has pushed consumers into a culture of digital housekeeping. Whereas the internet was once seen as a dream for one to be invisible, we now apply decorum measures – ways to behave – for our off-line and online lives.
This new self-awareness is driven by our increased use of the Internet and the merging of our personal and professional worlds. In the past, we had two lives (one online and one offline) and now we only have one. As consumers learn the consequences of their online activities’ half lives, the value of restraint will become ever more clear. Consumers feel the ongoing tension between the urge to share versus their preference for privacy, the desire to be free in cyberland versus the pressure for regulation and the desire for enhanced services versus feeling that companies are intruding into their personal lives.
The morning concluded with an interactive session led by the co-founder of the Future Foundation, Melanie Howard. This was focused on understanding the importance of irrationality and its implications on the way we approach consumer insight.
Our CEO, Christophe Jouan, then began the afternoon by analysing the importance of aspirations. Our proprietary research programme stretches back to 1980 and allows us to track how consumers have changed in their attitudes and behaviours since then. There is a (valid) assumption that our values as people lead to our choices as consumers and so brands always strive to fulfil emotional, as well as practical need. And, if this emotional need is a deep value or aspiration, so much the better.
Discovering these aspirations is even more important during radical times, when brands have to compete even harder for a smaller pool of money. Consumer knowledge can enable a brand to stand out in the ocean of price cuts, special offers and promotions.
Along with the rise of creativity, the need for recognition and fame is probably the aspiration that has grown most significantly but what was startling to see in the data was that many of the values and aspirations that shape our lives have remained incredibly stable across three decades. Although the way we interact with the world has changed dramatically, our core values generally have not. Will this change over next 5 to 10 years? We don’t expect so.
Jason Mander, a Senior Analyst on our editorial team looked at the rise and resilience of the “freemium”. Many of you, I’m sure, will be familiar with the concept of “Freemium” – a service model adopted by several online businesses in the quest to monetise digital content.
A combination of the words Free + Premium, it advocates giving a service or product away for free to a lot of customers on the expectation that some will choose to upgrade to premium access; essentially, service a large customer base but expect to draw revenue from a relatively small section of it. For this particular model to work, the revenue generated by that small proportion of paying subscribers is critical. But, as the profit reports of Spotify show, convincing consumers to upgrade from free versions is an extremely difficult feat - in the digital age, so many online users have become accustomed to receiving content at no charge that the thought of paying for it is simply unpalatable.
So, as Freemium companies attempt to stem the tidal wave of free content sweeping across various sectors - as they bid, as it were, to halt the obliteration of price - Jason asked us to consider whether the tactics being employed online have relevance in other retail contexts. And at a wider level, what light can the Freemium debate shed on the question of what customers in the 10s are willing to pay for? Will millions of consumers simply want something for nothing?
There was a specific focus on Freemium’s impact on, and relevance to, three of the themes we monitor within nVision – Considered Consumption, The Responsible Consumer and The Networked Society.
By exposing the latest attitudes among consumers and tracking innovative service propositions from a range of markets, we looked at how, and when, consumers may be tempted to hand over their money.
Last but certainly not least, Yasmine Baladi, Associate Director of Client Services, took us back into the world of nVitro to complete the day. She spoke about 2 emerging trends: The Wealth Siren and Self-Service Redefined.
What the mega-rich devour every day, the rest of us would like to taste at least once in a while. Furthermore these people continue to challenge the limits and boundaries of consumer aspirations and shape the dreams of billions of people.
The wealth siren theme demonstrates that there is no sign of the interest in the mega-rich diminishing. The number of uber-wealthy is constantly growing and as they do so, their importance and influence grows accordingly. We looked at a number of examples – of decaffeinated versions of what the super-wealthy are offered – and this will, we believe, continue to stimulate new waves of service and product innovation.
Self-Service Redefined was the final session of the day and Yasmine took us through how the humble vending machine is evolving to revolutionise consumer attitudes towards self-service and acquiring new status as it creates a third space between e-commerce and traditional retail.
Looking forward, the next generation of vending machines will continue to bridge the gap between traditional retail and the convenience of e-commerce. We envisage a future where smart terminals refine our expectations of service, where they perform a variety of additional social functions and provide features that help to simplify one’s daily life.
If you have any questions or comments about any of the content from the day, feel free to let us know in the comments or through your nVision Account Manager.
Autumn 2011 has seen the price wars between the UK’s major supermarkets enter a new stage of intensity, with a number of high-profile campaigns pushing the issue of value to the top of the consumer’s agenda – including the “Big Price Drop” (Tesco), the “Millions Giveaway” (Morrisons) and “1000s of Ways to Great Value” (Waitrose). But it is on the Sainsbury’s “Brand Match” scheme which we focus here and, in particular, its implications for our End of Inefficiency trend – in which we suggest that intelligent systems will soon take over some of our day-to-day decision making processes in order to optimise results. Essentially, that we’ll surrender a degree of control over our consumption once we realise that we can’t “beat the system”.
Of course, we acknowledge that critics of the “Brand Match” scheme have questioned the transparency of some of its conditions. But as a proposition, it must show how – at least in certain sectors – price comparison is likely to evolve. And so we might look with interest at a service like Nextag, a comparison site operating in a number of countries which allows netizens to set up “price alert” emails; once the cost of a desired item falls within the shopper’s predetermined range, Nextag sends the information to their inbox and prompts them to complete the transaction. Or to the Bing Flight Price Predictor, a service whereby travellers can monitor the cost of a flight and receive advice about the likelihood of it going up or down in the coming weeks. Will we soon see services which skip this final stage, automatically buying items on an individual’s behalf at the moment when – according to the algorithm – ticket prices have reached their optimum level? Will we have to wait much longer before some services start acting without waiting for intervention or confirmation from the consumer? We think not.
