Why 2021 Will Be the Year of the Consumer
About the Author:
Rich Macfarlane
Consulting Partner at EY
Rich is EY's Future Consumer leader for New Zealand. Helping organisations use technology to transform the way work gets done, he delivers highly impactful and challenging programmes of change.
As we head into 2021, consumer facing organisations in New Zealand may be lagging behind a dramatic shift in consumer behaviour.
According to the EY New Zealand Future Consumer Index, 52% of those employed say they have changed the way they work, and half of New Zealanders (49%) have changed the way they shop.
What’s interesting in this change is not about the move to online shopping. It’s about compelling trends in what consumers value. Sentiment has shifted. Retailers and consumer packaged goods (CPG) brands who don’t keep up risk a catastrophic loss of brand loyalty.
In store is back – but trust is not
The latest Index actually shows a swing back to bricks and mortar purchasing. Although growth in online behaviour continues and retailers are struggling with a decline in CBD footfall, 83% of New Zealanders are now comfortable shopping in a grocery store and 71% comfortable visiting shopping centres. For many brands, the high street will continue to be an important touch point in the shopping experience.
The big-ticket item that all brands – across all channels – need to respond to is the upward swing in the lack of trust.
According to the latest figures, more than half (51%) of New Zealanders say they have minimal or no trust with online retailers and 45% say the same of chain stores.
Most important is the reaction of consumers when an organisation does something that makes them trust that brand less. A massive 57% of New Zealanders say they have stopped buying a brand altogether over an incident that reduced trust – and 44% told friends or family not to use the product.
Effectively, consumer expectations of retail brands have caught up with those of hospitality. If you have one bad meal at a restaurant, you’ll never go back. Now, a single poor brand experience can turn off customers forever
What do consumers want from brands?
In an information rich environment, where bad news can go viral in minutes, how can brands deliver on increasingly demanding consumer expectations?
According to the Index, actions that consumers say undermine their trust and turn them off a brand include:
Inconsistent customer service
A poor refund or return experience
Poor treatment of employees
Brands that are difficult to contact or failed to offer access to real people
Hearing bad stories about a brand in the media or from other people
So part of the solution is to provide a consistently great experience during the buying journey. But this is just half the story.
Almost three-quarters (74%) of New Zealanders now agree the behaviour of a company is just as important as what it sells – that brands must behave ethically and for the benefit of the community.
To this point, 54% think brands must put employees ahead of profits. And more than a quarter said they will buy more from organisations that benefit society – even if their products and services are more expensive than others on the market. Fifty-seven per cent said they are more likely to buy products from companies that have a positive impact on society. Not surprisingly, the pandemic has also increased the number of New Zealanders keen to buy local.
Sustainability will soon be as important as affordability
Around the world, the coronavirus has catalysed consumer interest in sustainability. During the pandemic, consumer trust in scientists soared as governments relied on health experts to curb the spread of the virus. Meanwhile, as lockdown led to clear Venice canals and rare sightings of blue skies from Beijing to Delhi, consumers saw for themselves the benefits of humans treading more lightly on the earth.
In New Zealand, the COVID-19 crisis also taught us that overcoming existential threats requires everyone – individuals, companies and governments – to take action. Being a bystander is no longer an option.
In this environment, the scene is set for consumer activists to wield increasing power to reward organisations for playing their part in building a low-carbon economy, removing single-use plastics and moving to zero-waste.
The Index found abundant green shoots signalling this behaviour. New Zealand consumers clearly want a green recovery. Already, 45% say they are paying more attention to the environmental impact of what they purchase and consume. Asked to look five years ahead at what they will value most when buying products, sustainability was ranked just one percentage point lower than affordability.
In future, sustainability will play a much greater role than many traditional retailers anticipated. Brands can expect to be under increasing pressure to be completely transparent about the egality and environmental impact of their supply chains. Eventually, blockchain will make anything a brand claims instantly verifiable – and consumers will punish those caught green washing. It’s time for brands to verify and remove from their entire supply chain anything they wouldn’t be happy to share with their customers.
Time for visionary leadership
2021 brings a great opportunity for leading brands to differentiate themselves and cement customer loyalty by creating meaningful, lasting change.
This is the moment to collaborate with government (see here) and solve the industry’s big sustainability issues: packaging and single-use plastics.
The next decade will be less about the four walls of a business and more about the ecosystem it operates in. It’s time for CEOs to imagine a future where the consumer holds all the cards. Where purpose moves beyond delivering supply to meet demand, to focusing all aspects of a business on meeting the community’s broader needs. Brands that survive will be those actively playing their part in building a sustainable economy and a fair and equitable society. Those who move early and lead the way will be rewarded by New Zealand’s increasingly powerful consumers.
Summary
According to the latest EY New Zealand Future Consumer Index the compelling trends in what consumers value has shifted. Retailers and CPG brands who don’t keep up risk a catastrophic loss of brand loyalty. The big ticket item that all brands – across all channels – need to respond to is the upward swing in the lack of trust, ethical behaviour, inconsistent customer service. Sustainability is also playing a part in what consumers are demanding from brands. Brands that survive will be those actively playing their part in building a sustainable economy and a fair and equitable society. Those who move early and lead the way will be rewarded by New Zealand’s increasingly powerful consumers.
Consulting Partner, Consumer
EY Oceania Technology
09 309-5191
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As we head into 2021, consumer facing organisations in New Zealand may be lagging behind a dramatic shift in consumer behaviour.