Illustration by Open Source.
More businesses are morphing their business models to suit Millennials’ evolving values and spending power. Enter the anti-consumerism businesses: businesses that rent other people’s goods, or share them, on a temporary basis, to generate renewed value, happiness, and lessen environmental benefits through sharing.
The sharing economy fulfills the Millennial’s need for value, sustainability, and collaboration, and offers the kind of authenticity they can get behind. Whether businesses like Rent-A-Frock will ever lead to the demise of Nordstrom or Bloomingdale’s is debatable, but there are other aspects of the sharing economy that will affect the way consumers shop, particularly among the maturing Gen Z audience, as they start to earn income.
How does the sharing economy affect consumers?
How consumers get around affects where and how they will shop. With ride-sharing services like Uber now widely available, today’s generation of teenagers appears to be placing less importance on having a driver’s license.
The stark realities of future job markets and the preference for urban environments are making Gen Z more wary of the costs and inconvenience of driving and car ownership – many are realizing that they just can’t be bothered. What was once the symbol of independence for teenagers – the automobile – has now been replaced by the more accessible smartphone. They can do just about anything with their smartphone, especially shopping.
What does this mean for retailers?
Gen Z will unlikely be making regular trips to suburban destination retailers. Big box stores like Wal-Mart, Target, The Home Depot and Costco will not be easily accessible for those who don’t drive. Urban format stores will definitely see a renaissance; if you don’t currently operate an urban format, this is a strategy you may want to re-consider.
For some retailers, for example a furniture retailer, an urban format selling space may not be strategically viable nor practical for the consumer. However, you can still have an urban bricks-and-mortar location that can serve as a showroom, where you offer the ability to order online while in the store. For these retailers, it is essential to have a robust online shopping and fulfilment model that will suit the non-driving population.
What’s the true insight?
The critical insight with this trend toward no driving is that the consumer will no longer be coming to you: she expects you to come to her. While the effects of the sharing economy are mainly felt in the U.S., other markets will follow as evolving consumer needs continue to change retail business models. This is a prime example of where an omni-channel strategy is crucial to success to meet consumer needs.
These consumers will still visit brick-and-mortar stores, but will shop primarily online (and mostly via mobile) and will need delivery to home or, if the product is portable, an easily accessible urban depot. So while click-and-collect may be a burgeoning trend today for the Gen X and Baby Boomer car owners, home delivery or delivery to a local third party urban depot (e.g. subway stations) will be vital for the Gen Y and Gen Z consumer.
The takeaway here is clear: leave no fulfillment stone unturned. Consider multiple options for the consumer of the future, keeping in mind that many will be limited with their ability to travel by car. In planning your omni-channel strategy for 3 to 5 five years down the road, understand the consumer drivers that are affecting the way consumers behave and shop. This is the first step to delivering an experience that will be meaningful to them.