1. Online shopping is moving to mobile
The UK is the biggest online shopping market in Europe and is third in the world, after South Korea and Japan, based on the proportion of all transactions. In the UK, 6.9 percent of all retail sales take place online and the proportion continues to increase.
The growth of voice-activated tools such as Amazon’s Alexa and Google’s Assistant take some of the hassle out of browsing on a screen, and sales of mobile phones with larger screens, such as the iPhone X and the Samsung Galaxy S9 Edge, are making mobile shopping easier. This has fuelled an annual growth of almost 50 percent in e-commerce sales via smartphones.
As the graph below shows, m-Commerce is picking up in Asia, which would mean that most certainly it is on the rise. Already there are apps by various fast-food vendors such as Pizza Hut and McDonald's in Sri Lanka using which customers can order a quick meal. Movie tickets and booking rail and bus tickets is another major area where customers are getting accustomed to using their mobile phones to order things.
2. The balance of power has shifted to customer – it’s time to share & co-create
The internet together with social networking tools such as Facebook, YouTube, Instagram and Twitter has given consumers a lot of power these days. Consumers can instantly share their experiences, good or bad about a brand or a retail establishment. Recently, KFC Sri Lanka has seen a number o PR crisis's when customers found under-cooked meat and worse worms in their food. At all these times, affected customers did not hesitate to share their anger on social media. Of course, this being Sri Lanka, the company concerned quietly waited till the storm blew over. However, they are dead wrong if they think that is how every bad experience is going to end. Just ask Anchor Milk.
With this shift of power to the consumer, it is becoming necessary for companies and brands to engage consumers and give them the power to share. It may look dangerous, but there is no alternative. People will share good and bad. Companies have to be super alert about what their consumers are talking in the social media and respond appropriately. They must quickly boost positive talk and handle negative talk constructively and with honestly. Accepting wrong doing, apologizing and quickly taking meaningful steps to address the issue can restore faith in the brand and company.
The other aspect is co-creation where users are encouraged to create and share. There are co-create campaigns run by MNCs which encourage customers to take selfies or short videos sharing their brand experience. Here are some international examples.
Lego has its own version of co-creation that works as follows. On the toy company’s Lego Ideas website, people post concepts for new playsets. Fans of tiny building blocks then vote for their favorite ideas, and they can comment on the proposals as well. Lego’s executives choose new products from among the ideas with at least 10,000 votes. They also contact the originators of those concepts so they can provide input on design and marketing.
Anheuser-Busch, the beer giant has realized that their customers’ tastes and expectations are changing, and that they need to adapt. To meet these new demands, the world’s leading brewer has turned to its customers for innovation. The last few years has seen a significant increase in the popularity of craft beer and, not wanting to miss out, Anheuser-Busch saw crowdsourcing as the best way to develop a new product. Thanks to deciding to co-create with their customers, Black Crown, a golden amber lager, was developed with the help of more than 25,000 consumer-collaborators.
General Mills, the food giant counts brands like Cheerios, Wheaties, Pilsbury, Old El Paso, and Betty Crocker in its portfolio, but it has recognized the value of crowd-sourcing.
Through the General Mills Worldwide Innovation Network (G-WIN), General Mills has actively sought new innovative concepts and product lines. What’s best about their approach? The process is open to anyone. Customers, Employees, or Partners can ‘submit a novel proposal’ and suggest a product or innovation that could be useful to any aspect of General Mills and its business interests.
This approach has been a great success, and has seen General Mills make changes to their product line, packaging, manufacturing process, digital efficiency, and many other areas as a result of suggestions from the general public.
3. Please mind the generation gap, the demographics are changing fast
The generation gaps are not only real, they’re widening in the UK and elsewhere. As people live longer, they are redefining what it means to age; they are no longer winding down during retirement, they’re enjoying active lives and pursuing dreams.
At the same time, those at the younger end of the age spectrum are occupying increasingly small
niches. They’re not just different to their parents and grandparents, they’re very different to each
other, in their tastes, priorities, media consumption habits and preferences.
As a country with one of the fastest aging populations, Sri Lankan brands need to recognize the growing mature and elderly market. Older parents (with teenagers and older kids) are not hoping that their kids will get married soon and they will have the privilege of looking after grandchildren. With young people spending more time getting degrees and masters degrees and spending long hours at work, marriages are getting delayed.
All this means;
1. There will be a huge segment of elderly, economically active population that requires goods and services and brands needed to fulfill their aspirations. A brand cannot just assume that what the younger population requires will satisfy the elderly as well.
2. There is a growing population of young, independent, educated, economically secure, unmarried women who's specific needs have to addressed.
3. There is a growing segment of single parent families who also have very specific needs that has to be catered to.
4. Health is serious business
The search for good health is a sizeable phenomenon in the UK as well as other nations including Sri Lanka. A large percentage of the population inclduing children of school going age are overweight. A recent study published in ResearchGate concluded that as per the proposed World Health Organization cut-off values for Asians, the percentage of Sri Lankan adults in the overweight, obese and centrally obese categories were 25.2%, 9.2% and 26.2%, respectively. In addition, female sex, urban living, higher education, higher income and being in the middle age were shown to be associated with overweight and obesity in Sri Lankans.
Consumers know they need to act, and this is reflected in the products they are choosing to buy. People are cutting down on unhealthy fat consumption, salt intake and sugar intake. These choices are reflected in the brands people pick at the nearby supermarket. There is a big demand for organic food despite the unreasonably high prices. People are trying as much as possible to be reasonably in their dietary intake. Recently launched sugar free drinks are getting popular and the sugar tax seems to be having the right impact, lowering the prices of sugar-free drinks hiking the prices of unhealthy high sugar drinks.
Sri Lankan brands need to recognize these trends. Child obesity is rising in this country and soft drinks, fast-food and sweet treats are a big part of the problem. Rather than complaining, Sri Lankan soft drinks brands need to innovate and introduce healthier soft drinks. There is no point complaining that the sugar tax is hurting consumers. It is one of the taxes that is actually trying to help consumers.
5. Premiumising is not going to work in the short and medium term
Primium is feeling the pinch in the UK due to European economic crisis and on going austerity climate. While premium brands may have had a better past in the UK, it never really took off in Sri Lanka. Sure, there are lot of BMWs, Mercedes, Audi's and SUVs on the roads. Lot of people are buying hybrids and luxury apartments like there is no tomorrow. However, vast majority drives small cars financed by hefty lease agreements. A car has become a necessity and not a luxury item it used to be. Every family needs a vehicle regardless of their economic situation. Therefore, high car sales or apartment sales financed by the diaspora should not be seen as a signal that Sri Lanka is ready for luxury consumption.
Some companies are reading the signals wrong it seems. Premiumising or positioning at a premium segment with higher prices but (in most cases) offering dubious value seems to be a craze with some marketers in Sri Lanka, especially at the SME sector. There are upmarket boutique shops, premium restaurants, premium tea shops sprout around Colombo like mushrooms only to shutter after a few quarters obviously due to poor sales. You even get premium sausages for good measure.
Just because a few upmarket establishments such as Odel in retailing, Coffee Bean & Tea Leaf for tea and coffee houses or Kema Sutra and Ministry of Crab for restaurants or Spar Ceylon are (hopefully) doing well, it does not mean that the general population are going waste their hard earned money in high price, low value establishments. Sri Lanka, being a developing, middle income nation, the vast majority are squarely in the value segment.
There is money to be made at the bottom of the pyramid and in the middle but not much at the top for the next decade at least. Middle class Sri Lankan consumers are saddled with housing loans, car leases and student loans for most part of their working lives. Vast majority has very little cash left after the loan installment is paid and the credit card bills for the month is settled.
This is exactly why firms like Cargills FoodCity which target the bottom end of the retail segment is doing well. Even then, the FMCG segment seems to be in trouble according to the latest data. People are cutting back on non-essential FMCG purchases. In such a climate, premium is not going to do well.
Therefore, it is advisable that Sri Lankan brands take the WalMart or JC Penny (or Aldi and Lidle if you like a European flavor) route and not the BodyShop or Target route to the consumers wallet.
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