2. Contents
Foreword 03
Preface 04
Executive summary 05
About the research 08
The age of complexity 09
Great expectations 13
Understanding the changing consumer 19
New consumer realities 27
Lessons from industry growth leaders 31
Conclusion 35
References 37
1
4. Foreword
As the global economy continues impact of their purchases more often
on its slow path to recovery, there than they did three years ago. Such
is a prevailing sense of hope—and consumer trends have the ability to
expectation—that businesses can grow affect not only business-to-consumer
profitably in the coming years. From companies, but also business-to-
my experience with clients across the business ventures and the public
world, I have learned that businesses sector. Every organization must watch
and investors are tentative yet confident for signals of consumer change that
that a corner has been turned. can influence business growth and
the recovering global economy.
Yet while growth is high on the agenda,
it is especially hard to achieve in Businesses must stay one step ahead
a tough economic environment. In of the consumer to succeed in such a
Europe, particularly, the outlook is world. Many companies will admit they
challenging. It is still possible to find are currently one step behind.
pockets of growth, however—the Baltic
countries, for example, are all expected While there is no foolproof strategy
to grow at or above 2 percent in 2013. that will help restore growth in Mark Spelman
But for the most part, businesses economies where it has been hard
Managing Director
will not be able to ride the wave of to come by, a couple of imperatives
Accenture
overall market growth. Instead, they are clear. Businesses should discern
will have to redouble their efforts to emerging consumer trends, and then
grow in mature or slowing markets. invest selectively to stimulate growth in
consumer spending. Governments have
In regions or industries where the overall a role to play, too. They should actively
size of the market is static—or may create the infrastructure and the policy
even be shrinking—the ability to capture environment needed to foster business
market share becomes paramount. The activity in this new era.
companies best able to do this are those
that excel in their understanding of This is a time of great potential
consumers, a differentiator that applies for businesses and the customers
equally well in growing markets. they serve—a time when better
understanding of the consumer could
This truth is relevant as we embark energize global growth.
on what appears to be a new era of
consumption—one that is evermore
influenced by rapid advances in
technology, huge quantities of
information about individuals and their
preferences, and increasing concern
about the impact of consumption. What
has amazed me is the pace of change Mark Spelman
shown by consumers, particularly
in emerging economies. Nine in 10
emerging-market consumers have
watched television on a phone, tablet
or computer, and nearly two-thirds
are considering the environmental
3
5. Preface
Consumers are changing the world. Or more frequently co-operative: they seek
rather, changes in consumer behavior community, and they expect companies
are changing the world. Those changes to operate on behalf of communities.
are driving massive growth across They are also conscientious, and they
industries. And they hold the promise—if expect businesses to actively protect
businesses recognize and capitalize on the environment and to promote
the opportunities—of lifting the entire social causes.
global economy in the process.
Why does this matter so critically to
What kind of changes in behavior all business leaders today? Because
are we talking about? Let’s consider it points to the truth that companies
a few examples: it is the professor cannot be content to focus on the
in Stockholm checking her e-mail “where” and the “who” of selling.
before bed only to find an invitation They are unable just to say “emerging
to attend a conference in London, and markets” and “people over the age
immediately going online to buy airline of 55.” Instead, they must give new
tickets from a travel site. It is the young attention to the “how” and the “why” of
tech worker who gets his first job in consumption. The networked consumer Paul F. Nunes
Silicon Valley, sells his beat-up old car, is the new “how,” and the independent Managing Director of Research
and signs up for a car-sharing service and co-operative consumer is the “why.” Accenture Institute for High Performance
for those times when he needs personal
wheels. And it is the mother in São If stock markets are correct, then
Paulo, who always looks for the label companies must grow rapidly to meet
indicating that sustainable forestry analyst expectations. Just the non-
methods were used to produce the financial companies in the S&P Global
paper products she needs for her family. 1200 have to find an additional US$5
trillion in revenue each year. To meet
These examples all point to new types these expectations, business leaders
of behavior that we identified through must recognize key elements of
extensive research over the past year. changing consumer behavior and then
We found that the vast majority of undertake the necessary organizational
consumers today are networked. They shifts to capture the growth that those
are almost always “on”—never far changes are generating.
from an Internet connection that will
put them in contact with companies; Business leaders are confident in their
sometimes to buy, sometimes to offer ability to lead their companies to
advice, sometimes to praise or to profitable growth in the next few years.
criticize. They are also quick to use the Policy makers and government leaders
tools of social media to connect with should also be encouraged. We hope
everyone—family, friends, colleagues and this report helps them “energize” global
even companies from which they buy. growth through their understanding of
the changing consumer.
Furthermore, consumers are increasingly
independent. They may want products
that have been customized to meet
their specific desires. They often prefer
renting to buying, or second-hand
luxury to first-hand average. And yet
independent in no way means selfish—
on the contrary. Consumers today are Paul F. Nunes
4
6. Executive summary
The global economy hangs Investors today are, once again, Instead, companies must look elsewhere,
in the balance. Economists expecting robust business growth. at consumers themselves and how
We see this in our analysis of the changes in behavior are creating
continue to predict relatively S&P Global 1200, where enterprise important opportunities. In the past,
low growth in the developed valuations indicate high expectations. companies could grow simply by
world over the next five years. In fact, companies in that index will focusing on the “where” and “who” of
Meanwhile, the largest emerging need to find an additional US$5 trillion consumption—places such as emerging
markets have not been able to in revenue growth each year simply to markets and growing customer
meet the analyst expectations behind segments such as the elderly. Today,
maintain the astounding growth their current share prices.i two additional elements are critical:
rates of the previous decade. the “how” of consumption, and the
But while US$5 trillion may be a big “why.” Both areas have undergone rapid
Yet shareholders appear to number, business leaders show a change in recent years—so rapid that
see things differently. High surprising degree of assuredness in executives, even when aware of the
expectations for business growth their ability to deliver growth. In an trends, have wondered how to respond.
Accenture survey of 600 executives For instance, consider that more than
at large global companies in 10 countries, more than 80 percent four in five respondents (83 percent) in
are already priced into the reported confidence in their business’s our survey recognized the opportunity
market. The gauntlet, then, has ability to grow profitably over the next in responding to changing consumer
been thrown down: to meet two to three years. behavior, but nearly equal numbers (80
expectations, businesses must percent) said their companies were not
Is such optimism warranted? The recent fully taking advantage of those changes.
find ways to continue growing in record is not encouraging: only about
a world where average growth is one in 10 of the S&P Global 1200 saw
lower than pre-downturn highs. revenue growth outstrip economic
growth in each of the past three years.
Accenture recently undertook And when the analysis was broadened to
extensive research to understand include the world’s 3,000 largest listed
non-financial companies, we learned
how companies can achieve that only slightly more than half of the
high business growth in a slow- companies had increased both revenue
growth economy. The answer lies and net income over that period.
in recognizing how consumer
If the business climate has been
behavior change is generating
challenging in recent years, the overall
significant growth in a wide range economic climate has been worse—at
of industries. Armed with that least, in developed economies where
knowledge, business leaders can economic growth is roughly half what
then create the toolkit, mindset it was five years ago. And while those
markets are expected to rebound
and organizational structure that
somewhat in the next five years,
companies need to succeed in the outlook for emerging markets is
meeting expectations—including declining—with growth forecasts having
their own—for rapid growth. been revised downwards regularly. What
is the likely result? Executives should
Increasingly, as companies learn not expect that a rising economic tide
how to take advantage of the will enable middling companies to
become buoyant.
changing behaviors of their
customers, they can collectively
contribute to overall economic
growth wherever they operate; in
short, creating a virtuous circle.
i Financial service companies have been excluded from this analysis because their market multiples are not exactly comparable with other industries. For financial
service companies the market multiples are calculated at an equity level whereas for other industries they are calculated at an enterprise level.
5
7. The “how” and the “why” of • Co-productive consumers are now a While seeking a growing independence,
factor in the means of production. consumers are, at the same time,
consumption For example, they told us they increasingly involving others in their
Of course, it is possible to simply look more frequently provide direct consumption habits. They are becoming
around to get a sense of the changes feedback to companies and help increasingly co-operative, placing
in the way people consume and their design products. a strong emphasis on responsible
reasons for doing so. It is not news production and consumption:
The remaining seven dimensions
that consumers are increasingly using illuminate why people consume. • Communal consumers devote
mobile devices to buy anything and Personal fulfillment is critical to many extensive time and money to
everything. Nor will it surprise readers people, and this can be seen in four causes with social impact—and they
to learn that many people are often dimensions that define an appreciate businesses that do
less interested in acquiring “goods” and independent consumer: the same.
more interested in gaining experiences,
or that they see consumption as • Individual consumers spend to • Conscientious consumers more
an act of social responsibility. express their particular personality frequently buy local, more often make
and uniqueness: they want tailored what they need, and consider the
But having a general sense of the offerings that will bring out who they environmental impact when deciding
changing environment is not enough. really are. what to purchase. Also, they give
In addition to our survey of 600 away what they no longer need.
executives, we surveyed 10,000 • Experiential consumers want more
consumers in 10 countries to gain than the digital world can offer. • Minimalist consumers purchase
a data-led perspective on changing They seek the enjoyment of new and second-hand or reuse products.
behaviors. Our analysis yielded valuable different experiences, from traveling They may, for example, prefer
insights. Specifically, we were able to to new places to attending live events. car-sharing schemes to outright
identify 10 dimensions of consumer possession, tending to value access
• Resourceful consumers can seem
behavior change that are affecting over ownership.
like a familiar type: they work
the ways in which, and the reasons hard and spend thriftily to get Faced with a more complex landscape
why, consumers buy. Three of these ahead. The difference today is of consumption, businesses must work
dimensions point to the emergence of a that they turn to new online to enhance their understanding of
networked consumer: platforms to buy used products, consumers and learn how to turn that
sell directly to other consumers, better understanding into growth.
• Connected consumers are always on. or participate in online auctions.
For example, a large majority of those
we surveyed check e-mail before • Disconnected consumers like to
going to bed at night. They are never distance themselves from the
far from a purchasing channel at constant presence of the digital world
any time. and are willing to spend to do so. One
in five reported that they turn off
• Social consumers interact with their phones for extended periods. But
companies, institutions and each they still want products and services
other through the Internet. For that help them leave the stresses
example, more than half of of the world behind, ranging from
consumers reported that they scented candles to cruise vacations.
increasingly use social media to
interact with family members.
6
8. Targeting the new Instill an adaptive mindset. Leaders see The economics behind
disruption as an opportunity rather than
consumers—on their terms a threat. They inculcate a mindset of changing behaviors
What should companies do once they perpetual change that allows many of It is not only that businesses can grow
have gained this knowledge about them to shape their industry’s long- as a result of changing consumer
consumers? Returning to the list of term direction. For example, publishing behavior: the global economy can
the 3,000 largest listed companies company Pearson Education Limited benefit substantially. By aggregating
worldwide, we identified those transformed its entire business model estimates of market size and growth
companies whose median revenue when faced with a growing shift to for just a few industries and sectors
growth most exceeded their industry digital publishing. Tech-based education associated with these areas of behavior
peers—we term these companies services replaced textbooks as its change, we estimate the growth
“industry growth leaders.” By focusing primary breadwinner. Brazilian pulp opportunity from those sectors alone
on the set of highly successful and paper company Suzano Papel e to be roughly US$2.4 trillion over the
companies that had succeeded in Celulose saw beyond the challenge four-year period from 2012 to 2016.
markets built on significant changes of sustainability and recognized the These industries and sectors are growing
in consumer behavior, we were able to potential for “triple bottom line” growth; three-and-a-half times faster than
identify three common elements that it undertook sustainable forestry emerging economies and 10 times
kept them closer to changing consumers practices and was the first company in faster than developed economies.
and enabled them to achieve dramatic any industry in Latin America to receive
growth. Industry growth leaders: carbon-friendly accreditation. Additional research we conducted
estimates that stimulating consumer
• Develop a cutting-edge analytical Create an agile organization. Leaders expenditure could raise the level of
toolkit that enables them to recognize the importance of winning global gross domestic product by 2.3
continuously assess and respond to quickly in today’s markets; having the percent in 2016. With these projected
changes in consumer behavior. right capabilities to turn insight into returns, understanding and following
action. These companies scale offerings consumer behavior becomes everyone’s
• Instill an adaptive mindset that helps rapidly after identifying a successful business today, including those that
them anticipate or respond quickly to response to an element of consumer seek to increase growth at national
disruptive market forces. change and are able to change direction and world levels. The end result is likely
• Create an agile organization to quickly. Whole Foods Market understood to be a boost to growth that benefits
introduce the right capabilities to act consumers’ growing emphasis on both developed and emerging markets—
on fast-developing opportunities. healthy living and carried out mergers and the consumers within them.
and acquisitions to become the world’s
How can organizations market leader in natural foods. Baidu, a
Chinese search engine and technology
better profit from consumer company, is moving into Brazil as part
change? of its internationalization strategy—
despite losing US$108 million in its
Develop an analytical toolkit. Leaders overseas operations from 2008 to 2010.
use advanced analytics to identify and
bridge gaps between businesses and
consumers. For example, Activision
Blizzard Inc., a computer games
developer, partnered with an analytics
firm—which captures analytics data on
250 million consumers daily—to test and
improve gameplay in real time. Netflix’s
analytics capabilities lead the film rental
industry, enabling the company to cater
to individual consumers’ preferences in
recommending titles for rent.
7
9. About the research
Our research comprised four individual studies. Each study was designed
to answer critical questions in a logical sequence that started with the
individual consumer and ended with implications for the global economy:
• Is consumer behavior really changing—and if so, what patterns or
trends can we discern to help businesses grow?
• Are business leaders aware of these changes, and if so, how are
they responding?
• What are the best examples of companies that are capturing the
benefits of changing consumer behavior, and what can other
companies learn from them?
• What do changes in consumer behavior mean for the global
economy as a whole, and can higher growth be stimulated by greater
understanding of these changes?
For the global consumer behavior survey, Accenture surveyed 10,000
online consumers from 10 countries—Brazil, China, Germany, India,
Indonesia, Japan, South Africa, Turkey, the United Kingdom and the
United States—to assess and quantify the extent of consumer behavior
change. We conducted a factor analysis on the results of this survey to
derive the 10 dimensions of consumer change discussed in this report.
For the global executive survey, Accenture surveyed 600
business executives from the same 10 countries, across many
industries. Approximately half of these respondents were C-level
executives; the remainder were directors and other senior
managers. Nearly 60 percent of the businesses surveyed had
annual worldwide revenues above US$1 billion; about one-third
had revenues between US$500 million and US$1 billion; the rest
had revenues between US$250 million and US$500 million.
In our industry growth leaders analysis, Accenture assessed the world’s
top 3,000 listed companies by market capitalization and identified those
that had achieved the greatest median revenue growth compared to
their industry average over three-, five- and 10-year periods. A subset of
these companies was used to create several case studies for the report.
Accenture conducted a macroeconomic analysis in conjunction
with Oxford Economics to assess the impact of changing
consumer behavior, identifying the effect of an increase in
consumer expenditure on the economy as a whole.
In addition to the four studies listed, Accenture conducted
interviews with client account teams and technology specialists.
8
10. The age of complexity
The global economic Consumer expenditure Market growth harder
outlook crucial for growth to attain
The residual impact of the great Stimulating consumer expenditure Many businesses are finding that
recession is still being felt by the global is essential to steer economies onto traditionally “core” markets are showing
economy. While the prospects in 2013 higher growth trajectories, not least little or no signs of growth. Consumer
look better than 2012 at a global level, due to the size of consumer spending confidence in the European Union is
concerns still persist over economic itself. Household expenditure is the approximately 12 percent lower than
growth in developed countries, where main component in many developed the long-run average, as unemployment
the outlook over the next five years is economies—private consumption rises and disposable household incomes
below prior highs (see Figure 1). constituted 72 percent of gross fall.6 This decline in confidence has had
domestic product in the United States a corresponding impact on retail sales,
Lower growth in the developed in 2011.5 Many emerging economies which were 3.6 percent lower in the
world, and the consequent reduction are trying to stimulate consumer eurozone than the year prior.7
in imports, has dampened growth expenditure to rebalance economies
prospects among the largest emerging that have become reliant on fixed At the same time, emerging markets
markets. These emerging markets investment and government expenditure are unlikely to provide immediate
are also facing challenges closer to for growth. returns for new entrants. The Accenture
home. China’s growth is slowing as global executive survey suggests that
household consumption continues to In addition, history shows the important emerging-market exposure has been
lag investment,1 with the percentage role of consumer expenditure in critical for companies in developed
of gross domestic product attributable recovery from prior recessions. markets to achieve high growth. Of the
to consumer spending falling by 11 Accenture analysis of 14 recessions fast-growing companiesiii headquartered
percentage points from 2000 to 2010.2 suffered across Germany, the United in developed markets, 23 percent gained
India’s 2012 growth rate is forecast to States and the United Kingdom found more than half of their revenues from
be the lowest in 10 years. It, too, has that consumer expenditure was a emerging markets, compared with just
seen private consumption as a share of significant component of recovery after 5 percent of others. Yet the window of
gross domestic product fall—by more eight of these downturns.ii However, the opportunity in emerging markets may
than eight percentage points over the recent recession has been not only more be shrinking. In the Accenture Fast
same period.3 Brazil’s economy has prolonged but also more profound than Forward to Growth study in 2012, 73
oscillated from 7.5 percent growth in those observed in the past. Personal percent of respondents said they feel
2010 to 1 percent in 20124 and back consumption has taken 10 quarters to the need to accelerate their efforts and
to a forecasted 3.9 percent in 2013. return to its pre-recession level in the that they may already be too late to
In such a complex macroeconomic United States, compared to an average build satisfactory market share in high-
environment, sources of growth are of three in previous recessions (see growth markets,8 raising concerns that,
hard to find and constantly changing. Figure 2). while new hotspots of economic growth
may be appearing, it will take time for
businesses to reap the rewards.
ii The analysis looked at different components’ contribution to changes in gross domestic product levels, and the extent to which the components’ influence differed
from a historical average in the quarter immediately following recession. “Very significant” is defined as greater than one standard error over the mean.
iii Defined as those with an increase in total sales of 6 percent or higher over the last year.
9
11. Figure 1. Slow recovery in developed markets
Average annual gross domestic product growth, developed markets (in percentage)
Eurozone United States Japan
3.2
3.0
2.7
2.5
2.2
1.8
1.4
1.0
0.6
0.1
-0.2 -0.1
1998-2002 2003-2007 2008-2012 2013-2017 1998-2002 2003-2007 2008-2012 2013-2017 1998-2002 2003-2007 2008-2012 2013-2017
Source: Oxford Economics
Figure 2. Slower recovery than prior recessions
Personal consumption expenditure after United States recessions, index=100 for quarter prior to recession
130
125
120
115
110
105
100
95
90
-1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Quarters from recession start
1953 Q3 to 1954 Q2 1969 Q4 to 1970 Q2 1981 Q3 to 1982 Q2 2008 Q3 to 2009 Q2
Sources: United States Bureau of Economic Analysis, Accenture analysis
10
12. With the economic outlook in emerging Here is how global growth could play
markets facing downward pressure, out: in developed markets, the slowing
it will be far more challenging for or ending of the drive for austerity
international businesses to deliver rapid (happening organically or led by policy)
growth. The Accenture global executive could encourage businesses to spend
survey suggested a fading confidence and invest some of their cash balances.
in emerging markets—just one in three Increased business activity will, in turn,
business leaders surveyed are very improve labor-market conditions, lifting
confident that selling more in emerging real wages while boosting consumer
markets would enable profitable growth confidence. In emerging markets, this
in the next two to three years. impact is likely to be more prominent,
thanks to ongoing rebalancing efforts,
continued urbanization and strong
The case for change momentum in real income growth.
Given the importance of private
consumption to major economies, Although these changes are partly
a substantial recovery in consumer a question of policy—enabling a
spending would help economies reduction in the savings rate in both
achieve a higher growth trajectory than the emerging and developed world,
currently forecast. However, consumers without precipitating a return to the
themselves are not going to spend overly high levels of personal debt that
their way out of the current situation. helped bring about the 2008 downturn—
Business investment is critical to an businesses also have a role to play in
economic upsurge, with governments targeting investments to activities
also playing a role in providing that appeal to consumers, allowing
infrastructure and creating a favorable their spending levels to grow. To do so
policy environment. requires a nuanced understanding of
how consumers have changed, and what
Our analysis, carried out in conjunction they currently want.
with Oxford Economics, suggests
that if consumer expenditure can be
encouraged, global growth forecasts will
be significantly higher. We believe that
consumer expenditure globally could
rise by US$1 trillion over the baseline
expectations by 2016,iv resulting in an
uplift to global gross domestic product
of 2.3 percent (or US$1.4 trillion).
iv Oxford Economics baseline growth forecast as at November 2012.
11
14. Great expectations
Market expectations of The expectations are high; in total,
non-financial companies in the S&P
markets. These difficulties have arisen
for a number of reasons—weaker-than-
company growth are Global 1200 need to achieve US$5
trillion of revenue growth every year
forecast demand, regulatory pressures
or a misunderstanding of consumers.
back to meet analysts’ growth expectations. One US-based retailer, for example,
In today’s environment, achieving this recently announced the closure of a
Despite unfavorable economic
revenue growth will be no small feat. store format in China poorly suited to
conditions, market expectations of
local customers.
company growth have returned to pre-
crisis levels. Analysis of the S&P Global Unfounded optimism? At the same time, it is significantly
1200 (excluding financial companiesv) harder to realize inorganic growth.
Faced with these high expectations,
shows that enterprise value multiplesvi— The combination of the uncertain
businesses are remarkably upbeat.
be they multiples of revenue or profit— macroeconomic environment, increasing
Eighty-two percent of respondents
are back to where they were in 2007 protectionism and growing antitrust
we questioned in our global executive
(see Figure 3). regulation globally has dampened the
survey are confident in their business’s
ability to grow profitably over the next market for mergers and acquisitions.
We also found that analysts’
two to three years (see Figure 4). This Global merger and acquisition deal
expectations of revenue growth
growth is not restricted to companies values were 50 percent lower in 2011
among leading firms are significantly
based in emerging markets; in every than 2007, and the forecast for 2012 is
outpacing forecasts of economic
country we surveyed, at least 60 lower still.10
growth. Using the S&P Global 1200
(excluding financial companies) as percent of respondents said they are
our dataset, we calculated that the confident in the ability of their company
median consensus revenue growth to grow.
for 2012 to 2014 is 4.6 percent per
Such confidence may be misplaced: we
annum. In comparable terms, economic
looked at the revenue and net income
growth in developed economies is
growth of the world’s 3,000 largest
forecast to average 3.3 percent per
listed (non-financial) companies and
annum over the same period.vii
found that, over the last three years,
The implication is clear—leading nearly half (44 percent) of them failed
companies need to grow faster than to grow both revenue and net income.
their economic environment. Yet on
Weak overall growth in developed
average over the last three years, nearly
markets, coupled with challenges in
four in 10 companies have failed to have
achieving success in emerging markets,
revenue growth exceed gross domestic
has drastically reduced opportunities
product growth in developed economies,
for organic growth. Many large global
and less than a quarter (24 percent)
companies, from sports clothing
have had revenue growth that exceeded
retailers to consumer goods companies,
growth in developed economies in each
have recently issued profit warnings or
one of the last three years.9
lowered earnings forecasts in the face
of increasing difficulties in emerging
v Financial service companies have been excluded from this analysis because their financials are not exactly comparable with other industries. For financial service
companies the market multiples are calculated at an equity level whereas for other industries they are calculated at an enterprise level.
vi Enterprise value is a measure of the market value of an entire business, covering both debt and equity (less cash holdings). Enterprise value multiples reflect the
market’s perception of company growth prospects—higher multiples indicate the high premium that the market attributes towards their future prospects.
vii Consensus earnings estimates are in nominal terms in local currency, and we took the median of individual companies’ growth rates. Developed economies’ gross
domestic product was calculated in current prices and constant (2005) exchange rates—this is the closest parallel possible. We use gross domestic product growth in
developed economies as a comparison since companies from developed economies make up the vast majority of the S&P Global 1200.
13
15. Figure 3. Market expectations are back to pre-downturn levels
Enterprise value multiples, S&P Global 1200, 1997 to 2012
14
13
12
11 Enterprise Value/Earnings
Before Interest and Taxes
10
9
8 Enterprise
7 Value/Earnings Before
6 Interest, Taxes,
Depreciation and
Enterprise value multiple
6
Amortization
5
4
3
2
1 Enterprise
Value/Revenue
0
1996 1998 2000 2002 2004 2006 2008 2010 2012
Sources: Capital IQ, Accenture analysis
Figure 4. Businesses are confident in their ability to grow
How confident are you in your business's ability to grow profitably in the next two to three years?
1%
All 4% 13% 48% 34%
Developed 7% 20% 48% 25%
1%
Emerging 2% 9% 48% 40%
2%
Germany 3% 13% 52% 30%
Japan 5% 25% 41% 30%
United Kingdom 15% 25% 47% 13%
United States 3% 17% 52% 28%
Brazil 67% 33%
China 7% 43% 50%
India 10% 35% 55%
Indonesia 7% 48% 46%
2%
South Africa 13% 61% 24%
Turkey 5% 13% 15% 33% 33%
1 = not at all confident 2 3 4 5 = very confident
Source: Accenture global executive survey
14
16. Growth from consumer Fast-growth companies are
behavior change already taking advantage of
So, how can companies find and
behavior change
deliver the growth they need? Growth There is a significant difference
opportunity comes from change—and between companies we surveyed
changes in consumer behavior have whose revenues grew by 6 percent or
the capacity to create huge market more last year (“fast growers”) and
upheaval. In the churn that accompanies those whose revenues did not (“slow
change, there is opportunity for growers”) in their attitudes toward
companies to gain ground relative consumer behavior change (see Figure
to their competitors. Moreover, this 5). Fast growers are more likely to
opportunity is not reliant on high levels see business opportunity in consumer
of economic expansion—change will behavior change than slow growers (88
continue to create opportunity in high- percent versus 74 percent). But they
growth markets, but gaining market are also more likely to be investing
share represents the most likely source to capture it—79 percent of fast
of business growth in slowing markets. growers have increased investment
in consumer-facing activities in the
The results of our global executive last three years, compared with
survey suggest that, despite recognizing just 54 percent of slow growers.
the upheaval, business leaders are
underexploiting changes in consumer This opportunity from consumer
behavior as a source of growth. behavior change is not new—but the
More than four in five respondents pace of change means that, similar to
in our global executive survey said the emerging-market boom, those left
that consumer behavior change behind now will struggle to catch up.
presents opportunity for business
growth (83 percent selected “4” or Executives recognize that economic
“5” on a 5-point scale). And yet 74 and demographic change—the agents
percent of executives said that their of “market growth”—are not the only
understanding of consumer behavior trends that enable business growth.
is less than complete. Fully 80 Our global executive survey found that
percent of executives we asked said business leaders believe that technology
that they are not taking advantage developments are the most important
of this opportunity for growth. shift for enabling business growth (34
percent), with a further 13 percent
saying that changes to consumer
preferences are most important (see
Figure 6).
15
17. Figure 5. Fast-growing companies at the forefront of consumer behavior change
Opportunity from consumer behavior change
2%
Fast growth 9% 53% 36%
1%
Slow growth 5% 20% 54% 20%
1 = we do not see it as an opportunity at all 2 3 4 5 = we see it as an enormous opportunity
Understanding of consumer behavior
2%
Fast growth 11% 55% 32%
1%
Slow growth 3% 21% 60% 15%
1 = has very little understanding 2 3 4 5 = completely understands
Investment in consumer-facing activities, last three years
1%
Fast growth 4% 17% 48% 31%
Slow growth 7% 38% 41% 13%
1 = significantly decreased 2 3 = stayed the same 4 5 = significantly increased
Source: Accenture global executive survey
Figure 6. Technology seen as the main driver of business growth
Which of these broad shifts do you see as most important for enabling your business to grow profitably in the next two to
three years?
2%
All 29% 22% 34% 13%
Developed 7%
8% 26% 20% 30% 15%
2%
Emerging 29% 21% 36% 12%
Germany 3% 30% 25% 31% 11%
Japan 3% 31% 30% 26% 10%
United Kingdom 13%
7% 28% 17% 25% 17%
United States 12%
67% 17% 10% 38% 23%
Brazil 23% 40% 18% 18%
2%
China 23% 10% 65%
India 3% 42% 23% 20% 12%
Indonesia 33% 18% 41% 8%
South Africa 29% 19% 42% 10%
Turkey 7%
15% 25% 18% 28% 22%
Other/none Changes to global Changes to global Technology Changes to consumer
income patterns demographic patterns developments preferences
Source: Accenture global executive survey
16
18. Why consumer
behavior is
important for all
businesses
Very few businesses do not have a consumer at the end of the value
chain. While a traditional business-to-business company may think it is
not affected by consumer change, it is not well insulated.
Take tablet computers, for example—as traditional “consumer” goods,
they have been introduced in “non-consumer” industries, such as
healthcare and education, to disruptive effect. Also, indirect effects
of consumer behavior change have had a butterfly effect on some
business-to-business industries. The growth in demand for rare-earth
minerals in new consumer technologies (such as tablet computers)
contributed to price rises and export controls—creating real risk in
industries that use rare earths for different purposes, such as petroleum
refining. In an interconnected world, all businesses, everywhere, need to
have an understanding of changing consumer behavior.
17
20. Understanding the changing
consumer
Beyond “who” is However, awareness of consumption
shifts does not guarantee growth, and
10 dimensions of consumer
consuming and “where” fast-growth companies differentiate change
themselves by recognizing that they To take advantage of opportunities
Fast-growth companies understand need to respond to change in consumer that arise from changes in consumer
that knowledge of “who” is consuming behavior—as well as demography behavior, organizations of all kinds need
and “where” they are consuming is and income patterns—to capture to understand it better. As part of the
necessary yet insufficient for achieving the opportunity in increasing global Accenture global consumer behavior
sustained consumer-led growth. The consumption. As a result, they possess survey, we identified 10 dimensions of
demographic and economic shifts that a fundamental understanding of the consumer behavior change happening
are affecting consumption patterns are changing consumer which recognizes now that characterize the changing
well-documented. More than 15 percent “how” and “why” we consume. consumer. We analyzed survey
of the world’s population today is
responses to determine which behavior
under 15 and living in Asia. Yet by 2050
there will also be 2 billion people in “How” and “why” we shifts were cross-correlated—that is,
those that moved in step with each
the world over 60.11 In all 10 countries consume other. This analysis resulted in eight
we surveyed, the median age of the
Both digital enablement and attitudinal groups of behaviors, or “dimensions”
population is expected to increase
changes have altered “how” and of behavior change. We then split
between 2010 and 2050.12
“why” we consume, resulting in a new the largest (“networked”) dimension
Geographically, the locus for “where” consumer paradigm (see Figure 7). further, into three observable trends
consumption is taking place is shifting Today’s consumer is better-informed in online consumption. We grouped
east and south, as greater disposable than in the past, with unprecedented the remaining seven factors into
income brings millions in emerging access to products and services through those that are primarily concerned
economies into the consuming class. new methods of consumption. At the with the individual—what we term the
According to Accenture analysis, China same time, consumers today differ from “independent consumer”—and those
and India are projected to experience their predecessors in their motivations that primarily involve interaction with
a total increase of household income for consumption. They make choices others—the “co-operative consumer.”
of US$4.6 trillion between them from not only to improve their material The dimensions of consumer behavior
2010 to 2020. By 2020, Turkey is welfare but their physical and mental change are defined in Figure 8.
anticipated to have an extra 4.7 million well-being as well, and they are more
households with annual incomes more interconnected with the lives of others.
than US$30,000—and Mexico another These developments are less predictable
3.3 million.13 than economic and demographic
change, yet also less reliant on
high levels of economic growth.
This degree of changing behavior is
borne out by the Accenture global
executive survey. Nearly three quarters
of respondents (73 percent) said that
consumer behavior is markedly different
than it was just three years ago.
19
21. Figure 7. Moving beyond the “who” and “where” of consumption
Four major shifts…
Economic e.g. the growing global middle class
Changes who is consuming and where
Demographic e.g. aging populations
Technology Digital enablement
Changes how we consume and why Changing consumer
Ideology Attitude change
Figure 8. The 10 dimensions of behavior change
Connected • Ensures they are always “on,” continuously in a channel
Networked Social • Uses digital technologies to interact with friends, family, strangers, institutions
Co-productive • Plays a role in production through design, or providing data to companies
Individual • Values uniqueness and luxury, seeks to express their personality
Experiential • Desires new experiences, attends live events, shares experiences with friends
Independent
Resourceful • Works hard to get ahead, shrewd with money
Disconnected • Tries to switch off, break from tradition
Communal • Participates in society, with a strong group ethic
Co-operative Conscientious • Buys local, makes rather than buys, considers the environment before purchase
Minimalist • Places access above ownership, happy to purchase second-hand or reuse
20
22. The networked to design products and providing direct
feedback to improve offerings—what
The co-operative
consumer we term co-productive consumption.
Thirty percent of consumers are buying
consumer
Technology has now permeated all things they helped design or make Consumer expectations for products
spheres of life. The uptake of new online more often than three years ago. and services are going beyond personal
devices is now faster than at any Co-production can mean anything from utility. Now, consumer choices are
point in history—the time taken for designing personalized greeting cards guided by the need to do good—for
smartphones to move from 10 percent to providing funding for a start-up. others and for oneself. Co-operative
to 40 percent penetration in the Networked consumers are empowered consumers place a strong emphasis
United States was equaled only by to tailor products to their desires on responsible production and
the television. Tablet computers have and aspirations instead of vice versa, consumption. They are communal in
become the fastest technology to reach transforming the act of consumption. their outlook, participating in society
10 percent penetration, achieving this and improving their health (47 percent
milestone in a mere 18 months.14 There of consumers participate more in
were nearly 6 billion mobile phone The independent physical activity to improve their health
subscriptions in 2011, and 2.2 billion than they did three years ago). They are
Internet users—roughly one-third of consumer conscientious in their consumption—51
the world’s population.15 Facebook We are seeing unprecedented levels percent of consumers consider the
passed 1 billion users in 2012,16 while of wealth globally, with many people environmental impact of the product or
it takes only a week for Twitter users in many countries enjoying disposable maker more often before purchasing a
to send 1 billion tweets.17 Society has income for the first time. But money product. Instead of purchasing a new
moved online, creating a connected does not necessarily make you happy. As product, co-operative consumers rent
consumer class with continuous access societies develop, consumers seek more or buy used; what we term minimalist
to goods and services. Our global from their lives than a conveyor belt consumption. Twenty-five percent of
consumer survey found that 73 percent of washing machines and automobiles. consumers are more frequently buying
of consumers are using the Internet Consumers around the world are now or using things previously owned by
to research or purchase products or adopting lifestyles that can provide an someone else (see Figure 9).
services more than they were three outlet for self-expression in their pursuit
years ago. of happiness.18
Increasingly, networked consumption Independent consumers expect
has also become a social experience—we individual offerings to match their
found that 53 percent of consumers personalities and preferences—40
are increasingly using social media percent of consumers are buying things
to interact with friends and family, more often that they think help express
while customers are also using the their individual personality. Moreover,
recommendations of family, friends they are experiential, seeking unique
and others whose opinions they trust experiences, from the adventure of an
to inform their purchasing decisions urban scavenger hunt to the enjoyment
more often. But social networks on of attending a music festival—38
the Internet spread beyond friends percent of consumers increasingly are
and family—there has been an seeking out new or unique experiences.
explosion in online forums and chat Resourceful consumers are shrewd with
rooms that discuss various goods money, and they are working hard to get
and services, and consumption blogs ahead—35 percent of global consumers
(food or otherwise) have become are working outside normal business
a mainstay of online society. hours more often than three years ago.
Also, networked consumers have a And some choose to become noticeably
radically different relationship with disconnected—switching off from the
producers than their offline forebears. “noise” of modern life. Nearly one in five
Not content to merely purchase goods consumers say they turn their phones
and services and share their opinions off for extended periods of time more
with contemporaries, they want to often than they did three years ago.
actively participate in the production
process as well, working with businesses
21
24. Figure 9. Consumer Change Index
Key: Bars show net increase in activity. This is calculated by subtracting the percentage of respondents that have done the
activity less in the last three years from the percentage that have done the activity more in the last three years.
Global Germany Japan United United
Kingdom States
Connected Connected
Use Internet to research products 68 58 61 69 56 Use Internet to
Use laptop or tablet in personal life 63 41 46 52 47 Use laptop or ta
Check e-mails before bed 50 27 31 34 38 Check e-mails b
Watch TV on a device 25 8 5 25 12 Watch TV on a d
Shop while in bed 4 -1 3 5 -3 Shop while in b
Social Social
Use social media with friends/family 42 11 7 35 26 Use social medi
Interact with companies online 37 9 4 23 20 Interact with co
Spend time texting or e-mailing 29 3 7 38 26 Spend time text
Take part in online communities 22 8 1 16 3 Take part in onl
Co-productive Co-productive
Contribute reviews online 33 18 12 22 21 Contribute revie
Provide feedback to companies 31 14 6 34 28 Provide feedbac
Help design or make online 15 -1 -1 -5 -3 Help design or m
Individual Individual
Buy to express personality 26 9 8 6 0 Buy to express p
Buy because something is unique 21 9 0 -1 -1 Buy because som
Buy custom-made or tailored 10 -6 -3 -13 -17 Buy custom-ma
Buy to impress friends 2 -3 -10 -18 -16 Buy to impress f
Treat oneself to luxury 2 0 -4 -16 -13 Treat oneself to
Buy shares or stake in company -5 -8 0 -16 -9 Buy shares or st
Experiential Experiential
Share experiences with friends 22 6 -6 5 3 Share experienc
Do something new 17 8 -3 0 -1 Do something n
Travel to new places 12 6 -1 0 -3 Travel to new pl
Attend live events 1 -8 -11 -20 -13 Attend live even
Resourceful Resourceful
Repair rather than buy new 18 12 9 27 17 Repair rather th
Work outside normal hours 15 10 1 7 2 Work outside no
Resell or exchange goods 10 15 -1 26 13 Resell or exchan
Disconnected Disconnected
Buy things parents disapprove of 1 5 -7 6 -4 Buy things pare
Schedule time to do nothing -1 10 -5 -3 1 Schedule time t
Turn off phone -13 1 -7 -6 -3 Turn off phone
Communal Communal
Make changes to reduce impact 33 15 8 22 21 Make changes t
Participate in physical activity 30 25 12 11 25 Participate in ph
Volunteer to help good cause 15 2 -3 -3 9 Volunteer to he
Participate in group activities 8 -1 -7 -15 -12 Participate in gr
Help local organizations 6 1 -5 -2 4 Help local organ
Attend religious group meetings -3 -15 -14 -14 -7 Attend religious
Conscientious Conscientious
Consider environmental impact 42 27 15 18 28 Consider environ
Give away things 39 25 14 42 49 Give away thing
Buy locally sourced or made 30 27 23 24 35 Buy locally sour
Make rather than buy 18 11 -4 14 15 Make rather tha
Use community services 10 -7 -1 1 10 Use community
Minimalist Minimalist
Buy pre-owned -7 -1 3 19 4 Buy pre-owned
Rent rather than own -12 -14 -4 -17 -18 Rent rather than
Source: Accenture global consumer behavior survey
23
25. e the
d Brazil China India Indonesia South Turkey
s Africa
Connected
56 Use Internet to research products 80 79 55 72 71 76
47 Use laptop or tablet in personal life 69 80 58 80 75 76
38 Check e-mails before bed 76 44 60 61 64 66
Watch TV on a device 25 75 34 12 16 33
Shop while in bed 5 37 3 -10 3 -3
Social
6 Use social media with friends/family 61 67 51 58 61 41
0 Interact with companies online 51 58 42 43 51 65
6 Spend time texting or e-mailing 36 52 37 10 58 23
Take part in online communities 39 40 30 41 30 16
Co-productive
1 Contribute reviews online 53 53 35 33 39 45
8 Provide feedback to companies 29 49 39 19 45 46
Help design or make online 33 52 30 8 -1 37
Individual
Buy to express personality 28 53 49 44 24 36
Buy because something is unique 25 46 50 35 28 20
Buy custom-made or tailored 19 41 40 29 -8 16
Buy to impress friends 4 43 27 3 -14 4
Treat oneself to luxury 17 22 15 -5 3 0
Buy shares or stake in company -10 21 12 -10 -15 -11
Experiential
Share experiences with friends 44 48 47 31 24 22
Do something new 26 36 44 28 16 18
Travel to new places 16 29 31 24 -7 25
Attend live events 15 19 25 -8 -2 12
Resourceful
Repair rather than buy new 15 19 22 13 25 23
Work outside normal hours 13 31 18 19 31 17
Resell or exchange goods -2 27 10 -9 17 3
Disconnected
Buy things parents disapprove of 17 18 2 -27 4 -4
Schedule time to do nothing 2 8 6 -18 -8 -1
Turn off phone -22 -11 -12 -35 -19 -20
Communal
1 Make changes to reduce impact 42 60 48 46 40 28
5 Participate in physical activity 32 53 46 35 31 36
Volunteer to help good cause 19 35 35 24 11 26
Participate in group activities 21 39 26 16 -3 12
Help local organizations 5 23 27 9 4 -2
Attend religious group meetings 7 -4 21 20 2 -22
Conscientious
8 Consider environmental impact 54 62 53 56 48 57
49 Give away things 44 39 36 39 56 51
35 Buy locally sourced or made 25 43 24 12 43 41
Make rather than buy 19 26 33 13 25 25
Use community services 7 33 26 -2 24 9
Minimalist
Buy pre-owned -25 -5 -16 -19 -14 -15
Rent rather than own -11 27 -8 -35 -34 -9
24
26. The size of the prize It should be noted that our model
provides only a partial picture of
The marketplace for the changing the true potential of the market
consumer is vast and growing size associated with the changing
rapidly. To understand this market’s consumer. The industries included
size and economic prospects better, are indicative of each dimension of
Accenture identified a list of emerging consumer change,viii with account
industries and sectors that are driven being taken of any potential overlap
by the 10 dimensions of behavior between industries to avoid double-
change. We then researched each counting and overestimation.
industry’s size and projected growth
rate from 2012 to 2016. Finally, In low-growth environments, companies
we combined these industries and must focus on gaining market share in
sectors to create a composite growth an environment where potential gains
trajectory on a global scale. are constrained. There is immense
capacity for businesses to achieve
The results are striking. The market growth through these sectors—but such
size for industries and sectors we have growth may come at the expense of
associated with behavior change are incumbent offerings and businesses.
projected to more than double by 2016
from US$2 trillion in 2012 to US$4.5
trillion, with a compound annual growth
rate exceeding 20 percent (see Figure
10). By contrast, the global economy is
expected to grow at an average rate of
3.3 percent over the same period.19 Put
another way, these consumer behavior-
driven markets are expected to grow
at three-and-a-half times the rate of
emerging economies, and 10 times the
rate of developed economies, between
now and 2016.
Figure 10. The growth opportunity from changing consumer behaviors
Behavior change global market sizing, US$billion
4,462
87 Disconnected
178 Conscientious
121 Communal
33 Minimalist
+22% CAGR 364 Individual
3,600
81 Experiential
300
163
113 210 Resourceful
28 90 Social
2,938
339 29 Co-productive
75
149 259
106
2,426 25 168
317 66
70 18
137
2,023 100 224
65 21 136
126 296 49
94 11
18 194
276 111 36
7 3,050 Connected
168
91 27 2,364
5
1,847
1,454
1,153
2012 2013 2014 2015 2016
Note: Individual figures may not sum to the total due to rounding errors.
Source: Accenture analysis
viii The industries included are: organic foods and health clubs (both communal); mobile transactions and e-commerce (connected); crowdfunding and 3D printing
(co-productive); cruises and sleeping aids (disconnected); low-cost airlines and mobile coupons (resourceful); fair trade goods and green packaging (conscientious);
live music and adventure travel (experiential); video-on-demand and luxury goods (individual); digital music and e-waste/reuse (minimalist); social media and virtual
goods (social).
25
27. Hotspots of growth
Hotspots of pure economic and consumer spending growth can still
be found in unlikely consumer markets. Horizon 2 markets, such as
Indonesia, Mexico and Turkey, form the next wave behind the BRICix
economies, expected to grow at a compound rate of between 3.7 percent
and 5.8 percent over the period from 2010 to 2020. Beyond this, Horizon
3 markets, such as Pakistan, Ukraine, Angola and Egypt, combine rapid
growth with strong absolute increases in consumption (see Figure 11).
Compared to 2010, Kazakhstan will have nearly 500,000 extra households
with income over US$50,000 a year in 2020.
However, under current forecasts, consumer expenditure growth in
developed markets will be limited, and companies will have to look to
behavior shifts for growth opportunity. Apart from the United States
(which is likely to experience the second-largest growth in consumption
to 2020, behind China) growth in consumer spending in many developed
countries is going to be low.
Yet while expected growth may be low, we observe significant consumer
behavior changes in developed and emerging markets alike. These
changes present incumbents with continuous challenges and create
opportunity for new entrants. In mature markets it is critical to focus
now on behavior change as a source of growth—and it will become
increasingly important in emerging markets over time.
Figure 11. Next waves of market growth
Private consumption growth–Compound Annual Growth Rate versus absolute, 2010 to 2020
11
10 Angola
9 Horizon 3?
China
Qatar
8
Kazakhstan India
7
Zambia Cambodia Nigeria Horizon 2
CAGR, Percentage
6 BRICs
Ukraine Indonesia
6 Turkey
5 Russia
Brazil
4 Mexico
Senegal South Korea
3 Canada
Australia United States
2 United Kingdom
Western Europe Germany
1 Japan Other developed
Ireland Spain France
Italy
0
1,000 10,000 100,000 1,000,000 10,000,000
Absolute growth, US$million (log scale)
Source: Oxford Economics, Accenture analysis
ix Brazil, Russia, India and China
26
