Energizing Global Growth: Understanding the Changing Consumer

While growth has been slow to return to developed economies, and with some of the largest emerging economies showing signs of slowdown, shareholder expectations remain high and are already factored into the market.

To help achieve high business growth in a slow-growth economy, companies need to recognize how consumer behavior is changing and create strategies to capitalize on new opportunities. Accenture conducted extensive research to identify new patterns of consumer behavior, and pinpointed three common elements underlying the success of companies whose revenue growth leads their industries.

Learn more about our research and download the infographic

The global economy hangs in the balance. Economists continue to predict relatively low growth in the developed world over the next five years. Meanwhile, the largest emerging markets have not been able to maintain the astounding growth rates of the previous decade.

Yet shareholders appear to see things differently. High expectations for business growth at large global companies are already priced into the market. The gauntlet has been thrown down: to meet expectations, businesses must find ways to continue growing in a world where average growth is lower than pre-downturn highs.

Companies must look at consumers themselves and how changes in behavior are creating important opportunities. In the past, companies could grow simply by focusing on the “where” and “who” of consumption—places such as emerging markets and growing customer segments such as the elderly. Today, two additional elements are critical: the “how” of consumption, and the “why.” Both areas have undergone rapid change in recent years—so rapid that executives, even when aware of the trends, have wondered how to respond.

Accenture undertook extensive research to understand how companies can achieve high business growth in a slow-growth economy. The answer lies in recognizing how consumer behavior change is generating significant growth in a wide range of industries. Armed with that knowledge, business leaders can then create the toolkit, mindset and organizational structure that companies need to succeed in meeting expectations—including their own—for rapid growth.
 
As part of this study, Accenture surveyed 600 business executives and 10,000 online consumers in 10 countries across the world. We found:

• Market expectations of company growth (as shown by enterprise value multiples of the S&P Global 1200) have returned to pre-crisis levels.

• Non-financial companies in the S&P Global 1200 need to achieve US$5 trillion of revenue growth every year to meet analysts’ growth expectations.

• Eighty-two percent of executives are confident in their business’s ability to grow profitably over the next two to three years, but 44 percent of the world’s 3,000 largest listed (non-financial) companies failed to grow both revenue and net income over the last three years.

• More than four in five executives (83 percent) recognized the opportunity in responding to changing consumer behavior, but nearly equal numbers (80 percent) said their companies were not fully taking advantage of those changes.

• Fast-growth companies (those whose revenues grew by six percent or more in the last year) are more likely to see business opportunity in changes in consumer behavior (88 percent versus 74 percent of slow growers).

• Emerging-market business leaders possess greater belief in their understanding of consumer change: 32 percent of executives in emerging economies said that their businesses completely understand how consumer behavior is changing, compared with 17 percent in developed countries.

• On the whole, the extent of changes in consumer behavior is greater in emerging markets than developed markets.

• Forty percent of business executives said that the “inherent unpredictability” of consumers is the main barrier to understanding them better.

• Business executives cite the slow internal pace of change as the most likely barrier that prevents them from realizing growth opportunities, with more than one-third (35 percent) stating that this is the case.

• The market size for industries associated with consumer behavior change is projected to more than double from 2012 to 2016 (from US$2 trillion to US$4.5 trillion).

• A boost to consumer expenditure globally could amount to US$1 trillion over baseline expectations in 2016, resulting in an uplift to global gross domestic product of 2.3 percent.

Accenture’s research identified 10 dimensions of consumer behavior that affect how and why consumers purchase goods and services.

Three of these dimensions point to the emergence of a networked consumer, as technology alters “how” we consume:

• Connected consumers ensure they are always “on,” continuously in a channel.

• Social consumers use digital technologies to interact with friends, family, strangers and institutions.

• Co-productive consumers play a role in production through design, or provide data to companies.

The remaining seven dimensions illuminate “why” people consume. Four of these are primarily concerned with the individual—what we term the independent consumer:

• Individual consumers value uniqueness and luxury and seek to express their personality.

• Experiential consumers desire new experiences, attend live events, and share experiences with friends.

• Resourceful consumers work hard to get ahead and are shrewd with money.

• Disconnected consumers try to switch off and break from tradition.

The final three dimensions primarily involve interaction with others—what we term the co-operative consumer:

• Communal consumers participate in society, and have a strong group ethic.

• Conscientious consumers buy local, make rather than buy, and consider the environment before purchasing.

• Minimalist consumers place access above ownership and are happy to purchase second-hand or reuse.

Out of the 3,000 largest listed companies worldwide, Accenture identified those companies whose median revenue growth most exceeded their industry peers: the “industry growth leaders.”

By focusing on the set of highly successful companies that had succeeded in markets built on significant changes in consumer behavior, we were able to identify three common elements that kept them closer to changing consumers and enabled them to achieve dramatic growth.

Our analysis shows that industry growth leaders:

• Use technology to observe and respond to changes in consumer behavior: Leaders use powerful new technologies to identify and bridge gaps between their businesses and consumers through better understanding. For instance, the analytics program of a leading media-rental company enables it to recommend movie and TV titles based on an individual consumer’s preferences and rental history.

• Recognize and exploit market disruptions to enhance their business models: Leaders approach disruption as an opportunity rather than a threat. First movers proactively shape their industry’s long-term direction, instead of merely reacting to it. For example, global car-rental company replicated the business model of new players offering hourly rentals. By meeting disruption head-on, the company has been able to use its scale and scope to reduce the threat of new competition while improving customer service.

• Organize to scale their responses to consumer insight rapidly: Leaders rapidly scale offerings after identifying a driver of consumer change. For example, a US-based grocer understood at an early stage consumers’ growing emphasis on healthy living and carried out numerous mergers and acquisitions to become a global leader in natural foods.