2023 and 2024 will deliver new retail offerings for consumers that will change their lives forever, according to Fifth Dimension founder and CEO Lyndall Spooner.
“While a lot of people are panicking about Australia being in a retail recession,” she says, “for most consumers the next 12 to 24 months is likely to change their lives forever as new brands and products hit the market better equipped to meet the needs of a financially strapped consumer with a penchant for entertainment and new experiences.”
Ms Spooner notes that some of the world’s best innovations have come out of turbulent and difficult financial periods.
“The first Burger King restaurant opened amid the post-Korean War recession in the 1950s,” she says. “The marketing platform Mailchimp formed during the dotcom recession in 2001. Uber, Airbnb and Groupon all started during the Great Recession in 2007 to 2009.
“Many of these businesses have one thing in common – they have empowered consumers to take control of their own assets and be more thrifty with their wallets. I think this is what we will see happen over the next 12 – 24 months.
“Many new products and brands will launch that give more power back to the consumer to save money while supporting their lifestyle ambitions.”
According to Ms Spooner, the next 24 months will see some key developments across the market space:
Cheaper pricing
“While consumers are tightening their wallets, they will still keep spending. It’s just that they will spend less or be more careful about where they spend their money.
“As a result, this will place downward pressure on brands to find ways to reduce their pricing to entice sales. Businesses are going to have to find ways to deliver their products and services in a way that costs less, ultimately benefitting the end consumer with cheaper prices. I think this is a good thing. It’s going to force many brands to rethink how they do things. It will encourage innovation and the elimination of waste.”
Unwanted features will be dumped
“The market is full of products that include features that consumers don’t want but are forced into buying because that is the only way they can get the core product they need.
“Market forces will start to change this and consumers will benefit greatly. Brands are going to have to look at how they package and deliver their products. Again, consumers will be the winners as businesses are forced to unpack and compartmentalise and simplify their offerings.”
No frills brands will emerge
“We’re going to see the emergence of many new ‘no frills’ brands that provide low-cost solutions to our lifestyle needs. These brands won’t spend lots of money on packaging, advertising or promotion, they will grow organically through price alone and some help from social media.
“Don’t get me wrong, they will still look sexy on the shelf or enticing in digital content online, but they won’t be taking out television ads that would send most new startups broke in the first five minutes of their existence. Basically, consumers can look forward to a smorgasbord of amazing new brands and offerings that are super cool, are incredibly affordable and in some cases, completely revolutionise how we live and do things.”
Eco friendly features will no longer be premium
“At the moment, it’s largely the European electric car community that throw money around on products that are six times the price of everything else because they are sustainably sourced and packaged.
“This is going to change fast. Consumers want to buy things for themselves that are good for the planet, but up until now it has cost them a premium to do so. Brands are already realising that if they can reduce cost and maintain the green value, that consumers will buy their products over other products as long as the product does what it says it can do. Premiumisation will be replaced with greenisation. If the cost is the same, but one product is green and the other isn’t, green wins the sale.”
Self-serve and AI service
“Service is going to become extinct when it comes to humans delivering the service. More and more, businesses will introduce self-serve selling, pushing the process of buying and selling on to the consumer.
“Support will be provided online and mostly at first level by AI. It will also be provided by phone, but this will be automated. Humans are expensive to employ, and will increasingly be removed from front-line service roles over the next 24 months. Gen Z and millennials are the winners. Boomers are the losers.”
Delivery and service is going to cost more
“While many prices will go down, I predict that the cost of in person service and delivery is going to go up. This is an area of service where prices cannot be cut. Wages are going up, employment law is becoming more complex and as a result, the cost of providing services that are delivered by real people is going to soar.
“Anything that involves delivery and on-demand human service is going to explode in price. Only those that have the funds or the extreme desire or need, will be paying for these types of services over the next 12 to 24 months. Cashed up Gen Z and millennials and Boomers may cough up the funds, but Boomers have already been through a few recessions, so they are recession fit and know how to live without certain things. Gen Z and millennials not so. Their first life lesson on how to live through a recession is already underway.”