How Companies Can Use Megatrends Analysis To Anticipate Long-Term Societal ShiftsSeptember 12, 2017
In 1976, Kodak captured 90% market share of photographic film sales and 85% of camera sales in the US. The company’s ubiquity was such that its tagline “Kodak moment” entered common lexicon as a personal event that demanded to be captured as a keepsake for posterity.
For more than a century, Kodak was a leader in the photography business. Its founder, George Eastman, twice adopted disruptive photographic technology in the shift from plates to film and later from black and white film to color photography. However, Kodak eventually lost its No. 1 spot due to its slow shift to digital photography – a technology that ironically enough it invented in 1975.
Instead of marketing the new technology, the company held back for fear that digital photography would cannibalize its lucrative film business. Unfortunately, the company had the narrow view that it was a film company rather than a storytelling business.
Of course, Kodak is not alone. There are other examples like the classic story of once-dominant movie rental retailer Blockbuster that failed to identify new entrants as competitors. Then there are stories of others like Apple that lost their way only to become the world’s most valuable company on the heels of game-changing products like the iPhone.
Why did these once stalwarts of their respective industries fall from grace?
They did not see it coming. Staying relevant is no easy task as there are a multitude of underlying forces continuously reshaping the world and changing how business is conducted. These drivers shape where the global consumer spends now and in the future. As a result, the products, services and formats that most resonate with today’s consumers must continuously evolve to meet the demands of tomorrow’s consumers.
These underlining forces by their very nature span a period of time and leave a lasting impact. The five most prominent drivers as identified by Euromonitor International are shifting economic power, population change, new technologies, changing consumer values and environmental shifts and pressures. In particular, technology is creating massive upheavals in customer expectations, inspiring new forms of competition and digitally inspired business models that disrupt established approaches.
Despite the general awareness of such drivers, many one-time household brands have found themselves on the wrong side of one of these seismic shifts. Publicly-traded companies are perishing more quickly than ever before.Almost 10% of public companies fail each year based on 2015 analysis from Boston Consulting Group, a fourfold increase since 1965. In fact, the 5-year exit risk for public companies traded in the US stood at 32% according to the same analysis as compared with the mere 5% they would have faced 50 years ago.
One way to better understand and respond to a rapidly changing global environment is through megatrend analysis. A megatrend refers to a shift in behaviors or attitudes that stretches across years, geographies and industries. A megatrend is not a short-term fad, but rather a trend with longevity.
Following an extensive research process, Euromonitor International identified eight key megatrends to watch through 2030, which include the following:
- Connected Consumers – Connected consumers use a variety of devices and interfaces to connect to the internet and this digital connectivity is altering all aspects of life.
- Ethical Living – Among consumers and businesses, increasing attention is paid to ethics and moral values, which translates into decisions framed by concerns about the environment, sustainability or labor practices.
- Experience More – As well as prioritizing experiences over possessions, consumers are also demanding of experience in their shopping journeys.
- Healthy Living – Healthy lifestyle habits are becoming the normal way of life as concerns over obesity, food sensitivity and general diseases continue to rise.
- Middle Class Retreat – While the middle classes boom in Asia, the middle classes in developed markets struggle to maintain the economic position they enjoyed for the last half of a century.
- Premiumization – At its core, premiumization is about priorities. With more products available at varying price points, consumers can spend more on things that matter to them, while cutting back – often significantly – on those that do not.
- Shifting Market Frontiers – As some areas of the globe become over-farmed, over-populated or otherwise reach their maximum potential, others gained prominence for their unexploited potential.
- Shopping Reinvented – How consumers buy goods and services has been constantly in flux as economic and technological realities change every day for businesses and consumers.
Megatrend analysis allows companies to build a long-term strategy that is proactive, rather than reactive, making sense of where they stand today, but also ensuring they have a plan to remain relevant moving forward.Megatrend analysis enables businesses to better anticipate market developments and lead both incremental and disruptive change for their industries. This type of analysis can and should be leveraged as a key input to innovating all areas of a business, including both internal and external change.
In the coming weeks, I will explore several of Euromonitor International’s megatrends mentioned above in subsequent pieces to uncover the analysis behind these long-term trends and how businesses can capitalize on them to make strategic decisions moving forward.
Are there certain megatrends you’d like to hear more about? Comment below!