The Leading Edge: The big bets shaping the future of consumer goods

What is customized health?

Customized health uses personal health information to design food, medicine, and treatments for an individual’s specific needs. Think personalized vitamin supplements: instead of taking multiple capsules or a one-size-fits-all multivitamin, consumers can order a multivitamin customized to their individual health needs and goals. 

This heightened level of personalization is becoming more common thanks to “the quantified self,” a cultural movement where consumers digitally manage their health and track metrics for everything from exercise and sleep to food and medication consumption. A potential future outcome is that interconnected smart devices—refrigerators, watches, e-textiles—will synchronize to help consumers achieve their goals for wellbeing.

There are many opportunities for CPG brands who successfully integrate themselves into quantified lifestyles, customizing healthy options based on customers’ unique needs. For instance, personal care and beauty brands can recommend skincare routines tailored to individual skin types, microbiomes, environments, activity levels, and other specific lifestyle factors. 

What industry will be disrupted

• Healthcare
• Pharmaceutical
• Beauty
• Personal care
• Food and beverages

Signals of change to be aware of

• Increased focus on health and wellness: Health and wellness is a growing priority for customers. Consumers want to live longer, higher-quality lives and optimize both physical and mental health. Globally, 48% of consumers—almost half— say they make proactive health and wellness choices on a regular basis. Just 23% of consumers report they do not prioritize health and wellness. 
• Growing interest in personalization: 37% of global consumers are open or willing to try products with ingredients or meals tailored specifically to DNA and individual health needs. 
• Migration from clinics to aisles: Consumers are increasingly looking to stores to support physical and mental health needs. Many shoppers are now comfortable seeking healthcare services like vaccines and tests at retail and convenience stores, instead of a doctor’s office or clinic. As more consumers enter aisles looking for health services, there is an opportunity to tailor products and experiences to meet specific health requirements at scale. 

What is automation, tech, AI?

Automation involves using technology to complete tasks typically performed by humans. Route-planning robots can deliver groceries to customers’ doors. Staff-less stores, such as Amazon Go, allow shoppers to simply take the items they want and leave, without having to stand in a checkout line or pay at a kiosk. Prescription-filling robots prepare hundreds more pharmacy orders each day than their human counterparts while freeing up pharmacists’ time for other healthcare services, such as administering tests.

Employees displaced by the shift to automation will need to be retrained for other roles, such as maintaining and repairing the machines. If a significant number of employees are displaced without reassignment, the economic divide between consumers could be exacerbated, leading to negative longer-term impacts on CPG sales.

What industry will be disrupted: 

• Human resources 
• Pharmaceutical
• Healthcare
• Grocery delivery

Signals of change to be aware of: 

• Rise of e-commerce: U.S. retail e-commerce sales in 2021 represented a 50.5% increase over 2019, reflecting the rapid acceleration of online shopping in recent years. Food and beverage e-commerce grew 170% between 2020 and 2021. Although e-commerce makes up just 13% of total retail sales in the U.S., it is major force in some regions—comprising 46% of retail sales in China—and is expected to maintain growth. 
• Labor shortages: Declining birth rates in many countries, coupled with aging workforces and lower immigration, have created a labor shortage for many industries that is expected to worsen. 
• Inflation: Supply chain challenges, geopolitical conflict, and climate change have placed pressure on many retailers to seek out savings as costs rise. Automation, artificial intelligence, and other emerging technologies have the potential to increase efficiency and reduce labor costs. 

What is the metaverse?

The metaverse is a future vision of the internet that includes virtual, augmented, and mixed reality technologies. The metaverse will bring to life and blend together virtual worlds and communities. For many, it presents a completely new way to interact, socialize, work, play, and shop. For brands and retailers, the metaverse represents the next generation of consumer engagement. 

Many gaming platforms already exist in the virtual reality corner of the metaverse, with Roblox and Fortnite being some of the most well-known. These games are characterized by virtual worlds that continue to exist, even when a player is not playing.  

What industry will be disrupted: 

All industries will be impacted in some form or another by the metaverse. A cross section below includes (but is not limited to): 

• Marketing 
• Retail 
• Gaming 
• Fashion 
• Travel 
• Real-estate and architecture design 
• Finance 
• Education 
• Sporting 

Signals of change to be aware of: 

• Familiarity with the virtual world: As a result of the pandemic, there is a widespread acceptance of virtual media for socializing. The barriers to adoption have been significantly reduced. 
• Desire for Community: In the wake of long periods of isolation and lockdowns, there is a strong desire for a sense of belonging and community 
• Web 3 emergence: The metaverse is playing significant part in adoption of latest web3 technologies, like blockchain for safe and decentralized interaction or NFT for true digital ownership. 

What is an NFT?

An NFT is a non-fungible token.  “Non-fungible” means that it cannot be replaced, and “token” refers to owning a unique piece of data (inclusive of gifs, memes, digital art, video clips, and more).  NFTs are typically offered in limited quantities, creating scarcity that drives their financial and psychological value.  

Today, the early days of NFTs, uses are primarily based in digital collectables. However, future opportunities for NFTs are grounded in consumer relationship building, especially as consumers begin to explore their digital identities, communities, and brand preferences within the metaverse.  

For marketers, NFTs represent a new way to build loyalty programs. Brands can give exclusive discounts, product sampling opportunities, or anniversary celebrations to shoppers who own their NFT. Similarly, brands can create NFTs for attendees of exclusive branded events to increase their perceived value and transform them into a badge of honor—a sign of being in a special club. 
 

What industry will be disrupted

NFTs have the potential to disrupt a number of industries inclusive of but not limited to:

• Retail
• E-commerce
• Sports
• Fashion / Luxury brands
• Arts & Entertainment

Signals of change to be aware of

• A greater focus on loyalty: In the wake of shifting consumer priorities brought on by two years of disruption, companies have learned not to take a customer’s second visit for granted. Retailers have been increasing investment in customer loyalty programs.  
• The growth of online shopping: NielsenIQ data shows that online sales have experienced double-digit growth in many countries (89% in Turkey, 29% in Romania, 28% in Serbia) in 2021, significantly outpacing the growth of brick-and-mortar sales. After years of lockdowns and stay-at-home orders, shoppers have become more accustomed to purchasing goods online. 
• A desire for personalization: Shoppers are increasingly interested in personalized products and unique experiences. NFTs represent a way to offer tailored experiences to profitable segments of shoppers. 

What is vertical farming?

Vertical farming is a next-generation practice of food production. Typically contained inside industrial units like freight crates, fresh produce is grown from floor-to-ceiling, year-round in a controlled, optimized environment. Since vertical farms use less land, they can flourish in urban environments, reducing transportation costs, emissions, and travel-induced nutrient loss. Beyond the benefits of providing fresh local produce, vertical agriculture can also help alleviate the pressures of food insecurity and hunger. Currently, only a limited number of crops can be grown in vertical farms, such as lettuce, leafy greens, and herbs.  

What industry will be disrupted

• Retail
• Manufacturing
• Restaurant
• Urban planning and real-estate

Signals of change to be aware of

• Empty shelves: The pandemic highlighted and exacerbated supply chain issues, marked by shortages and empty shelves that cost retailers over $82 billion in 2021. Retailers and manufacturers alike are recognizing the need to take greater ownership of their agricultural supply chains. 
• Inflation: Geopolitical conflict has negatively impacted suppliers of staples and increased the cost of fuel to transport products from factories to shelves. Manufacturers and retailers are looking for options closer to home to keep a flow of key products. 
• Climate Change: Shifting weather patterns are creating a negative impact on crop yields of traditional farming. Vertical farms may offer an alternative source of fresh produce if traditional farm yields decline. 
• Growing consumer interest in sustainability: Food and Beverage products with a sustainability attribute increased 17% in dollar sales, indicating a growing consumer interest in preserving the environment through consumption choices 

What is regenerative agriculture?

Regenerative agriculture is a rehabilitative approach to farming and food systems, aimed at making a positive impact on the planet. This agricultural revolution involves farming practices that improve soil health, increase biodiversity, and increase carbon-capture to make a positive impact on the environment.

Regenerative farming practices include reducing the use of fertilizers, pesticides, and herbicides to mitigate the negative impact these chemicals may have on surrounding bird, bee, insect, and plant populations. Replanting native species and creating small ponds to make land more hospitable for insects and animals is another common regenerative practice.

For many manufacturers, regenerative agriculture may be an important cornerstone for achieving net zero emissions and other sustainability-centric commitments.

What industry will be disrupted

• Health & beauty
• Food & beverage
• Restaurant
• Agriculture

Signals of change to be aware of

• Growing consumer interest in sustainability: Globally, 54% consumers are willing to try products created with regenerative agriculture and sustainable farming methods. In the U.S., food and beverage products with a sustainability attribute have increased 17% in dollar sales, indicating a growing consumer interest in preserving the environment through consumption choices. 
• Shifting weather patterns: Irregular weather patterns driven by climate change are already impacting farmers across the globe, resulting in lower yields despite growing demand. Manufacturers and retailers alike are recognizing the need to incorporate sustainability and lower carbon footprints into every component of the supply chain, from farm to shelf. 
• Growing population: The world’s population is currently 7.7 billion and projected to rise to 9.7 billion by 2050. Feeding a rapidly growing population will require sustainable farming practices that leave land in good condition for future crop yields. 

What is rapid delivery?

Rapid delivery is quick-commerce (Q-commerce), an industry based on delivering orders as rapidly as possible. Markets where grocery deliveries typically take hours or even days to arrive, are seeing competition from startups providing deliveries anywhere from 60 to 10 minutes after orders are placed. 

What industry will be disrupted

• Grocery
• Convenience
• Drugstores
• Courier
• E-commerce

Signals of change to be aware of

• The shift to online shopping: Prior to 2020, 81% of consumers had never tried ordering groceries online. By May 2020 in the U.S., 79% of all grocery shoppers had made at least one online grocery purchase. According to NielsenIQ’s Global Consumer Outlook Survey, 39% of global consumers will continue to buy products that guarantee a short time for delivery and 21% are more likely to buy. 
• Inflation: As the rising costs of food and fuel place pressure on consumers, rapid delivery at a premium charge may become a lower priority. It remains to be seen whether the value of convenience will prevail against the higher costs of necessities.
• Exiting and evolving players: Q-commerce is still experiencing disruption, and it may look very different in the coming years. The practice remains a low-margin business. Many ventures have yet to show a profit, and several players have exited. Some Q-commerce companies are recognizing the need to differentiate themselves—for example, by offering private-label products—knowing that speed may not be the only factor setting them apart in the future. 

What is a staffless store?

Staffless, or unmanned, stores are cashier-less physical stores. Shoppers simply walk in, choose the items they want, pay using a digital wallet or app, and leave. Depending on how advanced the technology is, customers may even pay using sensors that scan the contents of their bag as they leave and charge their card accordingly, as seen in Amazon Go stores. 

Unmanned stores offer a number of benefits attractive to retailers and customers. Removing checkout lines frees up more space for inventory, allowing for greater variety and a more efficient use of store space. Customers experience a faster, more streamlined checkout process. 

Although unmanned stores are just beginning to gain a foothold in the Americas and Europe, their prevalence is growing in Asia. The four biggest convenience store chains in South Korea have opened 1,700 stores which rotate between having staff and operating staffless. Retailer FamilyMart Japan plans to open approximately 1,000 staff-less shops by the end of 2024. 

Chinese convenience retailer Bingobox, with over 150 staff-less shops in China, uses a smartphone-enabled self-checkout with live help available via video call if a customer needs help. This largely automated setup allows just four staff members to run 40 locations. 
 
Employees displaced by the shift to automation will need to be retrained for other roles, such as maintaining and repairing the machines. If a significant number of employees are displaced without reassignment, the economic divide between consumers could be exacerbated, leading to negative longer-term impacts on sales. 

What industry will be disrupted

• Retail
• Human Resources

Signals of change to be aware of

• Supply chain pains: Supply chain challenges, geopolitical conflict, and climate change have placed pressure on many retailers to seek out savings as costs rise. 
• The rise of discounters: Retailers face pricing pressure from discounters’ rising prominence across Europe and the U.S. These locations offer less variety in exchange for lower prices. As inflation persists, shoppers may be more amenable to making product trade-off. 

What are automatic subscriptions?

Automatic subscriptions commonly serve one of two functions for consumers: 1) “set it and forget it” replenishment of common household and grocery items, or 2) curated kits based around a theme, designed to surprise and delight the recipient with each delivery. Products provided by subscriptions include perfume, razors, wine, clothing, collectibles, and more. 

What industry will be disrupted

• Retail
• Manufacturing

Signals of change to be aware of

• A shift toward in-home spending: A global NielsenIQ survey revealed that consumers are planning to increase at-home spending, whether out of necessity from job loss or because of higher cautiousness driven by the pandemic.