New ways of living are emerging, including more sharing and a renewed focus on experiences. As a consequence, the role of products is shifting from ownership to access. The implications for business are substantial. Focusing on the experience and sharing economy will lead to shorter product lifecycles, increased demand for local production, and a shift in sourcing practices towards transparent and accountable suppliers.
Moreover, the renewal of interest in experiences will also have implications on new sourcing practices as well as supply chains that take into account social responsibility standards. Furthermore, we are witnessing a rise in conscious consumers interested in buying sustainable and ethical products. This has led to an increased demand for natural fibres such as wool or hemp; organic cotton; fair trade products; as well as vegan leather. Businesses need to adapt their supply chains and manufacturing processes accordingly – sustainability should no longer be an afterthought but an integral part of their strategy going forward.
Change in consumer behaviour
We are in the midst of a major shift in consumer behaviour. Consumers are increasingly interested in experiences over products. According to a study from Accenture and Oxford Economics, 39% of consumers in the US and 35% in the UK are interested in purchasing experiences, compared with 32% and 33% for products. Moreover, 56% of US consumers have experienced an increase in the number of events they have attended in the last 12 months, compared with just 16% who have seen a decrease. Importantly, consumers are shifting their spending away from material goods towards experiences such as travel, leisure, eating out, and culture. This is driven by people prioritising active and sociable living over passive consumption. According to an ING survey, only 5% of people agree that “keeping up with the latest fashions” is important, while 38% say “spending time with family and friends” is important.
Shortened product lifecycles
As the focus shifts from ownership to access, we will see shorter product lifecycles. This is already evident in fashion where product lifecycles have shifted from seasons to weeks, as well as in the travel sector where the average hotel stays is now just two nights. This is also likely to be the case in other sectors such as homeware and furniture where consumers are more interested in renting rather than owning products. We already see this in the market for home-sharing. According to one forecast, the number of people participating in home-sharing will grow from approximately 11 million in 2017 to more than 40 million by 2025. This shift is in part driven by the rise in urbanisation and the fact that people are increasingly reluctant to buy goods that have a limited lifespan.
Increased demand for local production
As consumers demand more transparency and traceability in their product sourcing, the demand for local production will increase. This is particularly evident in food and beverage, apparel and footwear, and home products. This shift is also driven by the fact that consumers have a growing awareness of the social and environmental impact of their shopping behaviour. According to a survey from Nielsen, the majority of consumers expect businesses to take responsibility for social and environmental issues. For example, consumers are increasingly interested in ethically sourced food and purchasing goods that are labelled “organic” or “fair trade.” This demand has created new business opportunities in the organic food sector and has led to the growth of fair trade certification.
Shifting sourcing practices
The renewed focus on experiences and shortening product lifecycles will not only result in a demand for local production but also a shift in sourcing practices towards transparent and accountable suppliers. While transparency has been a key issue in the food and beverage sector for a while now – with many food companies committing to traceability – the increasing demand for transparency might bring more challenges to other sectors. For example, consumers are likely to put more pressure on apparel companies to be transparent about their sourcing practices, particularly as consumers are increasingly aware of the environmental impact of their clothing. This might lead to a shift in sourcing practices whereby businesses source more from local suppliers, paying attention to traceability and working conditions.
Change in sourcing practices: Transparency and accountability
As the focus shifts from ownership to access, transparency and accountability become more important. Significantly, this applies not only to the supply chain but also to the design process. In other words, businesses are expected to consider sustainability and social responsibility from the very beginning of the design process. This has major implications for the textile and apparel sector where businesses are already under pressure to source sustainable fabrics, such as organic cotton or wool. This is likely to extend to other sectors as consumers become more interested in the social and environmental impact of their purchases.
Change in sourcing practices: Sustainability as core value
The renewed focus on sustainability might also lead to a change in sourcing practices whereby businesses source more ethically and locally. This is already evident in the food and beverage sector, where more companies are committed to sourcing locally and ethically, particularly in the area of meat production. This shift might extend to other industries, such as apparel, where ethically and sustainably sourced fabrics such as hemp, organic cotton, and bamboo might replace synthetic fibres. For example, Patagonia has committed to sourcing only organic cotton by 2020.
As the focus shifts from ownership to access, businesses will have to adopt new sourcing practices to adapt to shorter product lifecycles, increased demand for local production, and a shift in sourcing practices towards transparency and accountability. This will require a fundamental change in the design philosophy, including sustainability as a core value. To succeed in this new landscape, brands need to focus on experience design and sustainability. Successful brands will provide an experience that is modern and innovative, while also operating with a focus on being sustainable and socially responsible.
You might also like to read: Buy and sell second hand clothes sustainably.