IBM Partner Unpacks Changing Consumer Behaviour for Wittenborg Students

Students Get Good Insight on What Drives Consumers from IBM 2020 Report

Undergraduates at Wittenborg University of Applied Sciences recently had the privilege to listen to Jerry J Stam, associate partner of IBM Global Business Services, who gave a fascinating guest lecture on IBM's 2020 report on consumers driving change.

At IBM Stam is responsible for innovation, business development and project delivery for (international) retail and wholesale clients, in particular around omnichannel. He has over two decades of (consulting) experience in retail. He has been working for retailers the world over, including household names like Sainsbury's Hema and Jumbo Supermarkets.

At Wittenborg his lecture took place within the context of the final-year bachelor's module, Advanced Corporate Strategy. In this module students develop for instance an additional understanding on internal and external factors influencing organisations' strategy.

Consumers Now Shop "Whenever the Mood Strikes"

One of the key findings of the report is that there has been a fundamental change in consumer shopping behaviour. Rather than being a planned, discrete activity, shopping occurs whenever and wherever the mood strikes today’s always-online consumers - and this is increasingly while they are doing something else. Seven in 10 consumers surveyed say they shop in these so-called “micro-moments,” and 35 percent do so at least once weekly.

Modern Consumer All about Sustainability

Sustainability has also reached a tipping point. As consumers increasingly embrace social causes, they seek products and brands that align with their values. Nearly 6 out of 10 consumers surveyed are willing to change their shopping habits to reduce environmental impact. Nearly 8 out of 10 respondents indicate sustainability is important for them. And for those who say it is very/extremely important, over 70 percent would pay a premium of 35 percent, on average, for brands that are sustainable and environmentally responsible.

What Drives Consumers?

Furthermore, most consumers fall into one of two segments: value-driven consumers, who are primarily concerned with getting their money’s worth and select brands based on price and convenience, and Purpose-driven consumers, who select brands based on how well they align with their personal values and who are willing to “walk the talk” when it comes to sustainability, changing their behaviour, and even paying more for brands that get it right.

How to Drive Consumers

The report also suggests some action plans. This includes earning consumers’ confidence through transparency and traceability. "Consumers’ brand loyalty and purchasing decisions are highly contingent on detailed product information. Employ the latest technologies to provide transparency of production methods and traceability of source materials. Demonstrate your commitments to sustainability and environmental responsibility by offering details about operations, as well as how you manage your sustainability agenda."

  • Consumers' willingness to contribute to a cause must also be factored in. "If consumers are willing to pay a premium or change to reduce environmental impact, then offer options that provide trade-offs between supply chain cost, service, and environmental impact. In the “last mile” delivery from fulfilment centre to home, trade-offs can reduce variable logistics cost while enabling the consumer to participate in initiatives that reduce emission or otherwise help maintain a healthy planet."
  • Align sustainability initiatives to core competency. "Brands and retailers need to know which specific traits rank highly so they can factor that valuable information into product design and development. Consumer goods manufacturers are not only good at producing high-quality finished goods, they are experts at reducing waste. For example, in the food and beverage industry, discarded food can be given a second life by partnering with farms and kitchens to turn work-in-progress and semi-finished goods, that would normally be discarded, into nutrient-rich by-products, such as animal feed, protein flour or even beer. The circular economy is gaining momentum. Brands and retailers are actively looking to participate in this new economy in various ways, like recycling textiles, fabrics, and plastics. Others are forging new ways consumers shop. Look for ways your organisation can harness the zeitgeist to find innovations to reduce waste and fulfil customers’ sustainability demands with new products and processes."
  • Deliver value by using technology for the right assortment. Leverage external data to make better assortment decisions and more accurately forecast demand patterns - to have the right product available at the right place and the right time. The abundance of non-historical, non-linear external information available can help brands and retailers make more relevant merchandising and assortment decisions. For example, let consumers search via visual and voice technologies to enable brands and retailers to gather more context about consumer habits.
  • Be omnipresent, and fulfil anywhere, anyway and anytime. "As shopping continues to splinter, retailers must eliminate channel silos and become omnipresent wherever, whenever, and however consumers demand. Despite expectations around the omnichannel experience, ecommerce and supply chain often operate under two separate functions within an organisation. Beyond just technology, brands require a tighter integration between the two functions to effectively address consumer expectations of buying and receiving goods anytime, anywhere, and any way. Fulfilment is often challenged by inventory availability and logistics constraints, but complexity is compounded further with omnichannel distribution, be it distribution centre (DC) to store, store to home, or DC to home. Through prescriptive analytics and machine learning, shipments can be optimised for delivery across all nodes. The ability to optimise fulfilment using multiple variables (shipping cost, transit time, margin impact, and weather, to name a few) can be the difference between a profitable and unprofitable business."

Stam has been working for retailers the world over including household names as Carrefour, Tesco and Sainsbury’s. He holds a dual law degree, an MSc in management, as well as an MBA. At IBM he focuses on realising digital solutions for retailers.

WUP 3/4/2020
by James Wittenborg
©Wittenborg University Press

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