The pandemic upended lives and livelihoods across the globe, forcing consumers and businesses to adopt new digital behaviors. Homebound consumers abandoned ingrained shopping habits, hurtling ecommerce into hyperdrive and compressing a decade’s worth of digital adoption into 100 days. Businesses responded to the digital-first marketplace by quickly pivoting and innovating to find new ways to connect with new customers.
What does this mean for CFOs and business leaders? Technology has conditioned consumers to believe they can get whatever they want, whenever they want, within minutes. Meeting these lofty expectations requires real-time analytical horsepower to process massive amounts of granular consumer data. Only then will you gain the 360-degree view of customers needed to serve their unmet needs and deliver the wow factor with an astonishingly personalized experience.
During a recent Wall Street Journal CFO summit, McKinsey & Company partner Kelsey Robinson spoke with WSJ’s advertising editor Suzanne Vranica about the tectonic shifts reshaping the consumer landscape, and how CFOs should respond.
Four major consumer shifts
Consumer spending revving up
Americans are beginning to spend again, with some 51 percent of consumers reporting a desire to splurge and indulge themselves in a fit of post-pandemic revenge spending. Higher-income millennials look set to outspend all other groups on apparel, footwear, travel, and experiences such as dining, concerts, and spectator sports. This comes on top of a summer of 2020 acceleration in discretionary spending, particularly on home furnishings.
E-commerce accelerates to a next horizon
Credit and debit card data revealed a nearly 20 percent increase in online spending since January 2020, and this pandemic-induced surge in ecommerce was no hiccup. The digital future is here to stay. Some 92 percent of consumers who tried online shopping in 2019 became converts, cementing an emergency response into an indispensable habit. Ecommerce also redefined convenience, with even traditionally tactile shopping experiences such as grocery shopping enjoying a notable surge.
Rebalancing of the homebody economy
Consumers forced to work and spend most of their free time at home for a year boosted the homebody economy, and took it mainstream. Some 28 percent of consumers invested in amenities such as home theaters, gyms, or studios to make the lockdowns bearable, and 30 percent more plan to continue spending on their homes post-pandemic. But even the happiest homebodies are once again eager to spend time and money outside the home on dining, entertainment, and travel.
The shattering of brand loyalty
The pandemic ushered in an unprecedented level of channel switching and brand loyalty disruption. A whopping 75 percent of consumers tried new shopping behaviors, with many of them citing convenience and value. Fully 39 percent of them, mainly Gen Z and millennials, deserted trusted brands for new ones. That restlessness is reflected in the fact that many younger consumers say that they are still searching for brands that reflect their values.
Four key takeaways
The CFO as growth partner to the CEO and CMO
CFOs are uniquely positioned to partner with CEOs and CMOs to drive the company’s growth strategy. These relationships must be built on trust, as well as a shared mission and growth agenda. CFOs also need to understand how today’s investments will fuel tomorrow’s growth, translating customer insights into actionable, positive business performance.
Adopt an operating model built for speed
A rapid operating model can unleash nimble, empowered teams with multidisciplinary skills who use analytics to drive test-and-learn approaches and make speedy decisions. Incorporate customer-centered strategies, real-time analytics, and the right talent model to absorb sudden shocks and stay on course. Make sure CFOs team with CMOs to make real-time, data-driven decisions in response to customer needs.
Use analytics to drive personalization
Putting businesses on a growth trajectory requires a granular understanding of customers, creating moments that matter for them through personalization. Apply advanced analytics to identify reliable demand markers to ascertain where and how fast your customers are moving. Use forecasting models to locate pockets of growth and act with speed to capture demand, win new customers, and reinforce the trust and loyalty of existing ones.
Reexamine your ecosystem
Speed of action will only get you so far if other players in the ecosystem fail to move as fast—or are not aligned with your goals. Rethinking ecosystems and partnerships is crucial for dealing with the pace of change, complexity, and disruptions necessary to achieve extraordinary impact. Build your ecosystem on a foundation of trust, where systems and processes are integrated to make decisions on the fly.