Leading Off: Winning the consumer of the future: A leader’s guide

The customer’s always right ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

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Brought to you by Alex Panas, global leader of industries and senior partner & Axel Karlsson, global leader of functional practices and senior partner

More than four years ago, the pandemic threw everyone’s habits and routines into a tailspin—and consumer behavior hasn’t been the same since. Consumer spending, for example, is more and more unpredictable; customers no longer fit into segment-specific archetypes, and they continue to surprise the companies that serve them. This week, we look at the trends transforming consumer-facing industries (waning brand loyalty, the growing wellness market, and social media–driven commerce, to name a few) and the ways in which retail and consumer companies can think outside the box to succeed.

AN IDEA

An image linking to the web page “State of the Consumer 2024: What’s now and what’s next” on McKinsey.com.

Sweat the small stuff

When it comes to shoppers in 2024, many long-held truisms about consumer behavior are being upended. Older customers are splurging while also exploring new brands; younger consumers in Asia and the Middle East are more likely to opt for higher-priced brands than their peers in developed economies. In their “State of the Consumer 2024” article, McKinsey’s Christina Adams , Kari Alldredge , and Sajal Kohli say consumer companies must take a detailed, nuanced approach to understanding what shoppers across age groups and geographies really want. How can these businesses make sense of the current moment? One imperative is building their microtargeting capabilities. Companies can use consumer data to fine-tune their outreach to specific segments—yes, generative AI (gen AI) can help —and provide personalized experiences to encourage loyalty. Also on the to-do list: investing in the development of wellness products, engaging more meaningfully with consumers on social and digital channels, and offering premium products in the categories where consumers are likely to splurge.

A BIG NUMBER

62%

That’s the share of Gen Z consumers in Europe that plan to splurge during the summer months. In their latest ConsumerWise research on consumer sentiment in Europe, senior partner Jessica Moulton and colleagues found that Gen Zers are the most likely age group to say they will make more expensive purchases this summer—and more likely than others to plan to splurge on apparel. And somewhat to the contrary, Gen Zers are also more likely than other groups (millennials, Gen Xers, and baby boomers) to report trading down to lower-priced brands or retailers in recent months.

A QUOTE

“Successful strategies are founded on the notion that consumers are in charge.”

That’s McKinsey senior partner Becca Coggins on the importance of meeting customers wherever they, and their needs, are. Along with partner Steven Begley, Coggins unpacks the massive changes under way in the retail industry and points to what retail companies can do to succeed. One suggestion: seek a greater “share of life”—that is, creating new reasons and opportunities for a consumer to incorporate a company into their day-to-day lives. Increasingly, two concepts that are working well are subscription and membership models , but Coggins says some retailers are already going further. “Those companies are saying, ‘This is not about a category. It’s about the relationship we have with the consumer—and we can extend that relationship into automotive services, into travel. We can extend it into categories that are beyond the four walls of our store.’”

A SPOTLIGHT INTERVIEW

An image linking to the web page “Author Talks: Philip Kotler and Giuseppe Stigliano on retail’s next chapter” on McKinsey.com.

“Optichanneling.” “Webrooming.” “Humbitious.” These are just some of the newfangled words that the authors of Redefining Retail: 10 Guiding Principles for a Post-Digital World use to explain retail’s current, disruption-filled moment. Philip Kotler, professor emeritus of marketing at Northwestern University’s Kellogg School of Management, and Giuseppe Stigliano, global CEO of Spring Studios, say the industry is in the midst of an “exponential transformation, rather than an evolution.” In their research for the book, Kotler and Stigliano found that retailers and experts agree on the problems at hand, but the plans to solve them vary greatly—in no small part because different industries, geographies, and consumer segments have different needs and preferences. While the authors say there are no one-size-fits-all solutions for retail, they assert that understanding the customer is an essential starting point. Other words of wisdom for retailers: get a firm grasp on the financial implications of the investments made to reach your customers and optimize the mix of channels where consumers can reach you, in the ways that suit best, rather than an omnichannel approach that may induce decision paralysis.

YOUR BEST FOOT FORWARD

An image linking to the web page “The trends defining the $1.8 trillion global wellness market in 2024” on McKinsey.com.

When people think of aging gracefully, foot health may not be the first thing that comes to mind. Yet a recent study of adults 65 and older found that stronger feet support better overall strength and mobility and can even reduce the risk of falls. Luckily, there’s a product for that: the toe spacer , a humble item that’s having a moment with consumers of all ages and levels of athleticism, including the pros. With healthy aging and longevity on this year’s list of wellness trends to watch, it’s never too late for a new flex.

Lead by putting customers first.

— Edited by Daniella Seiler, executive editor, Washington, DC

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