Trends that are based on the ebb and flow of fashion, tastes, or preferences will be like the latest hot toy at Christmas or this season’s shoes: not built to last. On the other hand, long-lasting trends are usually underpinned by some economic and/or customer fundamentals and wholescale change is just a matter of time.
An obvious example over the last decade is smartphones, which provided a dramatically improved functionality compared to a typical mobile phone and then rapidly became more affordable as production volumes increased and more competing products came to market. Whilst the initial products were clunky, with short battery-life, the overall experience was far superior to their predecessors. As a result, the trend was unstoppable because the foundations were fundamentally strong, rooted in clear improvements to the end-user. While, adoption took some time, smartphones are now ubiquitous across the developed world, and reaching into much of the developed world, as lower cost manufacturers enter the market.
In the business environment of today, we always look to the fundamental foundations of a trend to predict whether it is here to stay. In essence, we seek to understand if the trend delivers a clear improvement in the user experience, or driven purely by fashion and taste?
For example, some have questioned whether internet shopping and home delivery in food will remain a growing trend or “cap out” somewhere close to the current levels, typically around 5-10% in the UK grocery market. We see it very clearly as a trend which is here to stay. Why? Because it is underpinned by a compelling fundamental: it will be a more convenient option for many (most) customers when the service is right.
Amazon’s recent purchase of Whole Foods fits neatly into this trend. By gaining control of a sophisticated, effective fresh-food supply chain, Amazon is gaining capabilities that will help it provide a better customer experience across all of food, not just non-perishables. If you tie in their (very) recent move into pre-packaged meal-kits (containing all the prepared ingredients, with the customer following the instructions to cook the meal), this is a clear demonstration of how important convenience will be to Amazon’s future food offer.
Sure, there are some blockers putting a “speed limit” on uptake of food shopping online – such as delivery charges, inconvenient delivery windows, and a paucity of rapid delivery options – which means it currently works well for large planned baskets but not smaller spontaneous shops. However, these issues are being solved as companies innovate on delivery models, for example through partnerships (such as Amazon and DHL in Germany) and updating their offerings (such as Sainsbury’s 60-minute delivery service Chop Chop). As these blockers are removed, the fundamental appeal to customers that drives online grocery shopping will win out and the trend will become an embedded staple in consumers’ lives, with much higher penetration than today.
Another example is the current discussion of AI, automation, and moves towards a ‘smaller and smarter’ workforce across many businesses sectors. Again, there are deep fundamental drivers behind this trend. Rising labour costs (from the living wage) plus improvements in technology – leading to decreased technology cost and increased effectiveness – are suddenly making automation a compelling option in a way it was not a few years ago. While there are many issues and technical problems to be solved on the way – not least, of course, that businesses want to treat their current workforce with sensitivity and respect – the economic laws of gravity will win in the end.
However, whilst it’s possible to predict which trends are here to stay, it’s much harder to predict their growth rates, or when they will “take off”. Every trend has a long, slow build-up curve, followed by sudden expansion. This expansion phase is triggered sometimes by a shift in consumer behaviour (customers getting more comfortable with a particular concept), but more frequently by a new proposition entering the market. For example, Uber’s growth has been meteoric, not because it was the first online taxi booking, but because it simplified so much of the user journey, resulting in a vastly superior customer experience. As many countries (and traditional taxi drivers) are finding, it’s very hard to put that genie back into the bottle!
Overall, then, if a trend towards a new product or service meets a perennial need better than the alternatives, or a change in how firms do business is based on fundamental economics it will not be a flash in the pan. But if the need it meets is really for “novelty” it will wither like Google Glass, the furby, and, hopefully, fidget spinners; consigned to the dustbin of trends which never really delivered.
This article first appeared in BRINK on August 7.
Read the article Five ways to spot a business trend that will last for coverage by The Guardian, a leading UK newspaper.
Discover more of Oliver Wyman’s retail and consumer goods insights here.
Oliver Wyman Ideas App
