Companies fighting to prosper in markets that will be dominated by single people can learn crucial lessons from the leopard and the peacock says Siân Harrington
Bridget Jones, the 30-something fictional singleton, returns to cinema screens next week in The Edge of Reason - and the food and drink industry should be first in the queue to see the film.
For gone are the days when the financial model for your businesses can be centred on the big-basket family shop. It is the single customer that future leaders in the grocery business should be targeting. And to do that, says Dr Kjell Nordström of Stockholm’s Institute of International Business, they will have to learn from nature’s great survivors, such as the leopard or the peacock.
The rise of the singleton appears to be a worldwide phenomenon. Stockholm tops the global chart for the number of single people, with 66% of households made up of single people, rising to 80% if you take the inner city only. Close behind is Amsterdam, with 60% of households being single, and then Moscow at 58%. In the UK, single households make up 40% of Londoners while in Buenos Aires the percentage of households made up of single people has moved from 9% to 20% in eight years.
“All of us are moving in the same direction,” Nordström told a conference of future leaders in Prague last week. “If you take away the most basic building block - the family - and focus on one single being, then everything changes. This is just the beginning and I see no way back. The single society is here to stay.”
Traditional ties are removed in such a society, a trend accentuated by the internet and cheap flights, which allow today’s consumer to find out anything, go anywhere, do anything and be anyone. “As consumers, we can find a spot in the world that fits exactly what we want,” says Nordström.
To create value, businesses need to customise their offer to smaller and specific groups. Indeed, global markets are no longer defined by national boundaries but by changing value systems. As Nordström puts it, to brands like Pepsi or McDonald’s “the People’s Republic of Britney Spears is infinitely more interesting than Austria”.
The paradox is that while the world becomes more heterogeneous, forces in business are increasingly moving to globalisation, where mass-produced, cheap products flow out of Chinese and East European factories and where the high street looks the same whether you are in Prague or Peterborough. Nowhere is this more obvious than in the food and drink industry, based as it is on standardisation and economies of scale.
So how do you win in an economy dominated by individuals shopping either for the cheapest deals, or aspiring to unusual and special products that their single lifestyles enable them to afford?
Nordström believes the answer is to look to the competitive world of nature, where animals have survived by adapting to changing environments.
The success of the leopard is based on the survival of the fittest theory. It is stealthy, lean and quick and has adapted to the different environments in which it finds itself. Thus the snow leopard is white and the savannah leopard a light tan, enabling each to blend in with their surroundings and gain an advantage in hunting.
Like the leopard, companies can survive by developing a business model that is flexible enough to adapt to the changing society as outlined above. Today’s fittest grocery companies are those that have taken out costs, reduced layers in the supply chain and are hyper-efficient. Their lean business models enable quick decision-making. In a market where consumers have access to knowledge that enables them to compare prices easily and where they are free to go anywhere to get the best deal, these businesses can offer the cheapest prices. Think super-efficient Tesco and Asda, or hard discounters such as Lidl or Aldi that have limited range, a no-frills environment and the cheapest-possible prices.
But there is another way. The peacock has survived hundreds of years but is hardly fit. It can’t fly, can’t run fast and certainly cannot hide from predators. So how has it survived?
The key is sex and glamour. It manages to pass down its genes because it continues to attract the peahen. The peacock has survived despite its handicaps.
Businesses can use their handicaps in any environment (for example not being the cheapest nor having the most efficient business model) to seduce the consumer.
An example outside grocery is BMW, where engineers are employed purely to ensure the sound of the car door closing is exactly what its customers expect. Hardly the most cost-effective or streamlined approach, but vital to BMW’s brand equity. In grocery look to Waitrose, which eschews EDLP for a high quality and sometimes high price model that pushes to the fore the provenance of its products. “There has been much investment in areas where cost can be cut out. Survival of the fittest is a brutal game to play, with margins getting slimmer. But if you take the other approach you must allocate money to attraction,” says Nordström.
What is clear, he adds, is that there is no survival strategy in between. “You cannot move between fit and attractive,”he says.
This message came across loudly at the CIES Future Leaders conference. There is no room in the middle any more - a major challenge for companies like Sainsbury, Boots and Marks and Spencer.
“We are facing very hard times. We may see a market with more discount formats and more strong quality formats and nothing in-between,” said Casino Group vice president corporate communications Benoît Cornu while Stephen Quinn, business development manager of Superquinn, said: “The middle ground is too dangerous to be in. If you look at our industry today there are far too many in it - they need to get out.”
Success in the grocery market will come not from standardisation but from original ideas adapted to this changing world where endless individual choice prevails.
Bridget Jones, the 30-something fictional singleton, returns to cinema screens next week in The Edge of Reason - and the food and drink industry should be first in the queue to see the film.
For gone are the days when the financial model for your businesses can be centred on the big-basket family shop. It is the single customer that future leaders in the grocery business should be targeting. And to do that, says Dr Kjell Nordström of Stockholm’s Institute of International Business, they will have to learn from nature’s great survivors, such as the leopard or the peacock.
The rise of the singleton appears to be a worldwide phenomenon. Stockholm tops the global chart for the number of single people, with 66% of households made up of single people, rising to 80% if you take the inner city only. Close behind is Amsterdam, with 60% of households being single, and then Moscow at 58%. In the UK, single households make up 40% of Londoners while in Buenos Aires the percentage of households made up of single people has moved from 9% to 20% in eight years.
“All of us are moving in the same direction,” Nordström told a conference of future leaders in Prague last week. “If you take away the most basic building block - the family - and focus on one single being, then everything changes. This is just the beginning and I see no way back. The single society is here to stay.”
Traditional ties are removed in such a society, a trend accentuated by the internet and cheap flights, which allow today’s consumer to find out anything, go anywhere, do anything and be anyone. “As consumers, we can find a spot in the world that fits exactly what we want,” says Nordström.
To create value, businesses need to customise their offer to smaller and specific groups. Indeed, global markets are no longer defined by national boundaries but by changing value systems. As Nordström puts it, to brands like Pepsi or McDonald’s “the People’s Republic of Britney Spears is infinitely more interesting than Austria”.
The paradox is that while the world becomes more heterogeneous, forces in business are increasingly moving to globalisation, where mass-produced, cheap products flow out of Chinese and East European factories and where the high street looks the same whether you are in Prague or Peterborough. Nowhere is this more obvious than in the food and drink industry, based as it is on standardisation and economies of scale.
So how do you win in an economy dominated by individuals shopping either for the cheapest deals, or aspiring to unusual and special products that their single lifestyles enable them to afford?
Nordström believes the answer is to look to the competitive world of nature, where animals have survived by adapting to changing environments.
The success of the leopard is based on the survival of the fittest theory. It is stealthy, lean and quick and has adapted to the different environments in which it finds itself. Thus the snow leopard is white and the savannah leopard a light tan, enabling each to blend in with their surroundings and gain an advantage in hunting.
Like the leopard, companies can survive by developing a business model that is flexible enough to adapt to the changing society as outlined above. Today’s fittest grocery companies are those that have taken out costs, reduced layers in the supply chain and are hyper-efficient. Their lean business models enable quick decision-making. In a market where consumers have access to knowledge that enables them to compare prices easily and where they are free to go anywhere to get the best deal, these businesses can offer the cheapest prices. Think super-efficient Tesco and Asda, or hard discounters such as Lidl or Aldi that have limited range, a no-frills environment and the cheapest-possible prices.
But there is another way. The peacock has survived hundreds of years but is hardly fit. It can’t fly, can’t run fast and certainly cannot hide from predators. So how has it survived?
The key is sex and glamour. It manages to pass down its genes because it continues to attract the peahen. The peacock has survived despite its handicaps.
Businesses can use their handicaps in any environment (for example not being the cheapest nor having the most efficient business model) to seduce the consumer.
An example outside grocery is BMW, where engineers are employed purely to ensure the sound of the car door closing is exactly what its customers expect. Hardly the most cost-effective or streamlined approach, but vital to BMW’s brand equity. In grocery look to Waitrose, which eschews EDLP for a high quality and sometimes high price model that pushes to the fore the provenance of its products. “There has been much investment in areas where cost can be cut out. Survival of the fittest is a brutal game to play, with margins getting slimmer. But if you take the other approach you must allocate money to attraction,” says Nordström.
What is clear, he adds, is that there is no survival strategy in between. “You cannot move between fit and attractive,”he says.
This message came across loudly at the CIES Future Leaders conference. There is no room in the middle any more - a major challenge for companies like Sainsbury, Boots and Marks and Spencer.
“We are facing very hard times. We may see a market with more discount formats and more strong quality formats and nothing in-between,” said Casino Group vice president corporate communications Benoît Cornu while Stephen Quinn, business development manager of Superquinn, said: “The middle ground is too dangerous to be in. If you look at our industry today there are far too many in it - they need to get out.”
Success in the grocery market will come not from standardisation but from original ideas adapted to this changing world where endless individual choice prevails.
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