Legacy direct-to-consumer (DTC) companies need to find bold ways to transform their businesses in order to remain relevant to the data and technology-enabled smart consumers.
As most legacy DTC companies are still trying to protect their businesses by leveraging scale and chasing incremental improvements, they will face disruption from agile market entrants which are using technology and new routes to market.
To future-proof themselves against the disruption, legacy DTC businesses need to address three requirements of maximising the declining benefits of existing business models to fund transformation, build on current capabilities in ways that drive new business models and create new capabilities that enable a pivot into new opportunities.
This is according to an EY FutureConsumer.Now research, which held series of one-week hackathons in five cities around the world for business leaders, futurists, and industry professionals to understand what the future consumer could look like and what this will mean for companies today.
The research also urged legacy companies to take leadership on the values and concerns of the stakeholders that matter most to their business by differentiating on their purpose and embedding it across every facet of their organisation, as it will help them gain competitive advantage.
When it came to consumers, the research recommended legacy companies to customise and adapt what products they offer, at what price and when they offer them as tech-smart consumers make purchasing decisions in split seconds, regardless of brand. These consumers are also demanding more measurable and personalised outcomes that go beyond the key benefits of the product or service, which means generalised brand promises will become redundant.
To cope with this, legacy companies need to show the transparent, positive impact of their product or service in order to better appeal to their target consumers.
“While the future is still evolving, companies that develop a point of view about a ‘preferable future’ have a better chance to steer themselves towards it than those that don’t,” said Chandan Joshi, the managing partner for ASEAN consumer industries, and the senior partner and global emerging markets leader of consumer industries at EY.
“For instance, in the Singapore hackathon, we saw that future consumers in Singapore will want to leverage emerging technologies to free themselves up to pursue their ‘live more’. Companies that presciently position themselves to take advantage of this trend are more likely to emerge as winners in this future world.”
The research also identified over 150 drivers that could shape the future consumer, along with eight hypotheses related to how people will shop, eat, stay healthy, live, use technology, play, work, and move. Read more about the research on the website.