September 19, 2012
Business is built on social trends. What customers think and do, where and how they live and what they want to buy all underpin their interactions with business.
Identifying and tapping into social trends is a lucrative strategy for entrepreneurs but humans are both fickle and complicated. Decoding their purchasing decisions can be like untangling a web.
To guide the way, BRW has spoken to trend-spotters and business gurus to identify 10 social trends driving new business opportunities.
Some trends, such as urbanisation and the growing number of Chinese tourists, are tangible. They are easily spotted from the reams of data they create. But something like a move to "feel-good consumption" or consumers' lust for information is a little more abstract.
To ground these trends in the real world, BRW has also identified examples of start-up businesses or new products that take advantage of each trend.
Jetts 24 Hour Fitness founder Brendon Levenson founded his network of gyms on the eve of the global financial crisis but as the economy contracted, Jetts grew.
Revenue jumped 495 per cent in 2009 to reach $22.8 million, then doubled in 2010. Revenue is now at $66.1 million and growing. When asked how he managed to achieve runaway growth amid economic woe, his answer was simple. Jetts caters to a time-poor lifestyle. So long as people work longer hours, there will be a demand for his 24-hour gyms.
He's on to something. Build your idea on the back of a social trend and your business is made.
But tapping into social trends is not just for nimble start-ups. Heritage brands such as Hilton Hotels or Weight Watchers are breaking out of the shackles of their history to get in on the action.
It takes a willingness to try new things, and to ask how a business can position itself one step ahead of the customer.
Rocket science? We don't think so.
NUMBER ONE: URBANISATION
"The future is utterly urban. How does that affect what you do as a business?" trendwatching.com's managing partner, Henry Mason, asks.
In China, it's a rapid shift from rural to urban but at home, urbanisation is also about a move from the suburbs to the inner-city, urban designer with Hassell, David Tickle, says. This signals different priorities, as people may be willing to give up a backyard to be closer to work or entertainment, he says. "You might see some businesses that are able to capitalise," Tickle says. From bicycle commuter shops/cafes to warehouse play spaces for inner-city kids, there are "a whole lot of things that exist now, that never existed in the past," he says. "There's less emphasis on private space ... and a much greater emphasis on public and shared facilities."
With urbanisation also comes smaller households but marketers are ignoring this, social researcher Rebecca Huntley says. "We still find that some companies think very much about the mum with kids [as] the main grocery buyers," she says. The opportunity for new products to suit smaller households living in smaller houses could be as simple as a half loaf of bread, a multi-use appliance, or furniture that you "sit on, eat on and store things in", she says.
Urbanisation #1: Size up your market
In South Korea, appliance maker Daewoo Electronics has unveiled a wall-mountable washing machine that is one-sixth the size of regular washers to better suit teeny apartments. "There's this trend towards urban consumption," trendwatching.com's Henry Mason says. "Why not urbanise your products and services?"
Of course to complement Daewoo's Mini, there's Youngman Vehicle Group's Superliner - a 300- person passenger bus for transporting city hoards.
Urbanisation #2: City slickers take turns at the wheel?
Hassell's David Tickle is a member of car-sharing network GoGet. Whether it's public transport, parks or collaborative consumption businesses, city consumers are "certainly more demanding in terms of the things that they're sharing with each other," he says. GoGet, which turned over $6.76 million in 2010-11, is about convenience but removes "the inconvenience of having to find parking or servicing a car or doing all those things that inner-city living makes quite difficult".
NUMBER TWO: LONGEVITY
Australia's ageing population is an historical anomaly generating opportunities for products and services tailored specifically to the old, the infirm, and those looking for lifelong financial security. The number of people aged 85 or older has increased by 169 per cent in the past two decades and 13.7 per cent of the population is past retirement age. This figure is growing. Companies that can deliver long-term financial securities through products such as annuities and 20-year bonds stand to benefit. Retirement villages and nursing homes are also obvious growth areas but there is scope for innovative residential solutions for the aged.
Greenlife Erina in NSW is a land-leasing community that enables retirees to buy a new home without purchasing the land. The caring industry is also positioned to boom. The government is more focused on community and flexible care, which are less costly per person than residential care. Occupational health and safety, easy-access building specialists and age-specific services also offer earning potential.
Longevity #1: Jobs that mature with age
Heidi Holmesset up an online job board for mature age job seekers when her father struggled to find a job at 57. "It was clear that we are the start of a curve but no one was targeting the market." Adage.com.a u was relaunched in January 2011. It now works with 1500 employers, including Westpac and Lend Lease. Government cash incentives for businesses that take on over-55s have been a boon for the business.
Longevity #2: Financial services takes healthy return from ageing population
Australian life expectancy is increasing, yet Australian Bureau of Statistics research puts the average retirement age at 53 years.
There is a captive market for financial products that deliver financial security. Lifetime annuities provide a retiree with regular payments until death in return for an initial lump sum. The rate of return is fixed from the outset and does not respond to sharemarket movements or interest rate changes. At present, 66 per cent of retirees report the pension as their main income source.
NUMBER THREE: CHINA ON THE MOVE
Huan ying is the Mandarin phrase for "welcome". It may pay to learn it. The number of Chinese tourists to Australia grew 20 per cent in 2011 to 536,000, contributing $3.6 billion to the economy. This is set to rise to $9.5 billion by 2020, Tourism Australia forecasts.
The peak body is attending to this trend. It has produced an online drama series staring two of Taiwan's biggest pop stars. The webisodes were aired on China YouTube competitor Tudou and have been seen 118 million times since April. How is your tourism, retail or hospitality business saying huan ying?
China on the move #1: A local learns the language
The Chinese tourist boom is "happening on a global scale but of course Australian businesses are perfectly positioned," trendwatching.com's Henry Mason says. Stephen Arnerich's Runaway Tours has been hosting private foreign-language tours to NSW attractions such as the Blue Mountains and the Hunter Valley since 2006 but didn't introduce Mandarin or Cantonese until about three years ago. About 40 per cent of Runaway's tours are now in these languages.
China on the move #2: A taste of home
In August 2011, Hilton Hotels unveiled a welcome program for Chinese tourists in 70 hotels globally. Travellers are offered congee and dim sum at breakfast and chopsticks, Chinese TV channels and tea varieties in rooms. The program has been a success. Bookings in the first seven months of the year by Chinese guests increased 129 per cent at participating hotels, compared with the same period last year. "This stuff works," trendwatching's Henry Mason says.
NUMBER FOUR: FEEL-GOOD CONSUMPTION
Consumers are looking for easy ways to make themselves feel like they're creating a better society. Innovative products are making the consumer's dollar work in more ways than one by delivering a great product or service and addressing a social issue at the same time. KeepCups are one example. They promote re-use and sustainability all in a funky, plastic design. Thankyou Water enables thirsty consumers to build clean water supplies in developing countries simply by buying a bottle. Collaborative consumption, which puts infrequently used products into frequent use by a large network of people is also a growth area. It's about cheap thrills and quick wins but when it comes to do-gooder credentials, the company has to be prepared to walk the walk.
Feel-good consumption #1: Renewably yours
Energy retailer Momentum Energy has made inroads on the eastern seaboard with its renewable SmilePower hydroelectric power. Turnover at Momentum jumped $240 million to $470 million in the past financial year, the third year in a row it doubled revenue. "If people can get the chance to do the right thing, they'll vote with their feet to do it," managing director Nigel Clark says.
Feel-good consumption #2: Online shoppers give a little lovin'
Customers of online marketplace Andable become part of a global micro-finance operation whenever they buy earrings, art or anything else from its cute and kitsch range of artisans. Ten per cent of every sale goes to a micro-loan administered by social enterprise Kiva, which is then repaid in three months, guaranteed. Founders Melissa Dean and Rupal Ismin are frank about their recipe for success: "Giving a little doesn't have to cost a lot."
NUMBER FIVE: STATUS SEEKING
Scouring through charity shops for vintage clothing has always played into the trend of consumption that comes with a story attached, social researcher Rebecca Huntley says.
But now these stories are playing into perceptions of status. "Status can be about more than just bigger, shinier, faster," trendwatching.com's Henry Mason says. Instead consumers are on the lookout for products and services that bring new stories, skills and smarts they can share with their friends, he adds.
"I think it's because people like to attach meaning to things that they like," Huntley says. "We want to feel like, 'I choose [something], not because it was the cheapest thing or the only thing or that it came with free steak knives but because it spoke to me on some kind of personal level'. In some ways it's about a new form of differentiation that isn't just about cost or marketing."
Huntley says the trend is common in urban audiences or among Generation Y, while Pollenizer co-founder Mick Liubinksas says it is a luxury of the middle class "to be able to consume with a story and have that story be interesting".
Status seeking #1: Time to show off your harvest
Wanting stories out of consumption "is a result of consumption not being interesting of itself any more," Pollenizer's Liubinksas says. That may be the case for a standard hotel stay but in South Africa, a luxury farm stay at Babylonstoren includes harvesting your own food to be cooked for dinner. "What we're seeing is the evolution of consumerism," Klick Communication's Kim McKay says. "Now the only thing we can't buy is essentially time. The status is being able to show off the time you have to learn a skill or find organic food."
Status seeking #2: Smarter than the average Jones
"To be unique, to not be like the Joneses or the Smiths," is what drives consumption with stories, trendwatching.com's Mason says. Well, if the Joneses - or the Lees for that matter - are coming around for a dinner party, Beijing's Ritz Carlton has on offer a unique dinner/status/story combination. For a cool RMB 10,000 ($1507), the hotel's top chefs will host a cooking class for four to six people in your home. "Consumers prize knowledge as a valuable social asset," Mason says. Businesses should aim to "become more intelligent or show off their intelligence."
NUMBER SIX: VALUE
We're rich but we don't know it and this is having a big influence on spending habits. Consumers want better value for money and nowhere is this trend more pronounced than in the retail sector. "People are still more cost and price sensitive to retail goods than they are to services," research outfit IBISWorld chairman Phil Ruthven says. "They can tell when Vegemite has gone up 2¢ ... but wouldn't have a clue what's happening to the services they buy."
Enjo, a brand of higher priced but durable and reuseable cleaning products grew throughout the global financial crisis, when discretionary spending contracted. So did premium milk brand A2 Milk. The lesson? To be cheap is not enough. The quality has to be there, too.
Value #1: Growing market share with fewer products
The German-owned Aldi supermarket chain captured the market of young, price-conscious families through a low-cost, high-value proposition. Aldi opened its first Australian store in 2002. It is now the fourth-biggest grocery chain. Prices are kept low by limiting the product range to about 600 items. Big operators stock about 30,000. Some 95 per cent of Aldi's products are private label, giving the chain strong quality control.
Value #2: Services' boom is retail's bust
Belt-tightening on retail spending has made the services industry the sweet spot of business opportunity. IbisWorld research shows that Australians spent $263 billion outsourcing services from teh home during the past financial year. That breaks down to $30,000 per house per year and $575 a week. the opportunity? Low-cost, high-value home services. Jim's Mowing and the Oven Fairy are on the right track. But can services such as these be injected with the cut-price value proposition that sells in supermarkets?
NUMBER SEVEN: MOBILITY
Critics of smartphone penetration might complain of the "always on" culture but they've no reason to frown. More than half of Australians own smartphones, which are mobile sales portals giving consumers power to purchase goods and services any time, anywhere. "A smartphone can turn any form of advertising - digital, print, outdoor - into a buying opportunity," PayPal spokesman Adrian Christie says. "Three clicks ... and it goes to your shopping cart." Companies that adapt their businesses to reach customers on the go will be the ones to profit. Businesses can redesign traditional offerings to be delivered in modern, mobile and more convenient ways. Services such as health advice and teaching can be delivered through a smartphone. Bricks and mortar retailers can use geo-location apps to entice nearby customers into the store with targeted mobile deals and advertisements. The biggest growth area? IT services to get businesses mobile ready and in touch with customers.
Mobility #1: Losing weight? There's an app for that
Weight loss industry stalwart Weight Watchers turbo-charged customer satisfaction and engagement when it redesigned its service to be delivered by smartphones. Satisfaction levels were 16 per cent higher for members using the mobile application. It's popular, too. The app has been downloaded more than 300,000 times in Australia and when a newer version came out, it was downloaded more than 20,000 times in one day.
Mobility #2: Fashionably located
Tech start-up StreetHawk uses geo-location technology to help retailers send targeted marketing messages promising deals and other bargains to customers close to their stores. "Mobiles get a lot of cut through but if its not relevant or personal, shoppers are going to see it as spam," co-founder Natasha Rawlings says.
NUMBER EIGHT: INFOLUST
Most 18 to 34 year olds can't go an hour without checking their phones (63 per cent for women and 73 per cent for men, mobile security researchers, Lookout, report).
"Consumers cannot get enough information as long as it's relevant and useful to them," trendwatching.com's Henry Mason says. "Forget information overload, you've not seen anything yet."
As well as information about the products they're buying, consumers are also self-obsessed. "Tell me about me!" shriek stats from iTunes that show the number of health-related apps in the App Store - everything from diet planners to exercise monitors such as RunKeeper, which all post to Facebook - has grown to more than 10,000 in the past two years. "You've already got people using the technology [smartphones], it's not a big jump [for them] to try and monitor everything they do," Rebecca Huntley says.
Infolust #1: Shoppers make an informed choice
trendwatching.com's Henry Mason encourages retailers to take "all those features consumers love about the online world . . . like choice, control and transparency" into the real world by empowering them with information. At US department store JCPenney, kiosks allow shoppers to scan barcodes to bring up customer reviews, check inventory levels in other stores, email images and if they like, buy right there and have the product shipped home. Information is power for shoppers and shops alike.
Infolust #2: Baby monitor meets #humblebrag for parents
Helping parents share daily photos of a new baby with family and friends adds to the data stream. But it's the ability for parents to record achievements - such as baby's first smile or toddler's first steps - against each day, that underlines how smartphone app Tinybeans is tapping into social cravings for information and benchmarks. Co-founder and father of three Stephen O'Young says it's not about "trying to be on top, you're just comparing to make sure your kids are going OK."
"I'm Chinese," he says. "Asians are quite competitive about their kids. In Australia I've found that it's a little different, parents don't like to admit they compare but I"ve been to playgrounds and I've seen the mothers eyeing the other kids."
The bonus is it gives parents an opportunity to tap into the Twitter trend of the #humblebrag, he says.
NUMBER NINE: ONLINE/OFFLINE BLUR
"There's a real demand for everything now and I think that's driving it," Klick Communications director Kim McKay says of the blur between online and offline life.
"Real time is the only time for consumers," trendwatching.com's Henry Mason says.
Children especially, don't see a difference, Pollenizer co-founder Mick Liubinskas argues. "They blur them so seamlessly that the actual consumer behaviour changes," he says. "We're not going to realise [that] for another 20 years. Until they start developing [businesses] themselves, we won't see the real fruits of this trend." But social researcher Rebecca Huntley says some people still want to draw a line. "There's points of resistance and they're different for different people. A mum [might say], 'Actually when I'm food shopping, I don't want to be on my mobile phone'. Or, 'Sunday is a really precious day'."
Online/offline blur #1: Retail about-face with "likeable" products
By merging online and offline, retailers can encourage engagement, which can increase sales, trendwatching.com's Henry Mason says. Shoppers in Brazilian department store C&A, for example, can check the digital display on Facebook-enabled coathangers to see in real time how many users have liked an item on the social network.
Online/offline blur #2: Tagging in teal-time
Australian start-up Centryc has its product, MeTag, in action at Sydney's Luna Park. Wristband wearing customers scan at the turnstiles before each ride, providing queue hilarity and updates to platforms such as Facebook in real time. The bonus for venues is that a more engaged customer is more receptive to targeted offers and links to smartphones facilitate this.
NUMBER TEN: TIME-POOR
Crowded cities, busy schedules and long working hours are leaving consumers desperate for quick and convenient access to the goods and services they need most. This is about listening to your customers and being prepared to deliver on their terms, even if it breaks the 9 to 5 model of opening hours and conventional, over-the-counter service. Jetts 24-hour gyms were one company to break the mould and were rewarded with successive growth throughout the years of the GFC. Oovi mobile DVD blu-ray booths have also helped professionals access low-cost entertainment without a trip to the video store. Services need to adapt, too. Consumers are looking for help with access to the "always on" culture that is the new norm. More household services are being outsourced and personal concierges and organisational experts are helping with the co-ordination.
Time-poor #1: Management consultants for the home
A lesson in home organisation might sound like a flashback to the 1950s but Brigitte Hinneberg and MaryAnne Bennie's guide to managing paperwork in the home, Paper Flow, has sold more than 20,000 copies in Australia and attracted more than 7000 customers to Hinneberg's Brisbane consultancy. Her Did you remember the milk? system helps clients improve household efficiency and reclaim hours every week.
Time-poor #2: Sanity, delivered
Being time-poor hasn't left consumers any less inclined to indulge in the pastimes they love, it has just made this more difficult. Take cooking, for example. Aussie Farmers Direct is taking the grunt out of preparing home-cooked meals by delivering farm-fresh meat, fruit and vegetables to people's homes. Revenue for the company increased by 14.8 per cent in the past financial year to reach more $152.2 million.