Recently, many research institutions, investors, and financial media have been discussing Generation Z. According to QuestMobile's recently released "2020 Gen Z Insight Report," Gen Z consists of those born after 1995 and after 2000. In November 2020, the number of active Gen Z devices on China's mobile internet reached nearly 325 million, compared to 166 million in the same period in 2016, nearly doubling in scale over five years. Gen Z has become a new force among mobile internet users. According to Roland Berger's 2021 China Industry Trends Report, Gen Z will also be a key group driving China's new consumption wave. This is not only because Gen Z is large in size, exceeding 260 million; but also because they are influenced by abundant material wealth, explosive information, and generational differences, making them significantly different from past mainstream consumers, exhibiting characteristics of "multiple identities" and "breaking rules." Roland Berger's report points out that Gen Z will drive deep innovation in strategic design and operational implementation for multinational and local companies in China. That said, every generation of young people brings collision and innovation when integrating into mainstream society. But Gen Z seems particularly distinctive, especially in consumption. Moreover, the changes they bring are already very imminent. According to Roland Berger's report, in 2021, China's consumer goods and retail industry will present five major trends: Trend 1: Consumer brands carry more expression of individuality and cultural display for young people In the past, "international big brands" successfully occupied China's mid-to-high-end market, while domestic brands mostly established "big brand" awareness and purchase path dependence in the mid-to-low-end mass market through intensive advertising and extensive channel coverage. Now, Gen Z young people are increasingly "confident" and "self-focused," and their consumption demands are gradually crossing the "material" threshold toward "spiritual needs." Therefore, brands need to satisfy specific value expression and cultural carrying. Domestic brands are revitalizing, and niche economies are also flourishing. Consumers are gradually shifting from "buying big brands and foreign brands" to "buying niche and culture." Especially in the post-pandemic era, with the formation of online consumption habits and the further enhancement of national confidence, it is expected that more emerging consumer brands will appear in the market by seizing niche cultural trends. Trend 2: Consumer brand companies actively promote DTC transformation, giving rise to a new generation of "super product companies" More and more new consumer goods companies are adopting "DTC (Direct to Consumer)." Several beauty brands have risen through this model, such as the familiar Perfect Diary, New Zealand Mystery, and Florasis. Traditional consumer goods companies face the challenge of how to gradually enhance direct communication and dialogue with consumers from the original "channel is king, claim territory" development model. Roland Berger predicts that 2021 will be the (re)start-up year for a batch of "super product companies" rooted in China and facing the world. New consumer brands that meet the needs of different circles will emerge at a faster pace and with greater voice. "Super product factories" may be established. Those brands that truly explore and grasp consumer needs, are willing to invest in product innovation, and possess the "hard power" of supply chain, all have the potential to become the next billion or even ten-billion enterprise. In addition to the re-creation of consumption demands and scenarios, we will also see traditional categories being broken through and even disrupted one by one. Trend 3: "Digital consumer operations" influence and change past media placement methods and means In the mobile internet era, "online + offline" and "public domain + private domain" omnichannel marketing has become the standard model. Live streaming has also shifted to "agency live streaming and self-live streaming," and different information flow forms such as short videos and community social networking are becoming normalized. Mastering the new consumer "selection" and "breaking out of the circle" models driven by digitalization, while balancing brand communication and effect conversion. This means that the media mix, integrated marketing methods, and matching organizational collaboration methods of consumer goods companies have completely changed. Trend 4: User management becomes the core driver of growth for consumer brand companies From "growth hacking" to "consumer operations," from "membership economy" to "experience economy," from "user raising" to "private domain operations," more and more concepts related to "user management" are emerging. The core logic behind these concepts is that the boundaries of corporate cognition and growth logic are being reconstructed in the new consumption era. In today's era, the importance of lean user management is increasingly prominent. Facing the future, cultivating a group of high-value, high-activity, high-loyalty, and high-identity users, doing well in user management, and shifting from the traditional marketing "push" approach to the user management "pull" model, is the fundamental way for enterprises to achieve lasting success. Achieving optimal user management requires not only changing the "concept issue" of operating the enterprise, but also changing the "way of doing things" in business processes. To make a large machine operate finely and make the enterprise's life spring—users—truly "come alive," it is necessary to incorporate consumers into the full-chain closed-loop operation of the enterprise, release the enterprise's operational surplus, stimulate and create additional value, and thus ensure sustained competitiveness in the future. Image source: "KOL: Marketing Insights under the WeChat Ecosystem" report Trend 5: Omnichannel digital retail ecosystem is initially formed, and retail enterprises need to follow the trend and find new growth drivers Driven by the improvement of consumer convenience requirements and the pandemic, the retail industry is undergoing rapid transformation and upgrading. The impact of the pandemic has accelerated the transformation and upgrading from "quantitative change" to "qualitative change." Offline retail formats are accelerating structural and trend changes, jointly forming a richer omnichannel digital retail ecosystem in China, reshaping the overall retail layout in terms of both physical distance and time cost. From the past offline-led, to the outbreak of online e-commerce, and then to the "to-home" and "to-store" jointly forming the local life circle, retail consumer goods are continuously narrowing the distance with each consumer, improving channel efficiency while accelerating agile response to consumer needs. In the above process, we see three important changes in retail formats:
Onlineization of terminal stores Differentiation of category consumption scenarios Diversified restructuring of retail format models For offline modern chain retail, this means solving: How to use home delivery services to innovate the repurchase process and release store space, existing store functions, layout, customer flow lines, and in-store personnel; How product display and arrangement should conform to the new experiential and scenario-based retail trends; And how to break the boundaries between product companies and retail companies, so as to carefully build the competitiveness of private brands and products. 2021 is destined to be an unusual year for China's consumer goods and retail market. In the post-pandemic era, the consumer market is gradually recovering. On the one hand, consumers' self-needs are gradually awakening and being further stimulated; on the other hand, influenced by Gen Z joining the consumer army, consumption is diversifying and rapidly forming distinct "circle cultures." All consumer goods retail companies must review and redefine their brand, products, channels, supply chain management, and consumer operations from a new perspective, innovate and seek change, and break through development bottlenecks. This will determine whether these enterprises can survive in the "future vision." Source: Naughty E-commerce (ID: tiaopiEC), Author: Roland Berger Tips will be paid 400-2000 yuan upon adoption.