The ‘transition twenties’ are making themselves felt in 2023. In times of crisis, we tend to narrow our gaze, but we should not forget that we are at a pivotal point in history. RetailDetail founder Jorg Snoeck sees that major megatrends are converging, setting the whole world a series of unprecedented challenges.
Trend 1: Re-source
In November 2022, the eight billionth human being on this globe was born. This is not just a symbolic milestone: the pressure the growing world population is putting on our Earth is the first megatrend – and the most massive challenge. In less than fifty years’ time, the world’s population has doubled, and there is no end in sight. The global population expected to peak at around eleven billion people around 2080, before levelling off or possibly even declining.
By then, however, the world will look completely different, with the focus shifting to India and Africa. A third of all people already live in China or India. This strong Chinese advance translates into a very active expansion strategy, including the revival the old Silk Road with the ‘Belt and Road Initiative’. China is looking for raw materials, food and even labour in other parts of the world to support its huge population.
Yet Xi Jinping should start worrying about other things too, as China is facing a problem: this year, it will lose the title of most populous country to India as China’s population ages and starts shrinking. India, on the other hand, is expected to see its population grow by a quarter of a billion by 2060. Meanwhile, the population of Africa would almost double by 2050, with people living in cities of as many as over eighty million inhabitants. It is immediately clear why China is trying so hard to seduce Africa: the world’s population is shifting to the South.
A big problem is that we cannot feed all those mouths, especially if climate change also takes away agricultural areas and causes crop failures and disasters. Other resources, such as metals, energy and water, are also coming under pressure from the growing world population. Scarcity causes price increases, hunger and social unrest. For instance, do not underestimate the role commodities play in the war in Ukraine. And this is not just about Russian gas: Ukraine is the world’s fourth-largest grain exporter and the world’s third largest supplier of maize (17 % of all supplies).
Trend 2: Re-balance
What does this growing global population look like? Increasingly urban, elderly and single. Globally, over-65s will account for about a quarter of the total population by 2060; the number of over-85s will more than triple. Thanks to advances in science and healthcare, there will even be ten times more centenarians than today. Largely due to this ageing population, already today almost a third of all households in Europe consist of just one person. In the majority of households, there are no children. Women in particular often end up living alone later in life.
By 2050, more than two thirds of the world’s population will live in cities. In the European Union, it will even exceed 80 %. In Asia, things are moving even faster: nearly a million new people arrive in Asian cities every week. The urbanisation of the world has taken shape in just one generation: nowadays, there already are more than thirty mega-metropolises with more than ten million inhabitants. This urbanisation naturally puts pressure on how we live, consume and produce.
Alongside urbanisation and ageing, we are also experiencing a cultural demographic shift. Thanks to migration flows, the European population still remains fairly stable, because without them the population would shrink. Indeed, since 2012, the number of deaths has exceeded the birth rate every year. In twenty years’ time, perhaps one in three of Germany’s inhabitants will have foreign roots, in large cities up to 70 % of the population. Germany will therefore need some 400,000 migrants per year until 2060 to prevent the economy from shrinking.
Trend 3: Re-connect
Demographic shifts and global uncertainty show that we truly live in the age of customisation. Standardisation is old-fashioned, but a good use of data is paramount to keep up with this increased diversity. Data analytics should be like electricity, PSFK argues: resilient retailers see data as an essential utility, available anytime, anywhere.
Indeed, data and artificial intelligence proved to be the lifesavers during the coronavirus pandemic. Without exception, the retailers and brands that weathered the pandemic best have data as their heartbeat: they are companies with a clear overview of their inventories and logistics, so they could rearrange or reroute orders and stock in a matter of days.
However, the consequence of all that data is that the biggest retailers are no longer pure retailers: they are becoming huge, all-encompassing ecosystems. They want to be present in every domain of consumers’ lives: just think of Amazon and Alibaba, which provide medicine, credit, food, movies, games and much more. By being so present in everyone’s lives, they catch consumers in a net from which they can hardly get out. On a smaller (Belgian) scale, players like Colruyt Group are also becoming such an ecosystem: what started with just supermarkets is today a network that includes healthcare (Newpharma), fashion (ZEB), petrol stations (Dats24), technology (Smartwithfood) and much more. From young (Dreambaby) to old, from poor to rich (Cru); Colruyt has something for them.
Such ecosystems also look to providing services for added loyalty (and revenue). Increasingly, retailers are not just selling products, but offering “solutions”: the old dividing lines between products and services are disappearing. Instead, there is one big playing field in which the two are effortlessly combined. Just think of meal boxes like Smartmat (to stay with the Colruyt example) and other subscription models. In 2023 and beyond, ‘servitisation’ will continue its rise, with the new consumer (elderly, urban and diverse) and the challenges of our planet as key stakes.