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Next Big Thing Consulting 2020 | The Community Spirit Revolution 1

Best Friends Forever? Partner up for the Community Spirit revolution

New peer communities are set to give consumer power a huge boost across Europe and the US over the next decade.

Tomorrow’s businesses will increasingly need to submit to citizen gatekeepers. But those that can empower these new communities will gain a huge market of loyal fans.

Next Big Thing September 2020


Table of Contents 0.0 Introduction ................................................................................................................................................... 4

0.1 Getting together ....................................................................................................................................... 40.1.1 A major new trend ........................................................................................................................... 40.1.2 Consumers and community .......................................................................................................... 50.1.3 What’s driving the trend? ............................................................................................................... 60.1.4 What will the trend mean for business? ..................................................................................... 70.1.5 How we created the report ........................................................................................................... 8

0.2 Key insights from the report ................................................................................................................. 90.2.1 Consumers will gain greater control ........................................................................................... 90.2.2 Local neighbourhoods will take centre stage ........................................................................... 90.2.3 Family and household composition will be transformed ....................................................... 90.2.4 Employee brands will matter to staff and customers alike ................................................. 100.2.5 Communities will become ever more autonomous .............................................................. 100.2.6 Brands will succeed by empowering communities ............................................................... 110.2.7 New communities will provide new markets ........................................................................... 110.2.8 Communities will become marketing hubs ............................................................................. 110.2.9 Branded communities will supercharge loyalty ...................................................................... 120.2.10 Brands will have to think and act local to survive ................................................................ 12

1.0 People Power .............................................................................................................................................. 131.1 Challenge: Customers doing it for themselves ............................................................................... 13

1.1.1 Customers take control ................................................................................................................ 131.1.2 Stronger together .......................................................................................................................... 141.1.3 Highly rated ..................................................................................................................................... 151.1.4 Communal commerce … and post-commerce ....................................................................... 161.1.5 Small is beautiful ............................................................................................................................ 171.1.6 ‘Framily’ valued ................................................................................................................................ 181.1.7 Workplace communities ............................................................................................................... 19

1.2 Opportunities: Be a friend, not the enemy ..................................................................................... 211.2.1 Help, they need somebody .......................................................................................................... 211.2.2 Customers: your new sales force ............................................................................................... 221.2.3 Build a brand community ............................................................................................................. 23


2.0 Bubble living ................................................................................................................................................ 252.1 Challenge: Gated communities keep brands at bay ..................................................................... 25

2.1.1 Home big home .............................................................................................................................. 252.1.2 Living together ................................................................................................................................ 262.1.3 Experience economy ..................................................................................................................... 282.1.4 Mixing it up ...................................................................................................................................... 29

2.2 Opportunities: New community, new market ................................................................................. 302.2.1 Try something new ........................................................................................................................ 302.2.2 Tend and befriend ......................................................................................................................... 31

3.0 Local heroes ................................................................................................................................................ 323.1 Challenge: Unwelcome to the neighbourhood .............................................................................. 32

3.1.1 Locality is the new good cause ................................................................................................... 323.1.2 Locality in lockdown ...................................................................................................................... 343.1.3 Walking to work .............................................................................................................................. 353.1.4 Learn local ........................................................................................................................................ 373.1.5 Fifteen-minute cities ...................................................................................................................... 373.1.6 Intentional communities .............................................................................................................. 38

3.2 Opportunities: Think local, act local .................................................................................................. 413.2.1 Localise and personalise .............................................................................................................. 413.2.2 Contribute and collaborate ......................................................................................................... 43

4.0 Conclusion ................................................................................................................................................... 444.1 A difficult but vital journey ................................................................................................................... 444.2 Next steps ................................................................................................................................................ 45

5.0 Next Big Thing ............................................................................................................................................. 465.1 Consumers are changing: we help you prepare ............................................................................ 46


0.0 Introduction

0.1 Getting together It’s become a cliché. But it’s one that can’t be ignored. Customers are changing. And, when it comes to profits, it’s rarely for the better. But there’s good news too. By paying attention to how shoppers are evolving and anticipating what they might need and do in future, smart companies will not only avoid the threats but actually benefit from that change. That is absolutely the case when it comes to a new consumer trend we’ve identified that we call ‘Community Spirit’. It’s a trend that is seeing people place greater value on togetherness. Across demographics, it’s seeing citizens place greater trust in their family and peers; care more for them; and choose to live their lives more locally.

0.1.1 A major new trend

Next Big Thing has been analysing consumer change for almost two decades, and we’ve monitored many trends. The rise of people power and community spirit is one of the strongest we’ve seen. It has the potential to revolutionise business: shifting the power dynamic between brands and consumers, and between regions and capitals across the globe. It’ll impact why we buy and where we live. By 2030, it will see people bypassing traditional power structures and creating their own areas of control. It might seem counter-intuitive to focus on community when people’s normal interactions are being so curtailed by the requirements of social distancing. But it appears the pandemic has actually boosted the community trend.

This trend has the potential to

revolutionise business


Physical social gatherings were discouraged: but if anything, that increased demand. Online meet-ups rocketed. And those individuals who received help from their neighbours were sharply reminded of the importance of peer support. The trend will pose some major challenges for Retail and Leisure. But we believe it offers major business opportunities too. It might even prove the silver bullet for such long-term problems as loyalty, footfall and engagement. In this report we outline how the trend will play out. We detail the specific threats for brands, with special reference to Retail and Leisure. And we identify the growth opportunities the trend offers too.: if companies are ready to take advantage. We show how smart businesses will be able to harness the trend, not just to reduce sales declines, but to increase profits now and in the long term.

We exist in an age of volatility and change. New technologies are shifting behaviours. New social attitudes are impacting sales. Rates of change are speeding up across markets. Covid has impacted consumer behaviour. But well before it began, many companies were already observing levels of consumer change beyond any they’d encountered before.

One of the biggest developments is the shifting power dynamic we mentioned between consumers and producers. The Consumer is no longer just ‘king’, they are about to become Master of the Universe.

0.1.2 Consumers and community

The power of consumers and consumer groups is growing exponentially. 87 percent of Britons now believe consumers can influence the way retailers and manufacturers do business.1 When they identify in groups, from Mumsnet to the anti-vaxxer movement, the power consumers wield is becoming more and more intimidating.

Meanwhile, consumer trust in institutions is crumbling, and trust in peers rocketing, reducing brands’ influence still further. Customers are increasingly acting as gatekeepers, not just for their own immediate circle but for local, national and even global communities too.

1 In Kind Direct, Feb 2019

Smart businesses will harness the

trend to increase profits


To make it even tougher for brands, traditional markets are starting to fracture too. The segmentations on which companies are used to basing their strategies are changing: in their attitudes, behaviours and make-up. Household and community composition are beginning to shift. So too are drivers of purchase choice. As a result, the marketing methods brands relied upon in the last decade will prove much less effective in the next.

These attitudinal and behavioural changes are not appearing at random. They are closely connected. They’re all driven by shifts in personal trust and societal relationships. And they are key parts of the new macro consumer trend we call ‘Community Spirit’.

This trend is seeing people placing more and more emotional and financial value on togetherness and personal relationships. The recent pandemic has accelerated this shift, with many re-discovering the power of community support. But before Covid struck, an inexorable shift towards greater communality had already begun.

0.1.3 What’s driving the trend?

The Community Spirit trend is being driven by four things:

• declining trust, • loss of control • rising anxiety • new technology

“A globalised world ... will generate opposition in the form of localisation, as people try to assert their own identity.”

Tadashi Yanai, President, Uniqlo.2

Trust in institutions is crumbling. According to Edelman’s annual Trust Barometer, the average global citizen today distrusts all institutional groups: financial institutions, big business, governments and the media. Almost two thirds (62 percent) of EU citizens think the European Union doesn’t understand their needs.3 Trust in individual businesses is falling too. The length of time customers stay with the same service provider has fallen 39 percent in the last four years.4

2 Business of Fashion, Jul 2016 3 Pew Research, Mar 2019 4 Opinium Research + Verint, Jun 2019

The average global citizen

today distrusts all institutional

sectors


The pandemic has brough institutional and commercial trust into sharp relief. Consumers were typically disappointed in how some companies and institutions responded to the crisis, but pleasantly surprised by others.

At the same time, an increasing number of issues, from economics to climate change, are having to be addressed on a global scale, placing decisions further and further out of citizens’ individual control. As a result, all kinds of consumers are trying to, in Brexit-speak, ‘take back control’ from institutions. Many see Community as proving a safer alternative. Consumers have less need to rely on ‘them’, since they have ‘us’: a community of family, friends, neighbours, fellow shoppers and shared interest groups. The third driver is anxiety. While individuals’ trust and control levels are falling, their levels of personal anxiety are on the rise. More people are stressed, anxious or depressed. In the US polls show rates of depression have been significantly higher in the last twenty years than the previous twenty. Communities can feel like safe spaces for the anxious: many are looking to them for comfort, support and shared strength.

Finally, technology. The growing dominance of personal tech has accelerated the trend, in both negative and positive ways. On the one hand it’s exacerbated anxiety and loss of control. Communities are a necessary anchor and uniting force in an age of fractured media, frequent technological change and competing commercial interests.

At the same time, technology has proved a powerful enabler for both regaining individual control and connecting with others. Whether consumers are Googling symptoms to avoid seeing a doctor or uniting disparate family members via WhatsApp.

0.1.4 What will the trend mean for business?

The trend offers three big challenges. As consumers become more communal, we will see three key developments:

1. consumers’ already growing power will increase 2. traditional target markets and consumption environments will fracture 3. ‘gated’ communities will make it harder for companies to reach them

Yet these threats offer major business opportunities too. Tomorrow’s most successful brands will prosper by:

1. harnessing consumers’ power as a marketing tool 2. adapting the business to better serve the needs of the new communities. 3. befriending the new communities to gain commercial access to them

Consumers are trying to ‘take back control’

from brands and institutions


0.1.5 How we created the report

At Next Big Thing we believe the most effective way to predict consumer futures is to use a combination of polling research, news reviews and behavioural analysis.

We begin any study we do by examining all available polling sources to establish how individuals, as consumer, employee or citizen, are currently feeling. What are they thinking and doing right now? And if that’s changed recently, then how?

Next we look at diverse news sources to determine the activity of macro forces, across the likes of technology and the economy. And consider what impact it might have on tomorrow’s personal and business landscape.

Finally, we use behavioural and motivation theory to understand the potential interplay between these macro forces and people’s attitudes and behaviours. What will matter to them in future? What established opinions and actions will accelerate or decline, and what new ones could emerge? How will these manifest in different aspects of people’s lives, across demographics, such as age and industries like Retail or Leisure?

To validate and understand the Community Spirit trend, we began by scanning our dynamic library of new and developing trends, to sense check the validity of the trend. We commissioned the most appropriate researchers from our team to locate and analyse hard data, from a literature review of research reports and social and economic forecasts, plus softer data from respected industry and academic publications. Lastly, we mapped this against behavioural theory, to help us paint a robust and practical picture of how the trend is likely to impact attitudes, behaviours and the business landscape.


0.2 Key insights from this report

0.2.1 Consumers will gain greater control

Consumers are becoming increasingly powerful players in the purchase and business journey. Already 87 percent of Britons believe consumers can influence how retailers and manufacturers do business.5 More and more are losing faith in institutions and placing greater trust in their peers. The future will see them seeking much greater personal and collective control over the purchase process. They’ll increasingly act as gatekeepers, not just for their own immediate circle but for local, national, even global communities. Businesses’ power to influence either their customers or the fate of their brands, will diminish.

0.2.2 Local neighbourhoods will take centre stage

People are placing greater value on their surroundings today. Good work/life balance is now a top priority for many. Trust in big organisations is falling and more consumers believe it safer to ‘think small’, further impacting people’s geographical viewpoint. Buoyed by the 2020 pandemic, homeworking will rise, with a shift from White Collar to No Collar. All of this will drive people to take greater interest in, and ownership of, their local neighbourhoods. These will gain more purchase power, as channel and choice driver. Neighbourhood organisations will become key pressure groups.

0.2.3 Family and household composition will be transformed

Traditional family, household and living space composition are set for major change. The boundaries between families and friends are beginning to dissolve. Household size is starting to grow, buoyed by children and grandparents. Already 80 percent of UK householders expect their parents will move in with them.6 High end flat sharing will increase too, as the differential between house prices and wages continues to rise. Over the next 5-10 years there will be markedly more co-living and live, work, play developments. And local neighbourhoods will become much more important. Companies that do not, or cannot, adapt their marketing and distribution methods and platforms will fall massively behind.

5 In Kind Direct, Feb 2019 6 Mintel British Lifestyles, May 2017

13% of householders in

the UK expect their parents will move

in with them.


0.2.4 Employee brands will matter to staff and customers alike

As peer trust grows and consumers place more value on human to human (H2H) relationships, the ‘humanity’ of brands will take centre stage. Interactions between customers and staff will have greater impact on decision and purchase journeys: shop assistants to delivery drivers to customer service reps. The rising importance of employees was illustrated during the pandemic. One might have assumed that the treatment of customers would take top priority in a crisis, but this was not the case. The way brands treat their employees became the most important criteria when evaluating a brand.7 Meanwhile, as technology enables smarter workplace communication, and companies look to workplace relationships to boost engagement, employee communities will gain internal power too.

0.2.5 Communities will become ever more autonomous

Unhappy with the pace of change, citizens on the Right and Left are increasingly protesting government, institutional and business influence. As a result, as neighbourhoods, households and other communities become stronger and more independent, an increasing number will develop into self-sufficient ‘bubbles’. Few will be gated communities in the traditional sense, but many will certainly close the gates to attitudes, lifestyles, products - and brands - they don’t like. They’ll range in size from micro-communes and local neighbourhoods to Seasteading communities and even city states. But they’ll be united by social and geographic independence: and being people-first.

Seasteading could create huge brand new cities like ‘Oceanix’.

7 Speed, May 2020

More and more communities will develop into self-sufficient bubbles


0.2.6 Brands will succeed by empowering communities

As consumers seek greater control over their lifestyles and purchase journeys, they’ll need outside help. They may have more power than before, but they know they’re not infallible, and many of the areas they’re trying to control will be new to them. They’ll be grateful to brands that provide them with practical advice, more opportunities for interaction and choice, and transparent product data to help make smarter decisions. Smart brands may focus less on identifying specific needs across many different groups, and instead target the full range of needs of specific ‘consumer verticals’.

0.2.7 New communities will provide new markets

The rise of new household and community typologies will be uncomfortable for brands unable to develop their strategies accordingly. But those with a strong innovation culture will benefit from the new needs and markets they offer. Sandwich households will seek more adaptable products and services: modular furniture to multi-user insurance policies. Companies will benefit from offering ‘framily’ loyalty cards, streaming service and theme park discounts. There’ll be demand for products that work in multi-occupancy homes, like voice assistant hubs and payment management apps. Demand will also grow for products previously outside the requirements or budget of single households. Tomorrow’s larger households will have an appetite for higher value, shareable items, from Peloton bikes to 3D food printers.

0.2.8 Communities will become marketing hubs

Today 91 percent of all consumers say positive customer reviews make them more likely to use a product.8 By 2030 we believe word of mouth will dwarf any other purchase driver. As peer trust and communal self-sufficiency become ever more important, word of mouth from community micro-influencers will have a phenomenal impact on product choice. Products and services that provide genuine solutions to the problems of one of the new close-knit communities will stimulate a whole engine of recommendation and publicity generation.

8 Bright Local, Dec 2019

Word of mouth from community

micro-influencers will have a major impact on future

product choice


0.2.9 Branded communities will supercharge loyalty

Across most sectors, brand loyalty levels are crumbling. The time customers stay with one service provider has fallen 39 percent in the last four years.9 But the trend for community offers hope here. Customers’ trust in the concept of reciprocally-run communities is growing. In future, companies will find greater success by creating a genuine ‘community spirit’ between customers, employees and brand. Those that can show with authenticity that they’re ‘one of the family’ will see consumer loyalty levels rise.

0.2.10 Brands will have to think and act local to survive

In recent decades many people cared more about the house prices and transport links of their neighbourhoods, than the quality of life they provided. But that is changing. What happens within a one-mile radius is becoming more important to households. As a result, they’ll increasingly act as brand gatekeepers to their neighbourhoods, and question what brands might bring to them. In future, companies will need to think and act local to appeal to their customers.

Poynter Institute, Media Trust Survey, Aug 2018

The pandemic has accelerated the importance of local neighbourhoods

9 Opinium Research + Verint, Jun 2019

0%10%20%30%40%50%60%70%80%90%

Peoplearedoingmoretohelpneighbours

Lockdown'sbroughtourneighbourhood

together

Ifeelasenseofcommunitybelonging

IfeelIcanrelyoncommunityfor

support

How people feel about their local neighbourhood during the pandemic


1.0 People Power

1.1 Challenge: Customers doing it for themselves As institutional trust levels fall, and the influence of global forces grows, two things are starting to happen. First, customers are looking for chances to take greater control over their immediate lives. More and more will find ways to remove incumbents and commercial intermediators from the purchase and consumption journey.

Second, peer trust is growing. Customer reviews and amateur influencers are beginning to replace professional marketers as drivers of product choice.

Customer power will rise, at the expense of commercial and producer power. Tomorrow’s brands will have less control over their own success.

1.1.1 Customers take control

With trust in institutions declining, there’ll be a shift towards greater self-reliance. Consumers in today’s ‘post-truth’ world are much less trusting of traditional sources of knowledge and assistance. Consumers will increasingly look for ways to wrest control from institutionally-run sectors, like health, finance and education.


Already increasing numbers are self-diagnosing via search engines like Google and health apps like WebMD. Almost half (44 percent) of Americans prefer to self-diagnose their illness online rather than see a medical profesnal, rising to over 80 percent in some states. A third (30 percent) say they rely on home remedies to address health issues.10

Meanwhile online and mobile banking is enabling more customers to track and administrate their accounts directly, without the help of the bank. 65 percent of UK consumers now use mobile banking. 67 percent use Internet banking every month.11

1.1.2 Stronger together

As individuals usurp control from institutions, we believe they’ll start seeing the benefits of grouping together and will take greater collective control.

This is likely to drive a communal empowerment cycle. As their individual power grows, so consumers’ collective power will grow, at both a household and a virtual group level. This will in turn boost the power of local communities and neighbourhoods. And the additional influence individuals will have within these increasingly powerful communities will drive a greater sense of personal power.

Parents are gaining more say in the running of their children’s schools. New voter communities are enjoying success around a range of causes, from the election of populist politicians like President trump, to Brexit to BLM.

People are trusting the ‘hive mind’ more too. Product success today can stand or fall on customer reviews. In one recent survey, 97 percent of consumers claim they use customer reviews whenever they purchase a new product.12

All of this poses a threat to business, of course. Already 87 percent of Britons believe consumers now have the power to influence how retailers and manufacturers do business.13 This is set to grow. Too many brands have already seen the damage a boycott can do to sales.

10 Tinker Law, Feb 2018 11 YouGov, Jan 2020 12 Power Reviews, Mar 2018 13 In Kind Direct, Feb 2019

87% of Britons believe

consumers have the power to

influence how companies do

business


Not coincidentally, a resurgence of cultural politics is making identity- and attitude-based communities an increasingly powerful part of the consumer lobby. Groups that were once viewed as ‘niche’ are gaining power from social media and going global: from Anti-Vaxxers to the Trans community. Like all powerful consumer groups, they will expect their voices to be heard.

“Customers are increasingly making decisions based on alignment with their values. Purchases now represent a customer's vote and the brand is a symbol, an extension of the consumer.”

Cassandra Lam, CEO, The Cosmos 14

Meanwhile, as citizens gain more control, they’ll seek ways to bypass and democratise traditional commercial power structures. The past decade has seen the rise of a whole new consumer sector, online influencers, who bypassed traditional media and leisure sectors to influence millions and are now authors, directors and moguls. Meanwhile online communities have started to provide their own entertainment, with members creating content, and moderators becoming the new media ‘owners’.

The next step for community-supported disintermediation could be popular customer reviewers expanding into the price comparison space. Or the Hive Mind providing learning and advice services.

1.1.3 Highly rated

The influence of customer reviews on profits is already considerable. It will grow still further as they nichify.

The more consumers self-define on attitudinal and behavioural lines, the less they will care what all customers think. What will matter more is what ‘people like me’ think. Parents will increasingly care about what other parents think of a hotel. Vegetarians will care more what other vegetarians think. As a result, consumers will look for specialist and segmented customer reviews.

Meanwhile, reviews are impacting peer relationships too. From eBay to Etsy, Uber to Airbnb, not only are suppliers being rated for their trustworthiness, so too are consumers. Although this feels unnatural to many, the more it happens, the more ‘normal’ it will seem. And the further it could develop.

The next step will be to export the ratings system of peer commerce and sharing companies to the Hive Mind. Knowledgeable amateurs and junior professionals in sectors could obtain ratings, or badges, that will accompany their avatars on sites from Facebook to Trust Pilot.

14 Cassandra Lam, CEO, The Cosmos, in AmericanExpress.com, Jan 2019

Customers are increasingly

making decisions based on

alignment with their values


How soon before people are vying to be the first of their friends to get a pastry chef or vegetable growers badge on Instagram?

Feedback pods, like this OMBEA one, are being rebuilt for a post-Covid world

1.1.4 Communal commerce … and post-commerce

The logical next step from trusting the reviews of fellow customers is to actually purchase products and services from them.

Already more consumers are becoming producers, selling their own products and services directly on sites like eBay or Etsy. Digital technologies have created thousands of ‘tabletop tycoons’: selling everything from pickles to plumbing services over the last two decades. The numbers of self-employed, freelance leisure providers too are rising: from personal trainers unaffiliated to an individual gym, to single room ‘hoteliers’ hosted on Airbnb. As the Community Spirit trend grows, so will this. There’ll be a big increase in single-person retailers and leisure providers.

But the growth of community could also drive a new type of peer sales. A sort of micro-franchising in which consumers that enjoy a particular brand actively pursue sales on behalf of that brand, gaining commission each time they do. It would be like a modernised version of the Avon cosmetics approach of the 1960s. Or a personal version of the huge success of recent direct to consumer (DTC) brands like Warby Parker and Dollar Shave Club. Perhaps it should be called CTC sales?

Why bother buying big-ticket

items when you can borrow them

from a neighbour, friend or work

colleague?


There are already examples in the luxury industry where, according to Forbes magazine, “a network of devoted brand customers acts as local influencers, sell directly to friends and family, and are proving more effective than celebrity influencers.”15

The impact of the Community Spirit on commerce won’t end there, however. As neighbourhoods become closer, many people could start to question the need to purchase many products at all. Why buy a big-ticket item when you can borrow it from a friend, neighbour or work colleague? Lockdown showed the way. Social sites became venues for barter and sharing. The Washington Post found many new Facebook groups dedicated to product barter. The Daily Mail reported sites like Facebook and Next Door were “flooded” with posts from those wanting to exchange items with neighbours.16

1.1.5 Small is beautiful

As trust levels dwindle, so people will place their trust in smaller and smaller groups. Consumers are becoming warier of big organisations. From governments to the ‘mainstream media’, ‘big pharma’ to ‘big technology’, larger enterprises are seeing loyalty levels tumble.

“Millennials want products.to be ... simpler, more local and if possible small: as small as you can.” 17

Scheherazade Daneshkhu, Financial Times

Consumers are starting to ‘think small’. Small local suppliers and artisanal products are proving increasingly popular, from beer to beauty. Over half of Americans prioritise local provenance when buying produce or baked goods or eating in cafes.18 Social media is less about having large numbers of friends, and more about forging closer ties and doing more with smaller groups. Even Facebook’s Mark Zuckerberg is advocating smaller communities, via the promotion of Facebook Groups, and in this recent statement:

“[Facebook’s] digital social environments will feel very different over the next 5+ years, re-emphasizing private interactions and helping us build the smaller communities we all need in our lives.”

Mark Zuckerberg, Facebook 19

15 Forbes, Dec 2018 16 Daily Mail, May 2020 17 Financial Times, Jun 2018 18 Nielsen, Jul 2019 19 Mark Zuckerberg, Facebook, Jan 2020

Mark Zuckerberg says Facebook’s plans is to help

people “build the smaller

communities we need in our lives”


Even the newly formed influencer industry is seeing a power shift. Trust in the opinions of ‘megastar’ influencers is beginning to decline as consumers switch their interest to individuals with specialist knowledge and just a few thousand followers. The future belongs to these micro-influencers.

The smaller that trust groups become, the harder it will be for companies to enter their virtual gates.

“Smaller companies are using social media and consumer engagement on the ground to great effect. They don’t need the “stamp of quality” that comes with the backing of a long-established global company [as] consumers themselves are building brand trust in real time with their reviews. It’s creating a new competitive arena in which smaller offerings can flourish through word of mouth.”

Sonia Gupta and Oliver Wright, Harvard Business Review 20

This will be an increasing problem for businesses. How can they recreate the authenticity and locality of artisanry on a global or even national level? How will tomorrow’s companies build loyalty at scale?

1.1.6 ‘Framily’ valued

The trend for ‘thinking small’ is impacting peer relationships too. Peer trust groups are shrinking in size: and coalescing around those people are closest to: family and friends, plus some neighbours or work colleagues. For an increasing number of people, these groups are becoming the only trustworthy source of emotional and physical support. They are all that can be relied on in today’s age of rising anxiety and change. Consumers today are on average five times more influenced by their friends and family than celebrities when they are making a purchase decision.21

Family will be a particular winner here. Time spent with family and family well-being have already become greater life priorities, for adults and children alike. Parents are spending more time with their children. 47 percent of all Britons today want to eat together more as a family.22 Household hierarchies are blurring. Children are being consulted on more family decisions. Parents and children are sharing clothes and music recommendations more frequently. Mirroring the households of the 1950s, dependent children are increasingly contributing money to the family account. Meanwhile families are going on holiday together more and in bigger groups. The ‘family footprint’ is being extended too, as decades-long rises in divorce levels create jigsaw families.

20 Harvard Business Review, Feb 2019 21 Campaign, Oct 2017 22 Co-Operative Group, Nov 2018

‘Framilies’ are viewed as being closer and more supportive than

friendship or family groups

alone


Friendship too is becoming more important. More people today are single and lack the support of close family.23 The rise of divorce rates, single parenthood and actively child-free couples mean many adults no longer have the support of spouses, siblings or extended families, so will turn their friends into a new family.

Social media and other digital technologies have helped. They’ve encouraged and enabled people to build and maintain more friendships. People are sharing more and more of their thoughts, experiences and favourite media with others online. 83 percent of Internet users globally share content with others on a regular basis.24

Meanwhile, the distinction between family and friends is actually starting to blur. Strong new trust networks, or ‘framilies’, are on the rise. These comprise family, friends and favoured neighbours and work colleagues. Respondents in a recent poll say they view 25 percent of their friends as family, and 20 percent of family members as friends. Framily groups are actually seen as being “closer” than family or friendship groups alone and provide a “greater breadth of support functions”.25

1.1.7 Workplace communities

The trend for greater communality will impact people in all spheres of their lives. As well as citizens, consumers and families, employees too will place greater value on communality and collectivity. The Community Spirit trend will accelerate this shift both internally and externally.

The workplace is looking at a revolution. Where, when and how people work and who works are all being re-evaluated. A key area will be communication. As more companies employ a Blended Workforce approach, employing a greater mix of full-time, part-time and freelance staff, being able to communicate effectively between these disparate groups will be vital. The ability to combine work and personal communications will be key to driving both engagement and efficiency. It will also drive greater communality within the workplace. This will be further boosted by a shift towards flatter hierarchies and team-based organisational structure.

As people look more to peers for trust and support, work relationships will become more important too. We’re likely to see more people viewing close colleagues as part of their ‘framily’.

23 United Nations, ‘Families in a Changing World’, Aug 2019 24 Global Web Index, Nov 2019 25 Amy Bush et al, ‘The Framily Plan’, Network Science, Mar 2017

Greater communality in

the workplace will be boosted by the growth of flatter hierarchies and

team-based work


Meanwhile, as peer trust grows and consumers place less value on brand relationships and more on human to human (H2H) relationships, employees will become more important to sales. Interactions between customers and staff are likely to have greater impact on decision and purchase journeys: shop assistants to delivery drivers to customer service reps. This was clearly illustrated by a recent major poll. When it comes to evaluating brand choice, the provisions a company makes for its employees (37 percent) have now become more important to consumers than the ones it makes for its customers (21percent).26

26 Speed, May 2020


1.2 Opportunities: Be a friend, not the enemy As consumers become more powerful, smart brands will turn that power from a threat to an asset by:

• providing products or services that make customers’ lives easier • using the Hive Mind as a marketing department • creating a loyal peer community based around their brand(s)

1.2.1 Help, they need somebody

Consumers will seek greater control over their day to day lives. But it won’t be easy for them. They’ll need help. Companies that provide a product or service that makes it easier to achieve will win customer loyalty. Indeed, as trust levels continue their downward trend, utility might soon be one of the few achievable loyalty drivers left. For example, strongly utilitarian companies like Amazon and Facebook have so far maintained sales growth, despite regularly receiving negative press for their working practices and privacy policies.

Support consumers to make their own decisions. Tomorrow’s consumers will value the opportunity for more control and choice within the purchase process. In future a family trip to the zoo could offer a Starbucks-style range of choices at the virtual ticket booth. People will appreciate the empowerment it provides, though some might prefer a simpler process. Those seeking to make smarter decisions will want clear, transparent data.

Offer advice and instruction. As consumers try to exert greater control, they’ll discover areas they’re unfamiliar with. This is a chance to help them. They may be tentative about trusting brands, but they’ll look favourably on those that provide useful, neutral advice. 91 percent of consumers today are more likely to buy products from companies that provide personal recommendations.27 None of this is news. But the importance of offering advice to tomorrow’s control-demanding consumer will grow exponentially.

Invest in understanding new needs. As they grow into the 2020s, these communities will have new needs that will be important to fulfil Just as understanding individual customers’ needs and pain points has been key, in future the same will apply to understanding entire communities. As a result, brands will increasingly look to target specific groups and their entire set of needs. Successful brands will identify and target these ‘consumer verticals’, as we’ve christened them. They’ll move from selling a few specific products to anyone who wants them, towards creating products and services that solve the needs of a particular group, across wider and wider product areas.

27 Accenture, Pulse Check, May 2018

Tomorrow’s smart brands

will increasingly target ‘consumer

verticals’


Support identity-based consumer groups. With the power of segmented consumer pressure groups growing, companies will need to determine how they’re going to enable them: and firm this up in consistent policies. If X group and Y group are in opposition but are both customers of Z brand, the brand will have to decide whether to support one over the other: or try to find a middle path that avoids angering either. Neither strategy is easy or danger-free. But here again, the right policy could provide dividends.

Get customers to help stop adverse legislation. Many companies find themselves in the middle of a ‘techlash’. A number of governments are looking for ways to curtail the power of the biggest technology brands. For instance, the French government’s introduction of a three percent digital services tax. But these governments may back down if faced with opposition from technology brands’ fan groups and users.

1.2.2 Customers: your new sales force

Word of mouth (WOM) has become a huge brand purchase driver. Already 91 percent of all consumers say positive customer reviews make them more likely to use a product.28 83 percent buy products recommended by friends or family.29 And 85 percent of 18-54s trust the opinions of online reviewers as much as they do personal recommendations.30

By 2030 we believe WOM will dwarf any other purchase driver. As peer trust and communal self-sufficiency become ever more important, word of mouth from community micro-influencers will have a phenomenal impact on product choice. Smart brands will find ways to utilise it.

Help customers and they’ll help you. Approached well, future communities could act as powerful marketing hubs. If an organisation can answer one or more of a community’s problems, that community will spread positive word of mouth about them. And the stronger communities become, the more impact that will have on sales. Brands will need to provide real benefits of course. Such close-knit groups will not suffer dishonesty or manipulation. But genuine assistance will earn dividends. Companies like shoe manufacturer Zappos and technology retailer Enjoy have succeeded by focusing the majority of their marketing spend on delivering strong customer service in order to drive WOM. Meanwhile brands from Lush to GoPro have found success seeding products with micro-influencers.

28 Bright Local, Dec 2019 29 Convince and Convert, October 2018 30 Bright Local, Dec 2019

85% of 18-54s trust the opinion of online

reviewers as much as personal

recommendations


Supercharge your feedback. The vast majority of consumers today like to know what users think before they buy or use anything. As community and peer trust grow, this will only increase: and brands will be forced to provide it via user forums and review sections. Smart companies will look to new ways to provide it, for instance in real time. Advances in AI and the Internet of Things will make this easier to do, using hubs and wearables. Brands confident in their products should investigate ways to make these automatic. If theme park customers consent to sharing data from their wearables, they'll let their heart rate do the talking when it comes to reviewing a rollercoaster.

Personalise customer reviews. Smart brands will also find ways to nichify and segment their reviews. Already some companies offer users the chance to segment customer reviews by demographics or behaviour. Advances in artificial intelligence will enable every company to stratify reviewers. In future, consumers need only see customer reviews provided by people like them.

1.2.3 Build a brand community

From Sephora to Patagonia, consumers are increasingly identifying as proud users of one or more specific brands. In a recent poll, for instance, a majority of Apple consumers said they would be put off a potential partner on a first date if they used an Android phone, and vice versa.31

As consumers place greater value on both community and identity, they will seek out companies that create a genuinely communal atmosphere around their brand. They’ll gravitate to those that build a real ‘brand community’ and a genuinely reciprocal relationship between producer and consumer: listening to customers as much as advising them. If retailers, leisure owners and other customer-facing companies can show with authenticity that they’re ‘one of the family’, they’ll win greater customer trust.

“A brand community can be a powerful and supportive strategy to develop your company … So long as you keep your users' wants in mind, and you're willing to provide value to them, there's virtually no downside.”

Anna Johansson, Inc 32

Build communities with a ‘purpose’. Brands from Whole Foods to Nike have built communities based on a shared worldview or purpose as much as on product choice. They’ve boosted this via political campaigns, but such purpose doesn’t need to be political. Lego has proved you can unite a group behind a shared concept like ‘play’ that’s just as powerful. It’s all about shared passion and emotional engagement.

31 Match.com, Sep 2017 32 Anna Johansson, Inc, Feb 2018

Tomorrow’s consumers will

gravitate to companies that

build a real brand community: a

symbiotic relationship

between producer and consumers


“Using the same old paid social channels and search engine marketing isn’t going to cut it anymore. Now the brands winning in e-commerce are … not only building emotional relationships with their customers but also creating brand communities that motivate shoppers to stay engaged over time.”

Tim Packover, Smile Rewards 33

Build multi-brand communities. Another community trend could enable brands to expand this opportunity: co-opetition. An increasing number of businesses are sharing resources and research with their competitors, from Apple and Samsung to Daimler and BMW. If brands can identify other brands that their customer niche trusts, then co-opetition with them could help solidify those communities: or even pool and expand them.

33 Tim Packover, Smile Rewards, Jul 2019


2.0 Bubble living

2.1 Challenge: Gated communities keep brands at bay

The trend for community will change the nature of traditional retail and leisure target groups. Families, households, friendship groups and local communities all look set for radical evolution. As a result, today’s established marketing and distribution methods will become much less effective.

And as households get bigger, closer and more independent, more and more of them will develop into self-sufficient bubbles. Though few will be gated communities in the traditional sense, most will close the gates to attitudes, lifestyles, products - and brands - they don’t approve of.

2.1.1 Home big home

One of the biggest trends of the last fifty years was the trend to smaller households. It forced companies to adjust their strategies accordingly. For instance, retailers put more emphasis on smaller portions, meals for one and singles marketing. But there is evidence the trend is starting to plateau in many developed markets. We believe larger households will return, with a consequent impact on business.

A range of social and economic factors will drive the trend. Increases in both youth unemployment and house prices mean young people are having to wait longer until they can afford to move into their own home.

10% of children in

the US now live in multi-

generational households


We’ve already identified how adults and children are placing greater value on spending time with their family. As a result, the young will feel less urge to move out and more children will stay at home longer, or return home after university. Today 40 percent of 25-29 year olds in the European Union still live at home with their parents.34 There are more UK 20-34s are now living with their parents than living on their own.35

Meanwhile, with interest rates so low, grandparents are finding it harder to live alone on their pensions. Moving in with their children will become an increasingly attractive option. Especially given how much equity they can realise by selling their homes. Already one in eight UK adults expect their parents will move in with them.36

There are more multi-generation households in the US today than ever. In 1996, just 5.7 percent of children lived in multigenerational families. Twenty years later, that’s nearly doubled to 9.8 percent. Multigenerational households are the only type of shared living arrangement that increased over the last 20 years.37 In the UK, the number of granny flats and ‘graddy flats’ - that is, self-contained spaces for grown-up children returning home after university - has risen by a third since 2014. One of the biggest trends in holidays in recent years has been three-generation holidays.

The pandemic is likely to accelerate the trend. Many families were kept apart geographically by lockdown and suffered emotionally as a result. It’s likely this will inspire some to try to avoid the situation in future by moving in with their family, or at least moving into their neighbourhood.

2.1.2 Living together

It’s not just family households that will grow. Increasing appreciation of social interaction, combined with growing economic concerns, will encourage more non-familial sharing too.

As time with friends becomes more important, and with house prices in many areas still rising, house-sharing with friends and potential friends will grow. The number of people looking for flat shares has risen 31 percent since 2011. More than half (51 percent) of those sharing in the UK today previously rented alone or with a partner, and 16 percent used to be homeowners.38

34 Eurostat, Sep 2017 35 Office of National Statistics, Sep 2012 36 Mintel British lifestyles, May 2017 37 Demography, Sep 2018 38 Spare Room, Sep 2018

51% of people living in

flat shares now previously lived

alone or with a partner


If economies remain unstable, more older and higher income groups will start renting. The proportion of UK 35 to 54-year-olds who live as private tenants nearly doubled in the last 10 years.39 Between 2014-2018, one UK flat sharing website saw searches by over-35s rise 26% and those by 45-54s rise 50 percent.40 According to the Centre for Ageing Better , the number of over-60s renting privately in the UK rose from 254,000 in 2007 to 414,000 in 2017. It predicts about a third of over 60s could be renting by 2040.41 It’s not just rental that’s seeing more sharing. Recent research from Marks and Spencer identifies a trend for groups of three or four friends to buy homes together, which encouraged it to create a new ‘mortgage for four’.

"Our research suggests the majority of millennials would take out a mortgage with two or more people to get a foot on the property ladder. The option of becoming a mortgage-mate is particularly appealing to those already in a housemate arrangement."

Paul Stokes, Head of Products, M&S Bank 42 All this is likely to drive growth in co-living: based around purpose-built multi-occupancy apartments that include communal amenities like kitchens, shops and food halls. These range from those targeted at the young and single, to those like the Amaryllis Centre in Bonn, Germany which combine pensioners and young families. Rooms in co-living spaces are already in demand. Common, a co-living startup with homes in New York, San Francisco, Chicago and Washington, claim it’s receiving 1,000 applications per week for its 500 bedrooms. Meanwhile three quarters (76 percent) of property development professionals believe there will be a rise in co-living spaces in the next twelve months.43 As the trend becomes more common, and distrust levels rise, the political and consumer power of co-living spaces will grow. The greater this grows, the more autonomy those communities will demand. And the more they’ll develop into ‘intentional communities’.

39 Hometrack + BBC, May 2018 40 Spare Room, Sep 2018 41 The Centre for Ageing Better, Jun 2018 42 BBC, Mar 2019 43 Development Finance Today, Jan 2019

76% of property developers

believe there’ll be rising demand

for co-living spaces over the

next year


2.1.3 Experience economy

The rise in co-living will further accelerate another important Retail and Leisure area: mixed use.

According to Mintel, consumers now spend more on experiences than on purchases. 78 percent of US Millennials would rather spend on a desirable experience than a desirable product. 55 percent of all US consumers are spending more on events and live experiences than ever before.44 One of the key drivers of the experience economy is the ability to share those experiences with others: in real life and in real time, or virtually afterwards. The trend for social leisure has seen rising attendances at live sport, music, festivals and theatres in recent years. So too have many social leisure services: gym classes to platonic dating, co-payment apps to sharing platters.

Although the pandemic greatly reduced physical leisure behaviours, demand for communal leisure remained. And many leisure communities, from family and friends to interest groups, continued unabated, simply shifting their social experiences online, using intimate online manifestations of community: virtual pub nights to Zoom-driven pop quizzes. And huge numbers of people returned to public leisure venues as soon as they were allowed.

The demand for social experiences has been key to many of today’s retail growth areas. Many retailers have used the demand for communal leisure as a way to bring people back to bricks and mortar: turning shopping into a stand-alone communal leisure experience. It’s also driven the shift from retail-only malls to mixed-use, incorporating more food service outlets and leisure venues. It’s bringing the retail and leisure sectors closer and closer together, around trends like competitive leisure.

We’re already seeing successful locally-focused malls focused more on leisure than retail. One that points the way for more neighbourhood leisure and retail-related spaces is The Forum in Groningen in the Netherlands. It’s a 10-storey “part library, part meeting space, part science museum and part recreational hangout ‘multi-space’”, which saw 700,000 visits in its first six months: which is impressive in a city of only 250,000 people.45

The trend will also drive the next step in mixed use social environments: fully integrated ‘live, work, play’ spaces.

44 Mintel Leisure Outlook, Jun 2019 45 The Guardian, Mar 2020


2.1.4 Mixing it up

The next step for mixed use will be to add more apartments and offices into the mix, finally realising a much-anticipated shift towards integrated ‘live, work, play’ (LWP) spaces.

There is already residential demand for such spaces. According to a recent study on mixed-use developments from the International Council of Shopping Centers, 78 percent of US adults would consider residing in one. In the past such integrated communities were more likely to attract older residents. But today they’re most popular with younger people. 85 percent of Millennials and 81 percent of Generation X polled would choose one compared to just 71 percent of Baby Boomers.46

The incorporation of flexible working spaces will be key. The number of flexible office spaces is growing, rising approximately 80 percent every year since 2010 outside the US and 50 percent in the US.47 In 2018, flexible work spaces made up almost two-thirds of the country’s office market occupancy gains, with market share predicted to grow from 5 percent today to 30 percent by 2030.48 Of course demand for shared work spaces plummeted during the lockdown, and they’ve yet to recover. But, as with social leisure spaces, there is no reason they can’t return, provided they can provide appropriate hygiene and distancing solutions.

Mission Lofts, Falls Church, Virginia exemplifies the Live Work Play approach

46 ICSC, May 2019 47 Colliers International, Jan 2019 48 JLL, Mar 2019

85% of US Millennials would choose to

live in a ‘Live Work Play’

development.


2.2 Opportunities: New community, new market

2.2.1 Try something new

With traditional household composition breaking down, retail and leisure strategies based around traditional households will need to change. That’s a big and unsettling ask for a large organisation. But the road less travelled can be rewarding. And we think this is true for changing household typologies.

New households will create new needs, driving demand for new products and services. Three generation households, co-living spaces and LWP communities will all have developing needs which proactive companies can satisfy. For instance, products that help them maintain privacy and share food.

Offer adaptable products. There will be an increasing demand among sandwich households for more adaptable products and services, from modular furniture to multi-user insurance policies. Sandwich parents will appreciate smarter furniture rental that enables them to adapt to the comings and goings of their family. For instance, Ikea has just set up a furniture subscription service.

Offer framily discounts. Companies will benefit from extending the remit of their family and household products. The scope of ‘family’ loyalty cards, car club memberships, streaming services, co-working spaces discounts could all be broadened to include framilies and extended families. This will be especially true for leisure centres, theme parks, heritage sites and the 80 million leisure centres predicted to exist in Europe by 2025, as the composition of family - and framily - holiday groups shifts.49

Find new markets for old products. New markets will also stimulate fresh demand for traditional products. Industrial size and ‘variety packs’ will appeal more. There’ll be increased household demand for products that work in multiple rooms and multi-occupancy homes, like voice assistant hubs and payment management apps. Products previously outside the requirements or budget of single households will be more affordable for larger households and flat shares. Such items could include high-end sports equipment like Peloton bikes, electric vehicle charging points, 3D food printers or portacabins for additional house sharers. Flat shares and WLP centres might want to hire out entire bowling alleys, music venues or charter flights.

49 Savills, Nov 2016


2.2.2 Tend and befriend

New commercial living spaces will also provide a whole new sales platform. As co-living and LWP communities develop over the next ten years, they will compete for residents by offering the most attractive amenities. Smart retail and leisure brands will help them out.

Make households a sales platform. Companies should look at the viability of placing small retail and leisure outlets in these new living spaces. In terms of functionality, most spaces will be improved by a branded cafe or gym, a ‘corner shop’ or a pharmacy. For smaller sites, there’ll be increasing opportunities around next generation vending machines. There’s an obvious brand benefit to placing products within consumers’ lives, as demonstrated on a larger scale by companies from Versace to Muji who have built their own branded hotels. Investment and placement in co-living and LWP sites offers a similar benefit for a much smaller investment. As such spaces grow in influence, they’ll provide further opportunities for brand investment and sponsorship. Mini, Amazon and Airbnb have recently begun investing in housing developments. It’s easy to imagine a Coca Cola LWP community in London or Chicago; a Patagonia or Ben & Jerrys one in Margate or San Francisco.

Japanese café Muteki at Open House co-living space in Bangkok


3.0 Local heroes

3.1 Challenge: Unwelcome to the neighbourhood The growth of bigger households and integrated household communities will drive another trend: a renewed focus on local neighbourhoods. As people work and play closer to home, they will become much more active stakeholders in their own one-mile radius.

As a result, residents will try to take more control over their neighbourhoods, enjoying the satisfaction and support they offer. They’ll look to shift power from the global or national to the local. They’ll be wary of companies that do not have a genuine stake in their local area. Brands will have to determine how to run multi-market businesses that are also acceptable to small local communities. It won’t be easy. Today 77 percent of businesses find executing a localised marketing strategy across all their locations challenging.50

3.1.1 Locality is the new good cause

The pandemic has encouraged greater neighbourliness. But the importance of local communities was already starting to grow before lockdown.

On an individual level, renewed interest in locality first surfaced in the ‘buy local’ movement. This was driven by a combination of health, safety, patriotism and sustainability concerns.

50 SOCi, Mar 2020


The importance of local sourcing has grown a lot since. Today 70 percent of European consumers express a clear preference for buying locally sourced products.51 68 percent of Americans prefer to buy local whenever possible and 59 percent would consider paying more for locally made products.52

Trust in national news media is declining, but trust in local news media stays strong. 76 percent of Americans trust local TV news and 73 percent local newspapers versus just 55 percent who trust national TV news, 59 percent national newspapers and 47 percent who trust online-only news outlets.53

Millennials are attracted by the communal aspects of locality. We’re already observing a trend for them to move away from busy, previously youth-friendly city centres. A recent Ernst & Young survey shows more American Millennials now own or rent in the suburbs than in the city. Today 41 percent would rather live there than anywhere else: up from just 36 percent in 2016.54

On a larger scale, we’re seeing an increasing demand for regional independence. Examples range from the Brexit referendum to anti-Chinese demonstrations in Hong Kong to Californian legislators’ resistance to federal guidelines. This chimes with the rise of nationalism and patriotic localism across much of Europe.

Consumers’ appreciation of local brands and their familiarity with local customers is also part of a growing consumer trend for personalisation. Already 91 percent of consumers are more likely to buy products from companies that use their name.55 72 percent will only engage with personalised messaging.56

The increasing importance of individual living spaces and local environments is also a consequence of the increasing value consumers are placing on stability, happiness and work/life balance.

“Consumers are placing more value on health and wellness than on material objects these days, and the definition of health and wellness has evolved ... to a more holistic state of being, where one’s mental, physical and emotional health are in sync. Looking great, feeling good and sleeping well are the new luxuries that consumers want to enjoy and flaunt.”

Deborah Weinswig, Forbes 57

51 IRI, Nov 2018 52 AYTM, Mar 2017 53 Poynter Institute, Media Trust Survey, Aug 2018 54 Ernst & Young, Nov 2018 55 Accenture, Pulse Check, May 2018 56 Smarter HQ, Jul 2019 57 Forbes, Jun 2017

68% of consumers

in the US today prefer to buy

local whenever possible


Locality is even starting to challenge charity in consumers’ hearts. 19 percent of Britons consider a brand ethical if it links up with a charity. But 23 percent do if it is linked with the local community.58

Trust in national media is declining, but trust in local media remains strong

3.1.2 Locality in lockdown

The enforcement of local living under Covid will give neighbourhoods a further value boost.

During lockdown, temporary office closures and public transport restrictions limited many people’s movements to within their immediate area. More people began to view their neighborhoods as a place not just to live, but to work, play and shop. It forced them to spend more time there and to interact more with local shops and businesses. Social site Next Door saw user engagement rise by 80 percent in the first two weeks of March.

Local communities have proved popular support hubs too during the crisis. 78 percent of Britons say people are doing more to help others locally during the pandemic. 50 percent feel they can rely on community support. 55 percent feel a sense of belonging to their community.59 64 percent believe the lockdown is bringing their neighbourhood closer together.60

58 Mintel, Nov 2015 59 ONS, Apr 2020 60 Channel Mum, Mar 2020

0%

10%

20%

30%

40%

50%

60%

70%

80%

Local TV news Localnewspapers

National TV news Nationalnewspapers

Online-only news

People's trust in local vs national news outlets

Poynter Institute, Aug 2018

78% of Britons say

people are doing more to help

others locally during the pandemic


Locality brings health benefits too. The more people stay in a small physical community, the less their chance of viral encroachment. This too will be important after lockdown. COVID-19 may dissipate, but greater global trade and communications means the threat of further pandemics will remain.

The trend is set to continue post-Covid, with 50 percent of Britons expecting community spirit to be stronger even after the crisis ends.61

“[After the pandemic] people are going to look for things with more honesty and value. The idea of being dependent on the people in your neighbourhood will actually be a good thing.”

Tom Dixon, designer and retailer 62

3.1.3 Walking to work

The key driver for next-stage neighbourhood growth is something that used to be the biggest barrier to it: work. As increasing numbers generate their livelihoods within strolling distance of their own homes, they’ll be more invested in the areas that they inhabit: proudly enjoying local attractions, shops, facilities and businesses.

After decades of mass commuting encouraging dormitory communities, commuter levels have been falling in favour of home working. Between 1995/7 and 2013/14, England's population grew 12 percent but the total number of annual commuting journeys decreased from 8.5 billion to 7.9 billion. There’s also been a fall in the number of commuting trips: from 7.1 journeys per worker per week in 1988/92 to 5.7 in 2013/14.63 This echoes a decline in car sales. In Germany, for instance, industry body VDA expects sales to fall by 4 percent in 2020.64

Meanwhile more people are working from home than ever. Even before lockdown, figures showed more people working as remote employees, homepreneurs and as part of the gig economy. 43 percent of Americans worked from home at least part of the time in 2017 versus just 38 percent four years before. 31 percent worked from home 80 percent of the time, compared to just 24 percent four years before.65

Lockdown simply accelerated the trend. 50 percent of Americans transitioned to temporary homeworking during lockdown. CEOs from Barclays to WPP are predicting huge growth post-lockdown too. Twitter announced in June it will allow its employees to work from home “forever”.

61 RSA, Apr 2020 62 House & Garden, Sep 2020 63 Department for Transport, Nov 2017 64 VDA, Dec 2019 65 Gallup, Sep 2018


Several European governments are looking at reducing the number of working hours too, which would further boost the number of hours workers spend in their local neighbourhood. Sweden are considering six-hour days, and Finland four-day weeks.

New technologies will help too. In the Noughties, improved mobile and video technology were the key enablers for efficient white-collar homeworking. In the 2020s, the arrival of 5G will make it easier still, providing smoother connections and immediate document sharing and retrieval. For manufacturing, advancements in 3D printing, mean that items can be produced without the need for separate manufacturing hubs and the accompanying logistics.

As more dormitory communities transform into fully interactive residential hubs, homes and residential streets will become more than just a place to ‘rest our heads’ and increasingly the centre of daily life. As increasing numbers generate their livelihoods within walking distance of their own homes, they’ll become more conscious stakeholders in the areas they inhabit.

Americans are working from home more often and for longer than in the past

0%5%10%15%20%25%30%35%40%45%50%

Workingfromhomeatall2017

Workingfromhomeatall2013

Workingfromhome80%oftime2017

Workingfromhome80%oftime2013

Proportion of Americans that work from home

Homes and residential streets will become more

than just a place to sleep: they’ll

become the centre of daily life

Gallup Sep 2018


3.1.4 Learn local

Home working will be a key driver of locality. But it won’t be the only one.

Another important area will be education. This is one of the institutional areas where distrust is growing fastest. It’s driving some parents to get more involved in school decisions and others to take up home-schooling. Both trends are likely to discourage demand for out-of-area schooling.

Meanwhile, as family households stick together, going away to university is becoming less of a rite of passage. A desire to remain with their parents, fear of leaving home and growing cost of attendance will mean more students attend local universities. Meanwhile more are choosing not to go to university at all, which will encourage apprenticeships with local businesses.

Demand for local businesses and hyper-local tradesmen looks set to grow too, from a customer and employee standpoint. Consumer trust in small, local and artisanal commerce will rise at the expense of larger organisations. And while young people used to leave their hometown for better prospects, in future they’ll be more likely to begin their careers just around the corner.

3.1.5 Fifteen-minute cities

If work/life balance and social experience become more valued and commuting less so, there will be more focus on local liveability. Future citizens will seek out those neighbourhoods that let them fulfil more life tasks, and enjoy more experiences, within walking distance of home.

A survey from the National Association of Realtors found that, when purchasing a home, 80 percent consider it important to live within easy walking distance of amenities.66 Millennials are particularly keen. 62 percent of them prefer walkable communities and short commutes.

In tandem, as global warming has a greater physical and financial impact on more people, sustainability concerns at local and global level will grow. The environmental impact of personal and public transport will increasingly need to be addressed. This will prove further demand for walkability.

Paris mayor Anne Hidalgo is citing a combination of sociability and sustainability as the reasons she wants to turn Paris into a ‘15-minute-city’. She plans to transform each arrondissement into a self-sufficient community where people can find all they need within an easy 15-minute walk.

66 National Association of Realtors, Sep 2017

Future citizens will seek out

neighbourhoods that let them fulfil

more life tasks and experiences

within walking distance of home


The Mayor of Paris plans to create a people-first 15-minute communal city

3.1.6 Intentional communities

As neighbourhoods become more important, so residents will seek greater influence over them. Neighbourhoods will themselves seek greater autonomy from central institutions.

The next logical step will be the growth of more socially, economically and politically independent areas. It’s not yet clear what form these autonomous, ‘intentional’ communities will take. It will depend on a range of political, economic and social factors.

They’re likely to start at a hyper local level. Anecdotal evidence suggests residents’ associations became more powerful during lockdown. As households place more value on their neighbourhoods, they’re likely to become stronger still, and act as official commercial gatekeepers.

Unofficial neighbourhood associations will flourish too. Boosted by both political unrest and climate change fears, the numbers of prepper groups appear to be rising. These are communities that ‘prepare’ themselves for dangerous future scenarios, from natural disasters to civil wars, by grouping together and learning survival skills.

The next step will be the growth of

more socially, politically and economically independent communities


Their underground nature makes it hard to quantify how many preppers there are. But as an indication, in the last 12 months roughly 20 percent of Americans say they’ve spent money preparing or buying survival materials.67 Preppers began as a US-only phenomenon, but they’re growing across the globe. It’s estimated that there are now over 0.1 million of them in Germany alone.68

Other types of communes are growing too. In the US, the Fellowship for Intentional Community already lists over 1500 communities using existing housing stock to establish full co-housing arrangements.69 Concerns about the environment have been drawing people to ‘ecovillages’, where they can reduce their carbon footprint.70 In Germany, design firm Carlo Ratti Associates has received approval to turn Heidelberg’s Patrick Henry village into a “futuristic commune” featuring shared homes, kitchens, and cars.71

By definition, such communities will remain relatively small. But we believe there could be long-term growth in much bigger autonomous communities.

One potential growth area is homesteading: independent communities set up in a country’s landmass but not subject to its laws. There has been increasing activity in an affiliated space too. Seasteading offers the same service but on established or newly created islands. The Seasteading Institute was set up a few years ago with funding from Paypal founder Peter Thiel.72

Others suggest the next step is autonomous city states. It’s been hundreds of years since any city seceded from its respective country. But we’re observing a growing independence among some, typically encouraged by increasingly powerful mayors. The morning after Britons voted for Brexit, the mayors of London and Paris met in Paris to announce that, despite what was happening at a national level, their respective cities would continue to maintain very close ties. Meanwhile the mayor of New York and governors of California have both fought to curtail the influence of federal legislation on their regions.

Whatever form tomorrow’s independent communities take, one thing is clear. They’ll be ‘people-first’. The more time citizens spend living, working, shopping and playing in their local neighbourhoods, the more they will trust and bond with their neighbours. They will be more comfortable sharing data, ideas and skill sets. The more united the community becomes, the more comfortably residents will work together to achieve shared goals.

Such communities will be an ideal environment for placemaking: citizens working together to create neighbourhoods that promote their own and their neighbours’ health, happiness and interconnected well-being.

67 Finder, Apr 2020 68 Deutsche Welle, Dec 2017 69 New York Times, Jan 2020 70 UPI, Jul 2019 71 Business Insider, Feb 2017 72 The Guardian, Jun 2020

Tomorrow’s independent

communities will put residents first

and work together to achieve shared

goals


Heidelberg’s Patrick Henry village is to be turned into a “futuristic commune”


3.2 Opportunities: Think local, act local

3.2.1 Localise and personalise

Many of tomorrow’s consumers will shrink their focus to what’s within a one-mile radius of home. And they’ll be increasingly wary of what’s outside that space. This will be a concern for business. But with companies globally finding trust and loyalty harder to obtain, such a celebration of locality might just provide the silver bullet for loyalty.

As consumers place more importance on their neighbourhoods, and their sphere of trust diminishes, the few companies they do trust are likely to be those that take a more local, ‘human’ approach. Smart brands will find multiple ways to connect with the local community. This is an area where companies who already have close ties to the local community will have an advantage, such as leisure centres, museums, pubs and cafes.

Make neighbourhoods a priority. Localising is not a new strategy of course. The best retailers have been doing it for some time. A recent poll shows brands planning to spend $62 billion over the next 12 months to target local consumers.73 What is new is the high level of importance it’s about to have. Until now, local has often been simply a useful addition to strategy. A means to squeeze out more profit at the ‘sharp’ end. But the more importance consumers place on their local area, the more central to retail and leisure strategy it will need to become. The way some companies are already localising their offering will soon be the way all companies do. When it comes to localising, today’s best practice will be tomorrow’s hygiene factor.

“The retail store of the future will actually take us back to the past, when shopping was something we did locally, in our own communities. The large suburban malls with their harsh florescent lighting may soon be a quirky thing of the past, a weird place where people used to pass their time in the ’90s.”

Elizabeth Segran, Fast Company 74 Think e-local. The rise of digital commerce enabled retailers to focus on bigger markets. But as regional gets more important, even e-commerce will localise. For instance, after initially consolidating all their social media, more and more stores, from Waterstones to Oxfam, now operate separate social media accounts for individual local stores. By creating local content, brands are achieving a larger share of an increasingly important segment: local voice.

73 BIA Advisory Services, Jan 2019 74 Elizabeth Segran, Fast Company, Jan 2020

Brands plan to spend $62 billion

over the next 12 months to target local consumers.


Be a local hero. Companies should start finding as many ways as possible to localise their stores. For instance, imitating the way individual branches of multiples like the Co-Op include the name of the local area on their shopfront. They should offer different products in different areas, based on specific local demand. They should focus on the creative talent of their local area. Uniqlo’s refurbished flagship store on London’s Oxford Street dedicated the top two floors of the six-storey megastore to showcasing local culture: offering a selection of products made by local businesses as well as a stage for local cultural events. Companies should also place greater importance on ensuring all senior staff are taken from the local area.

Think small ... In broad terms, larger companies will need to learn from, and where feasible imitate, the way the best smaller companies act. Already brands normally associated with larger stores, such as Nordstrom, are creating smaller-format stores which they’re siting in local neighbourhoods.

“Small consumer brands are better built to create hyper-targeted products and distribute them locally. They cast narrow research nets, gain real-time, direct insight into and feedback from niche consumer groups [and] quickly use this unfiltered information to develop and refine hyper-relevant products. Global supply chains, built to make and move large volumes of more broadly attractive products [and] big R&D processes, built to assess mass need, are cumbersome by comparison.”

Sonia Gupta and Oliver Wright, Harvard Business Review 75

… then scale up. For national and global brands, the key will be finding a way to scale up such an atomised version of production. A way for national or global chains to create branches ‘where everyone knows your name’. Luckily, new technological innovations look set to make this much easier. Advances in artificial intelligence and the Internet of Things will certainly help. As usability increases and costs decline, these will provide retail and leisure chains with the ability to personalise customer interaction at a local level, for example recognising customers as they approach and reminding reception staff of their name and history. Predictive analytics, artificial intelligence and machine learning via digital assistants, tablets and wearables, will contribute to increasingly personal interaction. Such a high level of knowledge from a stranger will feel unsettling at first, but we believe it will quickly become ‘the norm’ as consumers enjoy greater personalisation and convenience.

75 Harvard Business Review, Feb 2019

When it comes to brands’ localising strategies, today’s best practice will

become tomorrow’s

hygiene factor

The key for global brands will be

finding a way to create local

branches ‘where everyone knows

your name’


3.2.2 Contribute and collaborate

As residents place greater value on liveability and access to amenities, neighborhoods will compete with each other to provide the most and best amenities. They’ll look to brands to help them here, giving brands another opportunity to improve customer loyalty.

Care for the community. Brands will be able to gain goodwill and concessions, from neighbourhoods for whom they provide facilities such as civic gardens or bicycle parks. Some multiples have already gained support by sponsoring local schools and community halls. Others have built amenities, either within their own real pace, or as a separate entity. Brands could also fit wireless charging points for personal devices or electric cars. Or offer local apprenticeships, mentoring and coaching opportunities.

Support your local business. National and global companies will find it hard to compete in neighbourhoods that shift toward self-sufficiency. Consumers will be much more trusting of, and loyal to, brands with a local heritage. In such situations, larger brands will need to create a local business-led strategy. Where franchising already exists, franchisees should be given greater freedom to personalise and localise their offering. And in those sectors where it’s less common, it should be encouraged. Alternatively, larger companies should consider investing directly in local competitors as an alternative to locating their own store there. Multinationals from Nike to Mondelez, are having increasing success with similar investment and incubation strategies.

Larger companies should consider

investing directly in local

competitors


4.0 Conclusion

4.1 A difficult but vital journey The Community Spirit trend will have a massive impact on shopper and leisure consumer attitudes and behaviours, and on purchase environments. It will offer challenges to the traditional retail and leisure industries, as it accelerates consumer power, fractures traditional markets and business models, and puts more power in the hands of local neighbourhoods.

But it’s not all bad news. In fact, it offers more hope than threat. The retail and leisure industries are suffering a range of diverse threats today: e-commerce to economic volatility, technological innovation to rising disloyalty. In the UK alone last year, such threats drove the closure of 16,000 stores, with the loss of 143,000 jobs. A consumer shift towards greater community might actually provide a lifeline, to loyalty and long-term profits.

Yes, consumers will have more power. But they know they’re not infallible. Many of the areas they’re trying to control will be new to them. As a result, they will place real value on any genuinely useful assistance brands can offer.

Closer communities will also prove a potential marketing tool. Brands that provide products or services that offer genuine solutions to a new community’s problems will benefit from swifter and more effective word of mouth than ever.

Taking advantage of the trend offers huge benefits, but

it won’t be easy. It’ll involve taking

chances and creating radical

strategic changes.


New communities will also provide robust new markets. Again, the trick will be to create practical support and solutions. As consumers take greater interest in, and ownership of, their neighbourhoods, so brands that find a way to make their offerings more local and personal will benefit. As a result, brands will seek to satisfy the needs of the growing number of flat shares, co-living spaces and LWP developments.

Taking advantage of the Community Spirit offers huge benefits, but it won’t be easy. It will involve taking chances and creating radical strategic changes. But with so many traditional opportunities shut off to them, retailers and leisure owners that do so will find it more than worth the effort.

4.2 Next steps Next Big Thing has spent months observing and analysing the ‘Community Spirit’ trend. We’ve tried to create a report that combines strategic inspiration with practical, short term solutions.

If you enjoyed the report, we’d suggest you get the whole enterprise involved. Feel free to distribute it across your company, and supplier networks.

We included our favourite findings and recommendations in the report, but we’re keen to disseminate some of those practical insights that didn’t make the cut. This includes several which are specific to industries outside of Retail and Leisure.

Directors William and Nadia Higham are available to present our findings to interested businesses. We can deliver them in clients’ preferred format: management away-days, company presentations or a series of workshops.


5.0 Next Big Thing

5.1 Consumers are changing: we help you prepare At Next Big Thing we predict future consumer needs by analysing evolving attitudinal and behavior patterns.

We help clients to anticipate better what their customers will want in future. We visualise the future consumer landscape. We use workshops to help clients create appropriate new strategies and revenue models. And we try to nurture a more innovative mindset across the whole enterprise.

We work across sectors, with diverse brands from Amazon to Sainsbury’s, BBC to HSBC, on projects from strategy to new product development, leisure futures to Generation Alpha.

For more information, contact:

• [email protected] • 0044 203 542 1900 • www.next-big-thing.net

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