DEEPER DIVES: From Consumerism To Emotional Consumption

Good Morning,

First, as always, thank you for joining.

A short edition today to (hopefully) get you thinking about shifting consumer trends as the wave of peak season comes crashing down.

All too often service providers aren’t paying attention to what’s happening at the consumer level.

We spend our time working with our brands and helping them fulfill their plan.

This is great, but it doesn’t always leave you ready for what is coming next.

The best service providers will be those who can stay in-step with the future demands of the market and be true partners when it comes to rapid execution.

Here’s what this issue brings:

• Are you watching the trends of emotional consumption with GenZ?
  
  If not, you should be.
  
  They will dramatically change the expectations of fulfillment.
  

GenZ Is Radically Shifting How They Buy Your Stuff. To Survive, You Can’t Stay Stuck In The Past

By 2030, Genz will have a combine spending power of about $12 trillion dollars.

They will be the largest, wealthiest and high-spending generation in history.

They are digitally native, multi-cultural, sustainably driven and community connected.

Each generation has a unique way of shopping, expecting different things in how they buy and receive products.

Current supply chains (the systems responsible for getting goods from manufacturers to consumers) were designed decades ago to serve a customer base that prioritized brick-and-mortar stores, bulk purchases, and standardized products.

These systems optimized for stability and predictability, which aligned well with the habits of previous generations who shopped on familiar schedules with relatively predictable needs (or with limited options).

Now, a new generation is moving into the spotlight.

One that shops on emotion, values sustainability, personalization, and convenience, and is deeply connected through digital platforms.

This 'new customer' only knows a world where everything has been available to them.

They aren’t impressed by breadth of selection.

Their default is that whatever they want exists, it’s more about where to get it, or how.

Instead of a need to buy items from a local store out of scarcity, they make deliberate purchases based on how it makes them feel, or how it helps them experience life with friends and community.

So, just as you can’t force a square peg into a round hole, trying to serve this new customer with the old supply chain systems won’t work.

If supply chains don’t evolve—becoming more flexible, tech-savvy, and responsive—they’ll struggle to keep up, leading to missed expectations, lost loyalty, and, ultimately, becoming obsolete.

Supply chains, like any service, must match the pace and preferences of the people they serve. When the customer changes, the supply chain must change with them, or risk being left behind

Emotional Consumption Is Going to Make Operational Execution Harder

Gen Z often spends money to boost their mood or cope with emotions.

They social media and digital platforms extensively to influence their purchasing decisions and have a desire for immediate emotional fulfillment.

Emotional consumption is taking over China.

Young Chinese consumers are increasingly willing to spend money on items that may seem “useless” and expensive, but bring them joy or enhance their mood.

58% of Gen Z in the US consider themselves emotional spenders, compared to just 19% of those aged 59 and above.

Gen Z is also more likely to spend money to treat themselves on both good days (58%) and bad days (59%).

This type of hyper-personalized need fulfillment means that expectations are going to continue to increase when it comes to operational execution throughout the supply chain.

Procurement: With more variety it means buying less stuff in bulk but buying more things as you try to capture more of what your consumer base needs to hit those emotional buttons. Being able to understand market trends, communities and how your brand resonates (any why) is getting more important in order to be responsible with your spend and making sure that you get the right products in stock.

Warehousing: Is going to get more and more granular when it comes to the number of bins/locations that need to be managed. Providers will have to have to be strong with understanding how inventory is moving, what types of products should be slotted for ongoing distribution and which should be pushed towards more temporary solutions.

Transportation: With a wider sku base, we will see either fewer moves so that retailers can consolidate more activity, or an increase in LTL shipments. Personally I think more retailers will look to do more volume at less-than-truckload levels versus trying to hold back inventory until they can ship in full truckload equivalents.

Last mile: More volume will be spread out across more customers. The days of expecting brands to have thousands of packages per day in small geographies is coming to an end for most players in the market. Outside of Amazon and Walmart (who are benefitting from their fulfillment options and density from marketplace sellers), more retailers will see their volume fragment as deeper personalization takes hold.

Logistics 5 years from now will not be the same as it is today.

It’s never been more important to keep yourself open to new possibilities and to challenge your status quo.

That’s it for this week. Thanks for being here.