One of the most marked impacts of the COVID-19 pandemic has been the rise of the contactless economy. On the demand side, people turned to digital technologies that made it possible to virtually operate at scale. On the supply side, organizations pivoted to meet this new demand by leveraging technology to create new offerings and experiences. This phenomenon will likely persist.
In the Asia-Pacific region alone, “at home” consumption—involving activities such as online shopping and doctor’s visits via telemedicine—is poised to become a US$3 trillion annual market by 2025. According to our analysis, that’s 20% larger than what it would have been if the pandemic had not struck, representing 30% of the six sectors’ revenue in which “at home” consumption is most active.
This gives companies the opportunity to transform their business models to unlock value from the contactless economy’s unanticipated rise. However, leaders could face critical decisions to address new sets of complications and risks such as the complexity of identifying their organization’s customers, a possible erosion of trust, and legacy technology hindering the transformation.
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It’s an established fact that younger consumers are inclined to do a significant amount of their shopping online, from clothing to personal products to electronics. However, recent Deloitte research has found that when it comes to groceries, their shopping preferences are more omnichannel.
This category of “contemporary consumers”—younger, more well-off, more urban, and more ethnically diverse than “conventional” consumers—represents 40% of the consumer base, and according to Deloitte’s 2020 fresh food consumer survey, they aren’t habituated to buying fresh foods just in store or online. Instead, they report shopping for fresh foods from a mix of sources, from brick-and-mortar grocery stores (27% of their fresh food purchases), to online deliveries and curbside pickup (26%), to farmers markets (12%) and fresh food stands (10%). Meanwhile, 95% of conventional consumers’ fresh food shopping occurs at grocery stores, with just 1% coming from online shopping, 1% from farmers markets, and 1% from fresh food stands (see figure).
Our research found that contemporary consumers are buying more fresh food than others and are willing to pay a premium for it. They’re also keenly interested in convenience and sustainability, and they’re open to trying food shopping options like subscription boxes. During the COVID-19 pandemic, farmers in many areas of the United States capitalized on these preferences with direct-to-consumer produce sales. Given the spending power of the contemporary consumer segment and changing shopping behaviors overall, fresh food retailers’ innovation in distribution channels is likely to grow.
To learn more about this consumer segment and how to attract it, read “The future of fresh: Patterns from the pandemic.”
The pandemic has upended consumers’ notions about health care and its delivery, pushing the industry closer to the future envisaged by professionals tracking its trends. According to Deloitte’s 2020 Survey of US Health Care Consumers, more people are using technology to monitor their health, measure fitness, and order prescription refills—but are they willing to share the data these activities generate?
Insights from Deloitte’s COVID-19 survey indicate that after a slight prepandemic dip, consumers are now more willing to share their personal health-related data with health care companies, though they are still wary of doing so with technology companies and retailers.
While this trend is encouraging, it may slow down as the pandemic ebbs. To sustain it, health care players should use this data to better serve consumer needs. Many are frustrated with the inconvenience of their data spread across various channels, none of which talk with each other. Interoperability between organizations that own or store the data is essential to give consumers one-stop access to their medical information and control over data-sharing.
Consumer trust is important as well. Organizations should make it clear that consumers own their data, and demonstrate reliability, transparency, and empathy in their operations.
Read more about health care trends in consumer agency, virtual health, remote monitoring, and data-sharing in “Are consumers already living the future of health?”
Getting your latest online purchase from manufacture to your front door requires not only efficient delivery networks, but also countless security screenings and inspections, completed quickly and less intrusively thanks to advanced technology solutions. What if the same seamless and secure journey that your package experiences were available to you?
Long screening lines for travelers, sports fans, and concertgoers could be eradicated if airports and stadiums changed their philosophy from checkpoint-based security to a risk-informed, “smart security” model. Better yet, this model actually can provide greater security by closing key gaps in existing methods and adding capabilities (such as health screenings or social distancing) to monitor new threats as they emerge. A smart security model also can help people protect their privacy by giving them control over how their data is used and by whom.
Read more about the benefits of smart security and how to implement it in “Move faster, safer, and more privately with smart security.”
As in many businesses, value in the automotive industry is increasingly driven by software. Car companies are becoming “automotive technology companies,” with the computing power required to process huge amounts of sensor data from cameras, radars, and lidars in autonomous vehicles turning cars into supercomputers on wheels. This presents opportunities for software companies to partner with original equipment manufacturers (OEMs) to help power the future of the auto industry. The figure below presents four potential paths to success.
To lay out a viable road map, software companies should take into account the nuances of the auto industry, such as:
• Stringent quality and safety requirements: Regulation-driven requirements pose high entry barriers for new automotive software suppliers, and OEM-imposed prerequisites for supplier qualification are very strict.
• No clear visibility of software’s value in a vehicle’s bill of material: Software companies’ business models typically require them to retain intellectual property or risk endangering their value proposition. How can they price their offerings to reconcile this need with OEMs’ view of software-driven features as strategic core areas whose intellectual property they want to own themselves?
• Substantial upfront investment and lengthy amortization: OEMs often consider software development costs as upfront supplier investments, only compensated along the product life cycle as part of the unit price. This puts suppliers at significant financial risk, as volume developments may end up lower than initially forecasted.
Traditional automotive giants likely won’t be able to transition into data-driven technology companies by themselves in a timely manner. Their future success could very well depend on the capability to continuously deliver software-driven features over the air, many potentially developed via smart collaboration with (pure-play) software companies. This is a trend that is also affecting other industries, from manufacturing and health care to insurance and media. Software is transforming industries, and the race for future business claims is not yet decided.
Read more about strategic options for software companies in the automotive industry in “Software is transforming the automotive world.”