A.T. Kearney 11/09/2017 1

David Donnan – Senior Partner, A.T. Kearney

Amazon, Alibaba and Millennials

January 2018

A.T. Kearney 11/09/2017 2

ValueValues

A.T. Kearney 11/09/2017 3Source: A.T. Kearney

Gen X

0.1B 0.9B 1.4B 1.9B 2.3B 1.5B

2017–?

1998–20161981–1997

1965–1980

1946–1964

SilentGen

BabyBoomers

Millennials

Gen Z

AlphaGen

A survey of 7,000 consumers in 7 countries . . .

1928–1945

A.T. Kearney 11/09/2017 4

The mass market as we know it thrived for years on three key assumptions

Source: A.T. Kearney

A.T. Kearney 11/09/2017 5

The “mass market” of the future will thrive on three fundamentally different principles

Source: A.T. Kearney

A.T. Kearney 11/09/2017 6

Trust

A brand is simply trust.

Steve Jobs

A.T. Kearney 11/09/2017 7

Consumers now believe their purchasing decisions have a greater impact than their vote

Which has the Greatest Impact on Society? Which has the Greatest Impact on Society?

1. Q8. In your opinion, which of the following has the greatest impact on society? Base: All Consumers. 2013 (n=1,841). 2015(n=1779) Core (N=243); IML (n=552); OML (n=490); Periphery (n=262). Millennials (n=480); Gen X (n=401) Boomers (n=898)

32% 26% 18%

28%26% 52%

40% 48%30%

Millennial Gen X Boomers

18% 22% 27% 25%

45% 42% 39% 36%

37% 36% 34% 39%

2008 2010 2013 2015

Purchase Decisions

Voting Decisions

Community Involvement

A.T. Kearney 11/09/2017 8

Authority and nutritional advice does not come from traditional sources

Shoppers who Plan, Shop and Explore Food Culture through Social Media, by Generation

Forms of Social media regularly used to share food experience, by Generation

7359

3820

53

MatureBoomerGen-XMillenialsTotal

15

21

29

43

3

9

18

36

1

8

14

26

347

12

Pinterest YouTubeFacebook Instagram

MatureBaby BoomerGen-XMillennial

Source: FM US Grocery Shopper – Trends 2016

A.T. Kearney 11/09/2017 9

Food companies and grocery retailers leverage “free-from” brands to build trust

Source: A.T. Kearney; the Gluten-Free Agency; Tesco; Trader Joe’s; Whole Foods

A.T. Kearney 11/09/2017 10

Younger generations actively look for brands that do good …% of respondents actively looking for brands/retailers that do good for the world

29

35

44

46

Gen Z Baby BoomersMillennials Gen X

Source: A.T. Kearney Global Future Consumer Study (Q26)

A.T. Kearney 11/09/2017 11

Top players are losing market share to smaller companies and startups

Food & Beverage1 Market ($B)

494.7439.6

34%

2012

63%66%

2016

37%

2015

56.0

24%51.8

2012

76% 72%

28%

Personal Care/ Beauty2 Market ($B)

Other Share Top 25 Share

1. US Markets: Food and Beverage 2. Personal Care and Beauty

3% 3%

Rest of Market Growth Rate: 6% Top 25 Growth Rate: 2%

Rest of Market Growth Rate: 8% Top 25 Growth Rate: 1%

A.T. Kearney 11/09/2017 12

Community-based retailing is growing

Farmer’smarkets

Independentbookstores

MicrobreweriesLocal restaurantsand bars

A.T. Kearney 11/09/2017 13

Influence“If you make customers unhappy in the physical world, they might each tell six friends.

If you make customers unhappy on the Internet, they can each tell 6,000.”

Jeff Bezos

A.T. Kearney 11/09/2017 14

The event that shocked the industry

A.T. Kearney 11/09/2017 15Source: A.T. Kearney Global Future Consumer Study (Q18)

162124

353642

63

China GermanyUSAIndia UK FranceJapan

% of respondents buying groceries online

Constant connectivity is lowering the barriers to online grocery

Non-APACAPAC

A.T. Kearney 11/09/2017 16

While Amazon shocked the world, Alibaba is changing it.

$2.4B

Cyber Monday

$6.6B

Black Friday

$5.0B

$25B

Predictive fulfillment analytics Machine learning Mobile order, payments Personalization Robotics and consumer

technology Frictionless scale

Single day sales transactions 2017

A.T. Kearney 11/09/2017 17

The food industry is shifting toward new influencer relationships

Source: A.T. Kearney; Laurainthekitchen.com

The paradox of communication in the Digital Age:

Laura Vitale

3.8 M visitor/month1.1M Instagram followers

A.T. Kearney 11/09/2017 18

The dynamics of consumer data access and media amplification

Sources: Food Babe; Anheuser Busch website

A.T. Kearney 11/09/2017 19

“To me, the future is

personalization”Marissa Mayer

Personalization

A.T. Kearney 11/09/2017 20

What you do Who you are

Personalization will require companies to act on the notion of “consumers as data feed”

Where you live

Emails/Texts

Travel

Shopping History

Browsing History

Social Media Presence

Demographics

Relationships

Diet/Fitness

Finances

Social Influence

Sleep Patterns

Productivity

Goals

Source: A.T. Kearney

A.T. Kearney 11/09/2017 21

Consumers are willing to provide data for “value-add” personalization% of respondents willing to share data if they get something in return

333435364041

45

GermanyFranceJapanIndiaUKUSAChina

Source: A.T. Kearney Global Future Consumer Study (Q18) Non-APACAPAC

A.T. Kearney 11/09/2017 22

More consumers than ever are tracking caloric intake and diet through apps

Source: A.T. Kearney; Livestrong; Myfitnesspal; Fatsecret; Lose it!

>30M users

>165M users

>45M users

A.T. Kearney 11/09/2017 23

■ Explores by grazing and snacking

■ Actively seeks information

■ Trust their friends more than ads

■ Want healthy, . . .

■ But also indulgent

■ Unsure of Big Ag/ Big Food

The new food consumer

23

A.T. Kearney 11/09/2017 24

ProductWith Purpose

A.T. Kearney 11/09/2017 25

StoresWith Stories

A.T. Kearney 11/09/2017 26

David Donnan – Senior Partner, A.T. Kearney

Amazon, Alibaba and Millennials

January 2018

A.T. Kearney 11/09/2017 27

A.T. Kearney is a leading global management consulting firm with offices in 40 countries.

Since 1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues. For more information, visit www.atkearney.com.

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