New Consumption: 3 Key Trends for SMEs

With the continuous transformation of the economic structure, consumption, as one of the three engines of the economy, has become increasingly important to economic growth.

In 2021, the contribution of consumption to economic growth reached 65.4%.

By 2023, with the gradual optimization of epidemic prevention measures and the gradual liberalization of economic activities, the detailed implementation of strategies to expand domestic demand and the improvement of residents' balance sheets, the contribution of consumption to economic growth may set a new high, and new opportunities in the consumer industry will also be nurtured.

The essence of the consumer industry is people's clothing, food, housing, transportation, and entertainment.

So, why will the consumer industry never become a sunset industry and always have opportunities?

Because with the improvement of people's living standards, the advancement of science and technology, changes in the living environment, and the emergence of a new generation of mainstream consumers, new consumer behavior characteristics and new demands will continue to emerge.

For small and medium-sized enterprises (SMEs), seizing the new needs of core target users and core pain points of consumption can seize new opportunities in the consumer industry.

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I.

User Migration: New Consumer Behavior Characteristics of "Two Ends of the Population" From the perspective of demand, new consumer demand spaces for the "two ends of the population" have been opening up in recent years.

One end is the Z generation, the most mainstream consumer group in China today, which is the young consumer group born between 1995 and 2009.

This consumer group has 260 million people and has accounted for more than 40% of China's overall consumption power.

It can be said that by seizing the Z generation, the future of the consumer industry is seized.

Specifically, what are the consumer characteristics of the Z generation?

We have systematically studied this group and have conducted research with nearly 1,000 post-95 and post-00 students, summarizing the three most representative characteristics of this generation: The first characteristic is network symbiosis.

The Z generation has grown up with the Internet and mobile Internet since they can remember.

Therefore, their interests and hobbies are more personalized, and they are only willing to socialize with people who share the same interests, immersed in their respective circles, and there is a disconnection between different circles, forming "isolated islands of traffic."

Therefore, it is often difficult for products produced by companies to win the favor of all Z generation, and they can only first define a group of people and then provide more segmented and vertical products and services.

The second characteristic is to reject popularization and like things with distinct labels, provided that they are interested in the labels.

This characteristic is also derived from the "isolated islands of traffic" mentioned in the first characteristic.

Because the interests of the Z generation are diverse enough, they will find circles and products that match their interests based on their respective hobbies.

Therefore, a product that wants to attract Z generation users must have a distinct label.

If a product wants to be universal and liked by all Z generation, it is basically very difficult.

If the product does not have a distinctive label at the beginning of its birth, it is likely to be abandoned by the Z generation.

So what is a distinct label?

For example, a product that was launched at the beginning, with the label of "0 sugar, 0 fat, 0 calories," undoubtedly attracted a group of Z generation consumers with the characteristics of "punk-style health preservation."

The third characteristic is "hoping for certainty while enjoying uncertainty."

Many Z generation have good living conditions under the "intergenerational accumulation" of their parents.

Their growth and studies since childhood have been orderly, and their lives are full of certainty.

Therefore, uncertainty in some aspects can often bring them novelty and surprises.

For example, the rapid rise of the blind box mechanism is due to capturing the new demand of Z generation consumers for "uncertainty" consumption.

The other end of the "two ends of the population" with new consumer behavior characteristics is the elderly over 60 years old, who also have 260 million people in China.

I often use "new silver economy" to define them.

The reason why the "new silver economy" is "new" is similar to the Z generation.

The current elderly consumer group has also become elderly in the era of the Internet, and they have the ability to use Internet platform tools that the previous elderly consumer group did not have (this is also one of the reasons for Pinduoduo's rapid rise).

From specific data, as of June 2022, China's Internet users have reached a scale of 1.051 billion, among which the number of netizens over 50 years old has reached 271 million people.

In addition, according to the "China Development Report 2020: The Development Trend and Policy of China's Population Aging," China will enter a deeply aging society in 2022, and the aging peak will be reached in 2050.

According to the "China Aging Industry Development Report," from 2014 to 2050, China's elderly population consumption scale will grow from 4 trillion to about 106 trillion, accounting for 33% of GDP, becoming the country with the largest potential in the global aging industry market.

With the further planning of the elderly care system in the "14th Five-Year Plan and the Long-Term Goal Outline for 2035," the "new silver economy" has become a new industry opportunity.

Next, I will take three industries as examples: First, the insurance industry.

Under the rapid growth of the elderly population and the increasing burden of support, the demand for elderly care is increasingly strong, promoting the development of commercial endowment insurance.

Some large insurance institutions, such as China Life and Taiping Life, have invested in the construction of multiple elderly care community projects, distributed in Beijing, Tianjin, Shanghai, and other regions.

Second, a series of entertainment services related to the elderly, such as elderly tourism, elderly fitness, education and training, etc.

The domestic elderly care industry market is vast and has great potential for development.

Small and micro business owners can produce specific consumer goods or services for the various needs of the elderly.

Third, the development of the retail industry based on the daily life needs of the elderly.

For example, Japan is a country with a very serious population aging problem.

A famous old department store in Tokyo, Shinjuku Keio Department Store, has survived and developed by focusing on the unique market positioning of the elderly group.

The aisles in the shopping mall are wider, the font is larger, the elevator speed is slower, and the toilets are equipped with handrails, etc.

They pay attention to the refined needs of the elderly group and have found a blue ocean in the red ocean of retail.

II.

Scene Reshaping: Co-creation and Digitalization Small and micro business owners in the consumer industry should know that the three core elements of the consumer industry are "people, goods, and scenes."

Next, let's focus on "scenes," that is, consumer scenes.

1.

Co-creation with users has become the "killer move" of offline consumer scenes.

Here is an offline consumer scene case I experienced during the epidemic.

In 2020, when the epidemic just eased, I and several enterprises we invested in met at a newly opened coffee shop in Wangjing, Beijing, to discuss the next development plan.

I thought that the epidemic had just eased, and there should not be too many people, but when I arrived at the door of the coffee shop, I found a long queue, and they were all young consumer groups.

Later, we communicated with the store manager and learned that before opening the store, the manager had found many young people who like to drink coffee and asked them, "What elements do you want in the coffee shop scene, and you are willing to come in," and a series of questions.

In addition, the store manager also invited students from art colleges to participate in the design and decoration of the store.

The store manager was very proud to tell us, "The scene of this coffee shop is not created by me, but by my target users."

After listening to the above case, I believe that small and micro business owners can understand the value of co-creating scenes with users.

However, co-creating with users is easy to say but not easy to do.

It is not just a simple survey of users that can be achieved.

According to our analysis of successful cases, the following three points need to be achieved: The first is to be clear who your target users are and to clarify your user portraits.

There are two implications here: First, it is necessary to reasonably position your target users, and some markets need to be planned in advance to determine whether they are worth entering; second, after determining the target group, accurately analyze and grasp this group, and set up effective scenes to connect with them.

The second is to do a good job in site selection, and doing a good job in site selection is the premise for the success of offline consumer scenes.

To achieve co-creation with users, the logic of site selection does not necessarily have to go to places with a lot of traffic, but to find places where people who are the same as the user portraits of co-creation often go.

The third is to continuously correct in the co-created scenes.

Research is not "once and for all," but a continuous "project," and it is necessary to always know the preferences of the target users and continuously correct the scenes to make the consumer scenes co-created with users stand invincible in the long term.

2.

Achieving digitalization has become the "infrastructure" of offline consumer scene innovation.

Similarly, I will first talk about a case of a shoe production enterprise we have researched.

Everyone knows that before the advent of the mobile Internet era, the consumer industry has always been the king of offline sales channels.

At that time, this enterprise had nearly 200 stores offline nationwide, but with the rise of e-commerce later, this enterprise began to decline gradually, closing two stores a week on average.

However, when the enterprise carried out digital transformation of offline stores, it rose again.

So how did it do it?

For example, it installed smart chips in the shoes for monitoring and analysis, and found that one of their new shoes had the highest try-on rate, but the conversion rate was less than 5%.

The first try-on rate proves that the style of this shoe should be very popular, but few people buy it, which is very likely to be a comfort issue.

After the enterprise studied this shoe, it was indeed found that its shoe type was not suitable for the foot type of Chinese people, and the shoelaces were too long, making it uncomfortable to wear.

After returning to the factory for transformation, the conversion rate of this shoe increased to 25%, and the sales volume also increased significantly.

For example, it collected and analyzed the time data of each user's stay in a scene after entering the offline store, sorted out the time users stayed in different scenes, and then made more reasonable design and optimization for the shoe cabinet placement, which also improved the sales volume of its offline stores as a whole.So, to achieve innovation in offline consumption scenarios, the first step is to digitize the scenario, conduct more refined analysis through digitization, and thereby enhance the value of offline consumption scenarios.

Third, cycle re-creation: Improve the lifecycle of products or services and strengthen the operation of private traffic.

Many small and micro-business owners hope to extend the lifecycle and repurchase rate of their products and services, and the key to this is to strengthen the operation of private traffic.

Finally, let's summarize the three major trends in new consumption that small and medium-sized business owners need to pay attention to: First, user migration, which means finding one's own "foothold" for products or services among the Gen Z and new silver-haired users; Second, scenario reshaping.

The first step is to further segment the consumption scenarios, "cultivate" each scenario meticulously, co-create scenarios with users, and enable users to connect with each other through interests and tags.

The second step is to transform the purely offline sales model through digital means, achieving innovative integration of online and offline, production and sales links; Third, cycle re-creation, strengthen the operation of private traffic, and let private traffic users enjoy the "super VIP" service that public traffic users cannot enjoy.