This is a guest post by James King, a fellow faculty member at the Georgetown Masters of Professional Studies in Real Estate Program
Last week, the Harvard Club of New York hosted a presentation by Ann Mack, Director of Trendspotting at J. Walter Thompson (JWT), one of the world’s largest and best-known marketing communications brands. Ann shared six of the top ten trends her group has identified for her clients to navigate continually evolving consumer propensities – trends that can be capitalized on by forward thinking real estate companies as well.
GAMING THEMES – Sellers are finding that they can create connectivity and community with their customers with games, enabled by social media and mobile technology. Little victories create bragging rights which employs customers as individual and viral spokespersons. Brand loyalty is broadcast by engaged customers. These might be lotteries, competitions, scavenger hunts or sponsored athletic events but they are working and they are expanding.
NON-COMMITMENT CULTURE – Possibly driven by buyer conservativism during the recession and its impact on both home values and the anxiety index, customers are reluctant to purchase high value items where a reasonable renting or sharing alternative exists (zipcars, capital bike-share). Producers who share the risk of a job loss or tech obsolescence through buy-back programs are seeing incremental sales over their competitors (Hyundai automobiles, Best Buy electronics). The sharing aesthetic is also driven by expanded eco-consciousness. Digital stores and pop-up stores are replacing more durable real estate alternatives as the physical product is de-emphasized in contrast to the delivery of services.
TECHNOLOGY – Technology is central to our lives, in a continually expanding and accelerated way. The cycle time between early adoption to mainstream is compressing, and the cachet of latest products and capabilities is expanding. However, it is no longer the device that rules our buying consciousness but rather the capability. It is the empowerment of technology that is sought after. The tech product is only the gateway to the experience, the expanded capability or even the escape.
DE-TECHNOLOGY – Again, technology is central to our lives, in a continually expanding and accelerated way. And its pervasiveness is generating a periodic consumer backlash with the need to disconnect and revert to direct personal experience with family, friends and colleagues.
HYPER-PERSONALIZATION – Massive amounts of user data is being collected and used to generate increasingly personalized web search responses. Facebook is not a social media company; it’s a marketing data company. Based upon monitored user behavior, Google searches will generate different results for different individuals based upon the same search text. Individual web pages for leading consumer companies will be tailored to each user, based upon monitored prior behavior. This expands beyond consumerism to news and commentary and as users become used to it they will demand it. The NY Times ran an editorial about this trend some time ago, referring to the evolution of news delivery responding to personal predisposition as the new “Daily Me” self-reflective, and sadly limiting, news protocol.
OUTSOURCING SELF CONTROL – Tools and regulators are being developed to reign in our expanding need for instant and continual gratification. Credit cards can be set-up to cut off when a preset monthly limit has been reached for a particular category of expense, say dining. Smart phones can be preset to disable texting when in motion over a set speed. Consumers have become accustomed to outsourcing, the tools are being developed and marketed but most importantly, we have not been set up to deal effectively with the level of potential instant gratification that technology can deliver today – and we will come to “need” the restrictions and warnings these applications provide.
At the scale of a fully rationalized real estate decision, each of these consumer trends may have limited direct application, with the possible exception of tenant retention, which can be influenced by the multitude of individual social and management transactions which make up the tenant experience throughout a lease term. But, these are the trends that will be driving our customers’ and tenants’ businesses, and understanding their constraints will make us better implicit partners on a going forward basis. And, as each becomes mainstream, they will become embedded in the consciousness of real estate decision makers, and even if marginally, will influence even the most rational real estate decisions.
Although time did not permit, Ann had intended to spotlight some of JWT’s 100 Things to Watch in 2011-which are things that reflect or could eventually ladder up to broader cultural shifts. Both reports are available to the public here. I encourage you to take a look, and explore the broad implications for your company’s business plan.
What do you think are the trends that will shape the retail world beyond 2011?