The Future of Direct
to/with Consumer
A POV© 2020

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ContentThe story thus far
Our point of view
Signals of change
The future at a glance
About us + Contact

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Thestorythus far

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Global consumer
packaged goods(CPG) industry
experiencing slow
growth, due to shifts
in the overalllandscape(McKinsey, 2020)

After 40 years of growth, the CPG industry has
slowed over the last decade as a result of
emerging trends in direct-to-consumer (D2C)
business models, technologies and consumer
experiences. Now, the COVID-19 crisis hasamplified many of these trends, making change
imperative to the industry.
As a result, CPG players need to rethink theircurrent approach and evaluate “where to play”
options to expand their exposure into growthareas. Some are exploring the following:/ Igniting focus toward consumer experiencethrough research into shifting behaviors/ Building new digital capabilities to growalongside market trends/ Seeking global opportunities, especially inemerging markets like Asia

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Our pointof viewP.06

As the big players inthe D2C boom of the2010s retreat, a newwave of opportunity isafoot for those whoexecute.
(Harvard Business Review, 2020)

The CPG space is undergoing a
massive transformation at thenexus of tech disruption andsocial change, prompting ashift to a more streamlined,
data-driven and relational
direct with consumer way ofbusiness.

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The COVID-19 crisis ischanging consumer
behaviors andexpectations, en masse.
(Idea Couture, 2020)

Fundamental sociocultural norms,behaviors, attitudes and values
are transforming rapidly, some beyondrecognition. Emerging trends alreadyseem to suggest a transformation ofconsumer values—particularly around
trust, intimacy and resiliency.

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During this time oftransformation,
CPG leaders areadvantaged in ways
digital natives aren’t.

Now, brand leaders have a powerful opportunity
to create intimate relationships with consumers
while reasserting the strategic advantages ofscale in their supply chain, distribution andvaluable account relationships. With the crisis
accelerating consumer demand for value andreliance on digital, now is the time to leverage
digital innovations to steer the industry towardtargeted commercial execution.

(Forbes, 2020)

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Signals ofchange
The evidence behind our POV

/ Signals of change from multiple angles
Our POV is built on the shifts we are seeing from various perspectives, from changes in humanbehavior to strategic innovations across diverse product categories.

Humanbehavior

Emergingtech/ Shifting Desires/ Value-Awareness/ Craving-Centric/ Hygiene Essential/ Purpose-Seeking/ Availability Over Loyalty/ Digital Transportation/ Experience Immersions/ Multisensory Integration/ AI and iA/ Voice Revolution/ Social Marketplace

Innovation/ Chipotle’s Virtual Market/ Harmay’s “Traditional” Shop
/ Multisensory H&R Block/ Airbnb’s Online Experiences/ Snapchat’s AR Food Sourcing/ Future of Diesel Stores/ Voice Integration/ AI for Personalized Foods/ Alibaba’s Immersive Kiosk

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Human behavior
Shifts in human behavior have been accelerated by the COVID19 crisis, especially in the realms of digital interactions, social
rituals and consumerism.
COVID-19 has resulted in a state of almost universal
uncertainty and disruption. Despite the partial reopening incertain countries, behaviors representing the “new normal”
across all aspects of life have continued. Alongside theadoption of new rituals around work, self-care and leisure,salient shifts in consumer perceptions are reflected inincreased engagement with essentials, digital channels, the“caring” economy, the “homebody” market and availabilityover-brand sentiments.

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Behavioral signals of change
Shifting desires
As a collective, people have adapted to life under
lockdown and are beginning to express the desire
for stability, connection and positivity. Many lookto establish this through digital experiences.

Hygiene essential
Hygiene and sanitation are notions at the top of
everyone’s mind. Organizations are expected toprioritize public health in the design, delivery andprocess/service of products.

Value-awarenessWith economic uncertainty, people are doubling
down on essentials and steering away from luxury
alternatives. Increasingly, people are seeking
more value for their purchases.

Purpose-seeking
People endure by finding purpose. Meaningfulexperiences and relationships should bedesigned and built with consumers in support ofagency and the achievement of larger, connectedvisions.

Craving-centric
Mood and product accessibility have shown to be
key drivers for purchasing decisions. In a world
without many distractions, people are more likely
to pursue cravings.

Availability over loyalty
Due to initial disruptions in the supply chain,people have been shown to value availability overbrand loyalty. Businesses must approach with
empathy to re-cultivate relationships.

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Provocations
Tech to satiate
As more people turn to tech to satiate their
desires for connection, purpose and well-being,businesses need to leverage emerging
technologies to seamlessly integrate into the“new” daily lived experiences of consumers.
The “right” experiences
Businesses need to explore novel experiences tomeet consumer needs and expectations. There ismore whitespace than ever, because people havemore time and flexibility to indulge.
Reignite loyalty
People increasingly value availability, accessibility
and cost over brand loyalty. As such, businesses
must focus on growing direct consumer
relationships at the front-line level to rebuild
connections.

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Emerging techTechnology is constantly evolving and brand leaders continue
to scout from the sidelines, rarely taking action. The current
global transformation constitutes a call to action fororganizations to move into the future with a modern lens.
Advancements in technology are well on pace to beaccelerated by a decade within key sectors such as AI, 5G,
V/AR and IoT due to the crisis. Shifts in consumer behavior
have also elicited uptakes in digital transactions, along withthe launch of a host of new platforms to fill the gaps left
behind by social-distancing. With new breakthroughs
promising emotional intelligence and hyper-intuitive cognitive
capabilities, brand leaders must organize their thinking andtake the next step in crafting the customer experiences oftomorrow.

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Tech signals of change
Digital transportation
More than ever, consumers are digitallytransported to products. As people become
further removed from relationships with physicalmoney and goods, embed payments into
interactive media (i.e., shows, ads, etc.).

AI and iA
AI enables better understanding of the consumer,
while individual assistance (iA) enables
consumers to better understand the AI. iA will
become a paramount conduit for guiding andeducating people through buying experiences.

Experience immersions
Tech enables “try before you buy” and“experience it anywhere” digital experiences.
Many of these experiences replicate the bestparts of the physical equivalent.

Voice revolution
As voice and wearable technology evolve,
consumers will decrease their interactions withscreens. With seamless integration into our daily
lives, voice will replace dexterity as the controller.

Multisensory integration
With the evolution of A/VR, along with haptic
technology, consumers are able to interact withmore by exerting less. Pilots of these immersive
experiences continue to gain traction.

Social marketplace
Snacks have been the bridge for socialconnection. As we shift to more digital chats,
events, and gatherings, there is opportunity topreserve this ritual through digital adaptations.

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Provocations
Contactless interfaces
As voice, gesture, wearable and architectural technology
progresses, we will move further away from screen-based
interactions. Especially in a post-COVID world, surface
interfaces will transform to contactless interactions.
Seamless integration
As we move away from surfaces, interactions with techwill become more integrated into our daily living. Be it
through smart homes/buildings or wearables, brandleaders will have to navigate new frontiers for direct
consumer interaction.
Consumers as a partner
In leveraging AI technology, brand leaders can optimally
tailor and personalize products based on individual unmet
needs. Concurrently, this will create a two-way
relationship—a task that can lead to the success ofmany digital-native brands.

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Innovation“The future of retail in _________ industry will look very
different.” As a common statement across various productcategories, CPG organizations must identify, realize andtranslate innovations for continued growth.
Business models are being adapted across the board in lieu
of social and economic transformations in today’s world. Asplayers within various product categories seek to elevate theircurrent ways of business, many have adopted emerging techand strategic innovations to align with the consumer
behaviors and expectations believed to be the “new normal.”Across different product categories, businesses have focusedon cultivating that direct consumer relationship.

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Innovation signals of change
Chipotle’s virtual market
Chipotle launches a direct-to-consumer virtual
farmers’ market for its suppliers. Further
blurring the line between a restaurant andgrocery store, suppliers each have a digitalbooth for their goods.

Digital travel
Airbnb is transforming the experience
industry by shifting to online. Customers
are able to digitally travel around theglobe with private tour guides, meetingthe needs of those seeking exploration.

Harmay’s “traditional” shop
A retail store with no visible products,
promotional signage or attention-grabbing
screens where instead customers are guided
by their own desire for discovery. It shows theessential elements of physical retail that
consumers still enjoy.

Snapchat’s AR food sourcing
Snapchat Lens Studio, in collaboration
with yuka, will create an AR lens tool thatallows users to scan packaged foods fornutritional information.

Multisensory H&R Block
In an ASMR video by H&R Block, a fakeaccountant whispers about the pains of filingand how H&R Block can be of service. A
unique experiment, it uses senses to reachconsumers directly.

Future of Diesel stores
Diesel has built a digital showroom inresponse to COVID-19, providing a hyperrealistic experience that offers a glimpse
into what online shopping might look likemoving forward.

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Innovation signals of change cont’d
Amazon’s voice integration
Equipped with a robust tech ecosystem, Amazon
is further streamlining the integration between
Alexa and its marketplace. Consumers can moreintuitively and accurately order by voice.
AI personalized foods
Analytic Flavor Systems is using AI to develop
flavors tweaked precisely for various age,
ethnicity and gender markers. Think beer andsnacks as unique as fingerprints, and a future
where the food knows more about the consumer.
Alibaba’s immersive kiosk
Refinity, a multisensory shopping kiosk developed
at the Alibaba DAMO Academy, is an innovative
effort to redefine retail without the need for any
wearables.

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A closer look: case study 1
The convenience of BUD LIGHT DELIVERY
What is it?
Originally launched in 2015, Bud Light Delivery is seeing aresurgence amidst the COVID-19 pandemic. Through the Bud
Light website, consumers can directly order their beveragesof choice, with guaranteed timely delivery. Analogous toballpark vendors, Bud Light Delivery seeks to fill the void inconvenience, while also promoting social distancing.

Why is it?
Aligning with consumer behavioral shifts toward being morecraving-centric, hygiene essential, while valuing availability
over brand loyalty, Bud Light is providing a digital platform tocater to these needs. By creating convenience that requires
minimal input from users, Bud Light is, once again, aiming tocreate a direct relationship with consumers.

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A closer look: case study 2
CASPER’s focus on the experience of sleep
What is it?
The widespread D2C success of Casper is attributed to thebrand’s ability to alleviate analysis paralysis while positioning
itself as a leader in the sleep economy. By not overwhelming
visitors with choices, Casper is able to focus consumer
interactions beyond the product and toward the larger sleepexperience. Launching features that enable direct virtual
consultation with sleep experts and enroll shoppers into theonline “school of sleep,” along with R&D into digital immersive
experiences for consumers that help them feel the products,
show how Casper is striving to solidify the experience of sleep
using tech.

Why is it?
Aligning with a combination of behavioral shifts and emerging
tech, Casper is capitalizing on the value awareness and shifting
desires of consumers by positioning its product as a wellness
enhancer. Through technology, it focuses on creating an
immersive experience to digitally transport customers into theecosystem of sleep.

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A closer look: case study 3
The 5TH, building engagement through exclusive glamor
What is it?
Luxury accessory company The 5TH approached D2C with aunique perspective. Rather than keeping its ecommerce site
online 24/7, the brand opted to open only for a few days permonth and treat each of those days as a digital event/galathat immerses consumers into a digital shopping experiencethrough beautiful visual designs and engaging auditory
soundtracks. By fostering consumer relationships throughthis event-based approach and continuing to develop AI for
personalization through digital tools, The 5TH’s goal is totransform these “events” into “personalized parties.”

Why is it?
Aligning with consumers’ shifting desires and seeking ofpurpose, The 5TH creates events for customers to “attend” ina world that seldom encourages in-person gatherings. By
exploring AI and iA opportunities and multisensory integrationin design, The 5TH sees technology as a means fordifferentiation.

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Provocations
Conversions across categories
Across all product categories, businesses areseeking advantage through tech innovations. With
the goal of building direct connections withconsumers, brand leaders must explore outsideof their domain and pilot based on evidence.
Digital and infrastructure symbiosis
Brand leaders have the advantage of establishedfundamentals: supply chain, relationships,distribution, etc. Capitalize on these advantages
with digital innovations that fit.
Individual winning recipe
All business differs in terms of infrastructure,vision and operations; as such, success will also
look and feel different. The deployment of newtech, models and ways of business should betailored based on individual circumstances.

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The future ata glancefrom -> toP.25

FROMTO

Direct toConsumers

Direct withConsumers/ Web-only retail/ Omnichannel business model/ Borrowed supply chain/ Robust fundamentals in supply
chain, distribution, relationships/ Social media marketing/ Visual brand identity/ AI-driven community building
through collaboration/ Integration into daily experiences
through immersive techP.26

FROMTO

Efficiently Filling
OrdersFulfilling ModernExperiences/ Prioritizing product overexperience/ Seeking innovation acrossindustry and product category/ Doubling down on existing
operations and processes/ Experience-driven andfocused, fulfilling unmet needs/ Emphasizing legacy ways ofbusiness/ Seamless transactions,creating a delightful customerjourney

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FROMTO

Building ScreenBased Interfaces

Thinking Beyond
Surfaces/ Focusing solely on online retailapps and stores/ Integrate into voice andemerging interfaces/ Looking at successful digitalinterfaces of today/ Understand unmet needs ofconsumers in their lived
experiences/ Leveraging UI as the solution toCX

/ Explore new frontiers of tech

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About IC

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Idea Couture
Is a strategy, innovation and experience
design partner @ Cognizant Digital Experience
We help leading companies envision and create
differentiating breakthroughs that fulfill userneeds; forge lasting emotional connections
between customers, employees and brands; andcreate shareholder value through the alignmentof business strategy, brand and organizational
culture.
Our expertise in anthropology, sociology,
economics, service design, business strategy,
experience design, technology and foresightenable us to negotiate our way through any
cultural, consumer, technological or economic
shift.

By switching between different lenses toview multiple worlds and draw on deep
customer insights, business contexts andfuture scenarios, we are able to discoverwhat would otherwise go unseen andcreate what is yet to exist.

Contact.
Maya Oczeretko

Human-Centric Design Leadmoczeretko@ideacouture.com© 2019 |