Global forces like Brexit and climate change are affecting trade worldwide. Sarah Dunn consults the Ambiente trade fair in Germany for evidence of how this uncertain environment is changing consumer behaviour.
It's easy to get tunnel vision in New Zealand - our closest major market is at least three and a half hours’ flying time away. However, geographic isolation no longer protects Kiwi retailers from movements in the global economy.
Euromonitor’s ‘Top 10 Global Consumer Trends 2019’ report has described the wider world as feeling “out of control” as we move into the middle of the year. It cited political upheaval in developed markets and fast, unprecedented change in developing economies as the causes.
This background of instability has left consumers feeling unmoored, and changed their behaviour in a variety of different ways. Euromonitor characterises the undercurrent to many trends as “taking back control and asserting ourselves” in the face of turmoil.
“We feel more powerful when we can go back to basics and eat an egg laid by our own hen, or actively choose to find solace away from digital demands without junking them completely. We want to get that thing or service seamlessly and easily. We want to make a difference to the world by buying more thoughtfully. We want to look after ourselves and sidestep the experts, by taking up the reins of knowledge ourselves and driving the consumer conversation more than ever.”
J. Walter Thompson Intelligence’s ‘Future 100 2019’ report concurs:
“Wellbeing, stress management and health are all prompting a continued evolution of new products and services to help soothe unstable, constantly connected lifestyles. Meanwhile the definition of wellbeing continues to expand, encompassing everything from spirituality to lighting design.”
New Zealand is currently more stable than culturally-similar markets like the US and UK, but the interconnected nature of global business and cultural exchange means ripples from ongoing issues like Brexit, the US’s polarised political climate and climate-change-related phenomena inevitably make themselves felt.
A picture of the world market
The venerable Ambiente trade fair in Frankfurt, Germany, is a place where retailers from around the world gather to share information, network and gain a deeper understanding of global consumer trends. In 2019, 4,451 exhibitors from 92 countries attended the event, which in 2020 will run from 7 – 11 February.
Stephan Kurzawski is senior vice president at Ambiente's parent company Messe Frankfurt. Messe Frankfurt is the world’s largest trade fair, congress and event organiser, and it's been active in the international trade fair business, both in Frankfurt and worldwide, for some 800 years.
“A trade show is just a picture of the world market,” Kurzawski says.
Kurzawski says Messe Frankfurt has long been operating programmes intended to support its attendees in adapting to a changing business environment. At Ambiente, it offers guided tours, resources like the Ethical Style Guide, and educational programmes at the Ambiente Academy.
“In my view, all this has to do with a modern trade show,” Kurzawski says. “In former times, it was enough to bring buyers and sellers together, today you have to do a little bit more.”
See EU later
Since 2016, the Western world has been holding its collective breath over the unpredictable outcomes of two ongoing political events with massive ramifications for international trade: the US presidency of Donald Trump, and Brexit.
Brexit refers to the United Kingdom's planned exit from the European Union. As this issue of NZ Retail went to print, the UK had managed to temporarily postpone its exit, originally planned for March 29, but had yet to agree on a plan for its withdrawal. Without a formal withdrawal agreement – known as a “no deal” scenario - EU laws would abruptly cease to apply in the UK on the date of Brexit's implementation, and many trade agreements would dissolve without replacements in place.
The upheaval this will cause at the border would be very disruptive in the short term for most retailers, especially those which have become accustomed to relying on EU goods. Some 30 percent of the UK's food supply is sourced from the EU. A recent report from the UK Government, 'Implications for Business and Trade of a No Deal Exit on 29 March 2019', indicates that there is “little evidence” that businesses or consumers are adequately prepared for a no-deal Brexit.
A long-term economic analysis referenced in the same report, which “implicitly assumes a smooth, orderly transition to WTO rules”, indicates that 15 years after a no-deal Brexit, the UK economy would be between 6.3 percent and 9 percent smaller than if existing rules had continued to apply.
Kurzawski says the impending withdrawal of the United Kingdom from the European Union will influence every trade show. For Ambiente, it might have a positive effect: “Maybe [British retailers] will have to travel more and visit more trade shows, because if not, they are dying on the island.”
There may be fewer UK suppliers present in future Ambiente trade shows, Kurzawski muses, but China is now becoming one of Ambiente's most important visitor countries.
New Zealand’s top trading partners for the year ending March 2018 were China, Australia and the European Union. New Zealand Customs says Brexit is likely to affect New Zealand businesses that export goods to the UK, but not those which import.
Customs advises Kiwi businesses likely to be affected to view the UK Government’s technical notes advising on the situation, and work through the following checklist:
Ensure they check the tariff rate for their goods into the UK and EU.
Ensure they understand any documentation requirements for importing into the UK and EU – checking with their customer and forwarder.
Check with their forwarder on shipping routes and understand any transit or trans-shipment requirements.
Check if their customer or forwarder is an Authorised Economic Operator (AEO) – especially for EU trade.
If there is a delay – get facts and be clear why a delay has occurred.
Keep an eye on delays or impacts at particular ports.
Keep informed by regularly checking the New Zealand government websites.
While the impact of the ongoing tariff disputes between China and the US has caused ripples in global trade, the main mechanism by which Trump's presidency has affected retailers is indirect. A year after Trump's appointment, Psychology Today collated national surveys from the American Psychological Association (APA) and from Gallup to report sharply-rising stress and anxiety in the US over that period.
“It can come as no surprise that the groups most negatively affected over the past year are those who have been targeted by the policies and attitudes of the Trump Administration. The principal drivers of stress and anxiety are fear, uncertainty, and a lack of control over one’s life and future, and these have grown markedly.”
These concerned consumers are turning to goods and services to soothe them. The search for stability is evident in dozens of US trends: from the cultural obsession with staying home, watching Netflix and ordering delivery food (Kylie Jenner spent $10,000 last year on 186 Postmates orders) to the current US fad for cannabidiol (CBD)-infused skincare, to the popularity of Japanese organising guru Marie Kondo.
In January 2019, Wendy Liebmann, chief executive officer of consultancy WSL Strategic Retail told Bloomberg that the Kondo craze was about consumers grasping for control: “What we’re seeing reflected in what she’s saying is we can’t control the big things like the government shutdown or markets… But we can control the little things — where we buy, what we buy, and how chaotic our life is.”
Longing for tranquility
The retail therapy approach to anxiety is at its most developed in the US, but wellness-related goods and services are booming worldwide. According to the Global Wellness Institute, the worldwide wellness market is now worth US$4.2 trillion, and it's growing at nearly twice the rate of the global economy.
At Ambiente, this search for wellness and comfort was best reflected in design studio Stilburo bora.herke.palmisano's ‘Ambiente Trend Report 2019’. The three thematic trends – Tasteful Residence, Quiet Surroundings, and Joy-Filled Ambience – each describe a social development or “attitude to life”, says Ambiente vice president Nicolette Naumann.
Designer Annetta Palmisano says the Tasteful Residence trend is about looking to craftsmanship for perfected, high-precision “collections of rarities” which express timeless elegance. The product which best expresses this trend is German company Nui Studios' Mygdal plant light – a sleek lamp containing a hermetically-sealed terrarium.
Quiet Surroundings references the back-to-basics approach to stress described by Euromonitor. In mapping out an interior made from natural fibres, expressed in a sunbleached colour palette, it provides “a place to withdraw to”, with “the longing for tranquility focusing on the natural.”
“It's a style that focuses on the natural and the credible, and wants to achieve a more silent approach,” Palmisano says. “Evade the everyday rush and have a simple and silent life.”
The product that best expresses the Quiet Surroundings trend is washable paper bags by Australian company Uashmama, which has its bags hand-sewn by a family business in Tuscany.
Finally, the Joy-Filled Ambience trend is intended to describe “the ideal apartment for a young creative family.” Bright and eye-catching, it's perfect inspiration for showrooms and shop windows, imagining a “happy, colourful trend world with bold combinations of colours and the charm of randomness.”
“A hopeful and positive atmosphere – a happy place,” says Palmisano. “This is really what we need.”
It's best expressed in products by Lithuanian designer March Design Studio's reflective sticker badges for cyclists and night-time pedestrians.
Each of the three meta-trends incorporates a focus on recycling and sustainability, mass-produced goods coexisting with high-end design, an eye towards nature, and mindfulness. The meta-trends of 2019 all express a need to escape from what Palmisano describes as “the bursting world” for a tranquil atmosphere where belongings are few but well-considered.
Research from IBM indicates that around 30 percent of what most retailers sell is directly tied to weather and seasonality, and a diverse roll call of retailers – including recent New Zealand market entry Superdry - have cited unseasonal weather as negatively affecting sales. Destructive storm events such as 2017's Hurricane Harvey can also wreak havoc on retail supply chains.
It's not just about the direct effects of climate change – consumers, too, are noting these effects and adapting their behaviour.
According to the 2013 US study, The Business Value of Changing Consumer Behaviours, in one survey of 54 of the world’s leading brands, almost all of them reported that consumers are showing increasing interest in sustainable lifestyles.
Ambiente introduced its Ethical Style Guide in 2016 in response to this trend, and has this year held three powerful new exhibits which promote advocacy for fair trade and sustainability in production and sales: Made51, a global initiative of the United Nations Refugee Agency which exhibited products made by refugee artisans; the World Fair Trade Organisation, which showcased a selection of products aimed at creating alternative business models; and the Centre for the Promotion of Imports from Developing Countries.
New Zealand plastics manufacturer Sistema has exhibited at Ambiente annually for many years. International sales director Chris Ramsey says the company's global footprint gives it balance as international markets ebb and flow - “We often find that if one market's down, another can cover it.”
He agrees that the conversation about sustainability has become more serious over the past few years for retailers. This year, Sistema's 135 square-metre stand at Ambiente offered plenty of material on the company's sustainability policies, explaining how its waste materials are reground and re-used in a recycled product.
“We as a plastics manufacturer have a responsibility to keep an eye on our carbon footprint.”
Sistema's strongest environmental credential is in its products' design, Ramsey says. Compartment-style lunchboxes remove the need for plastic wrap, and Sistema's water bottles replace single-use plastic bottles.
“We're not the bad plastic,” Ramsey says. “We're actually providing an alternative to single-use plastic.”
Sustainability and design feeds into consumers' search for authenticity, says Ramsey. The company's location in New Zealand helps satisfy that search.
“We're proud of the fact that we're a company based in New Zealand and we export to over 100 countries around the globe.”
Ramsey feels the next generation of consumers is pushing this pivot to sustainability, and retailers will see it continue to intensify in the future as demographics change: “They're going to be the voice of decision-making.”
Messe Frankfurt’s Kurzawski says it’s crucial for companies to face the challenge at hand and move with the times.
“The intelligent people should know that climate change will force a change. The stupid people don’t know there is even a climate change.”
Living in the future
For consumers and retailers, the relentless evolution of technology is both the cause of and solution to many of life's stressors. The Future 100 report presents ‘social media wellbeing’ as a major emerging trend, alongside ‘ethical internet’ and ‘humanising tech’ – these three trends highlight the way tech is contributing to consumers’ sense of living in an out-of-control world.
“In an era when pervasive tech affects every aspect of people’s lives, with weekly scandals involving the behaviour and failings of tech brands to behave ethically, there are signs of a tipping point.”
At Ambiente, Wolfgang Gruschwitz and his son Nikolai, head of new media at the Gruschwitz design studio and managing director of the digital consultancy Waketo, displayed their augmented reality and touch modules intended for high-street retail in an exhibit titled 'Point of Experience'.
The centre of these applications is a touch table which brings ecommerce products to life inside the store. Wolfgang Gruschwitz says the bountiful product offer of Amazon illustrates how products are now more or less all commodities, and so omnipresent that there's no way to effectively compete except on exclusive goods. He says selling effectively within this environment requires a shift from a product-focused mentality into a service and experience mentality.
“In the future, you are not a seller anymore. You are more of a consultant. The store must be like an event”
Tools like the touch table give retailers the ability to offer in-store-style service and theatre with the flexibility of ecommerce. Retailers can play videos on the table, show variations on products, and scan QR codes. The table also responds to products placed upon it, meaning retailers can lead customers to related events or collect their information.
Gruschwitz says his tech can support retailers in creating retail theatre – another major Future 100 trend.
“Now retailers have the opportunity and the duty to make events, to show people what to do with product.”
Gruschwitz believes the unprecedented ability to connect with other human beings offered by the internet will ultimately result in greater understanding worldwide, despite the current difficulties caused to disrupted industries.
“People didn't change for 100,000 years,” Gruschwitz says. “We are all human beings, we have only a cultural problem. We are all lazy. We all want the easiest way; our brain is working to the easiest way.”
He cites Amazon's effect on bookshops as evidence of evolving understanding: at first, the book industry was in trouble as book-seeking shoppers deserted traditional stores for the convenience of ecommerce, but then people began missing the experience of browsing in a physical store. Since 2016, Gruschwitz says, 2000 bookstores have opened in Manhattan alone.
“This is not because of books, but because of that third space. People seek connection, not digital.”
“Shopping was never just about the goods.”
Gruschwitz believes that technology like his touch table is not the way of the future, but “an interim” between the present and a more immersive, integrated solution that's yet to be invented. He says retail spaces will continue to evolve to bring customers entertaining spaces focused on satisfying consumers' need for connection, and also notes that in our globalised, interconnected world, sustainability is crucial.
“There's only one real wealth in this world. It's not money, it's the human relationship, and as long as we're believing in the human relationship, no robots, no online will hurt us.”
Messe Frankfurt’s Kurzawski says the consumer shift from goods to services “has happened and will happen” more in the future. Younger consumers have different priorities to those of older consumers, he says, and personal belongings are becoming less and less important to them.
He speaks of this shift as a return to pre-consumerist values:
“What’s more important is things that add value to life. The money will be spent as in old times, more on feelings.
This is why the fair is moving towards creating feelings. Today's trade shows have to do with emotions, with inspiration, information and education.”
Frankfurt and New Zealand are 18,523 kilometres apart, so attracting Kiwis to Ambiente was never going to be a casual affair. Kurzawski says Messe Frankfurt has a responsibility to make fairs like Ambiente worthwhile for those who have come a long way to attend, explaining that for those motivated to make the trip, Ambiente can offer a high degree of efficiency.
The value Ambiente represents to the Kiwi retailer is in collecting a smorgasbord of newness and inspiration from many different sources around the world and providing it in a single location, Kurzawski says.
“You can see so many things in Frankfurt, it's more than you can usually do in five months.”
Ambiente’s single-site opportunity means it’s more sustainable than flying by plane to dozens of other locations. Kurzawski says those inclined to do their research at home on the internet will find some useful insights, but trade fairs like Ambiente offer up surprises in a way search engines can't: “What you do not know, you cannot Google.”
“In five days, we deliver thousands of opportunities.”
“When you're going back, you should be full of new things: inspiration, shop decorations, product collections. You will always see something that is new.”
Sarah Dunn travelled to Ambiente courtesy of Messe Frankfurt.
This story originally appeared in NZ Retail issue 761 April / May 2019