In the 1980s, back-to-school shopping typically meant a day-long hunt through a limited number of stores, often ending in settling for what was left. Today, an abundant preference-driven consumer landscape presents an explosion of choices in brands, products, channels, formats, experiences, configurations, and service models.
Moving away from a mass approach
Post-World War II, the consumer industry, from retail to automotive, evolved to meet a specific set of “more”-focused requirements: more consumers, more consumer spending, growing GDP, and expanding geographic markets. That era’s consumers, largely middle class had relatively uniform preferences, central to a bell curve of shared demographics and cultural norms. Competition in the industry hinged on scarcity, so requirements were focused on distribution, product availability, and scale, catering to a relatively homogenous market with few choices.
THE FOUNDATIONAL REQUIREMENTS THAT ONCE DROVE THE INDUSTRY ARE NO LONGER ADEQUATE TO MEET FUTURE DEMANDS.
Consequently, the industry was built on economies of scale, mass production, mass distribution, and mass marketing. This approach worked within these market dynamics, but now, as we look to the future, the requirements on the horizon appear to be very different than those for which the industry and traditional organizations were built.
Today’s diverse consumer profiles and a fragmented tech-driven market are driving many in the industry to transition from a supply-focused to a demand-driven model. This pivot marks an important transition from mass-market approaches to strategies that can prioritize relevance for specific consumer groups. For many consumer industry organizations, they refer to this as striving to provide her with “what she wants, when and where she wants it.” We refer to this shift as an industry moving from mass to micro. While at first read, this may sound like micro-targeted marketing, how a consumer company builds highly relevant offerings and becomes more consumer-centric moves well beyond personalized marketing.
The shift from mass to micro can affect the heart of the business, crossing the value chain, including functions like real estate, merchandising, experience design, menu management, new product development and customization, pricing, inventory, maintenance, and more. Our research indicates that this is merely the beginning, with unprecedented changes looming and forces accelerating the industry toward a more consumer-centric, fragmented, complex, and demand-driven future.
The six forces
Over the past two decades, the consumer-facing industries have acclimated to an environment where change seems to be constant. Confidence that your organization has learned to navigate this environment may be comforting, but the next 10 years could potentially eclipse the changes of the past in terms of scope, speed, and intensity. Through our client experience, we’ve identified six major forces that are expected to drive consumer market shifts in the coming years. Through this work, it has become clear that the industry may face unprecedented degrees of economic, demographic, technological, political, and cultural change—and it is poised to happen simultaneously.
The result could be a highly complex mosaic of consumers, increased competition, and a level of technology-enabled complexity that could likely redefine the industry for years to come.
Examples of unprecedented change:
- Generation Alpha will be the first generation in US history in which the white demographic is not the majority. The youngest generation born today is roughly 48% white —making it the most diverse generation ever.
- The racial makeup of the five largest US markets by GDP—accounting for nearly 50% of US GDP (Florida, Texas, California, Illinois, and New York) is looking vastly different, with the Gen Alpha population of 32% non-Hispanic white people (down from a cross-market average of 78% of baby boomers ).
- The largest and most concentrated wealth accumulation to ever occur happened in the last 10 years. This massive wealth accrual, primarily among baby boomers, is making the wealth gap much more pronounced along generational lines. Between 1989 and 2019, the median household wealth of families headed by 65 to 75-year-olds grew by 54%, while wealth in families headed by 25 to 35-year-olds declined by 11%.
- For the first time in US history, the population will include more people age 65 and older than under 18.
- Women, for the first time in history, are projected to control more wealth than men (from 49% in 2019 to 65% by 2040).
- The fertility rate in the United States is now below the replacement rate, implying a future with potentially “less” and not “more.”
These shifts no longer are represented by a standard bell curve, but instead demonstrate dramatic diversity in the needs, wants, sizes, tastes, and desires of the new consumer. Gone are the days of the “average” consumer. Today we are witnessing a new battle for consumers that is happening at a more granular level.
01
AI acceleration
01
AI acceleration
AI is rapidly transforming the consumer industry, advancing faster than Moore’s Law with efficiencies between 20% and 60%. This reduces costs in content creation, copywriting, coding, and comprehension, while improving outcomes. AI shifts focus from mass to micro, acting as both an efficiency tool and growth catalyst.
AI is also changing consumer spending towards services, experiences, health, and digital goods, challenging traditional categories with more customization and personalization. Essential for exploring new markets and meeting evolving needs, AI’s potential and diverse preferences will shape the consumer industry’s future.
02
Breaking through complexity
02
Breaking through complexity
The traditional mass approach focuses on economies of scale and efficiency, but micro-operational strategies can increase complexity and costs. However, technological advancements are enabling a new approach that decreases marginal costs and drives breakthroughs. This involves advanced algorithms, computing power, detailed decision-making, and extensive automation.
This modern, hands-off approach, common in tech companies, uses predictive signals to cater to specific consumer demands and preferences. Consumer data becomes crucial in managing these signals. The methodology hinges on two principles: precise prediction and effective automation.
03
A blueprint for the transition
03
A blueprint for the transition
In today's fast-paced business world, companies must adapt by creating efficient, automated, and sustainable operations. Transitioning to micro-operations focuses on detailed, customer-centric approaches.
Businesses should prioritize "when" to adapt over "why," given the significant investment required. To navigate changes, they should:
- Broaden demand signal detection: Analyze diverse consumer signals.
- Use algorithmic analysis: Identify patterns in real-time data.
- Embrace technological integration: Implement AI and automation.
- Enhance operational agility: Improve responsiveness and detail.
- Develop teams: Combine human skills with AI analytics.
- Reimagine core systems: Upgrade to intelligent, integrated decision engines.
Mass to micro in the market
The shift from mass to micro is already visible across the market:
- A national restaurant chain adopting location-specific pricing for localized market demands.
- A large apparel company using predictive signals to design and deploy market-specific store formats.
- Soft drink companies offering a dramatically increased product ranges to meet niche consumer preferences.
- A vitamin company producing custom vitamins to meet users’ specific gut-biome needs.
- A hotel company developing a loyalty program with individualized offers and services.
- A social media platform that serves up personalized marketing and recommendations.
- A food and beverage company customizing a recipe for local tastes.
- A grocery retailer offering curbside pickup, front-door delivery, and in-garage delivery.
- A mass retailer deploying precision-level inventory based on predictive signals.
- A large protein-based food manufacturer developing a brand of ecologically friendly poultry for a specific, targeted consumer.
- An automotive company offering software-enabled, subscription-based vehicle customization for enhanced personalization.
- A large bank developing a personalized private-banking suite of services.
This growing trend of mass to micro appears to the consumer as optionality. This change goes beyond simple personalization; it’s about deeply integrating customer-centric relevance into the core business philosophy and across all operations. The key to this shift lies in embedding precision, specificity, and responsiveness to consumer needs throughout the organization—not just in messaging and offerings. A key, though, is creating breakthroughs and building optionality while addressing margin costs of added complexity.
The mass to micro future
The consumer industry’s evolution from a mass-market approach to a more nuanced micro-focus necessitates a fundamental shift in the way businesses make decisions. Future operations likely will require a transformation from mass, periodic, manual, and reactive decision-making to a more dynamic model that is continuous, automated, and predictive. This shift signifies a departure from traditional, hypothesis-led strategies, ushering in an era of data-driven, real-time adaptability.
Embracing this change is more than a strategic choice; it is also likely an important move for sustained relevance and growth in the rapidly changing consumer landscape. The journey toward a micro-focused approach requires a broad reevaluation of operational processes, leveraging technological advancements and insights from vast data pools. This evolution marks a paradigm shift that is increasingly in line with the industry’s future trajectory: moving those organizations that adapt to the forefront of consumer engagement and market innovation.
This path, while challenging, offers a significant opportunity for businesses to refine their agility, develop innovative strategies, and excel in their market offerings. The leaders in this new era will likely be those who can effectively integrate continuous, automated decision-making with agile, real-time execution. By doing so, they can navigate the complexities of today’s market and potentially set new benchmarks for success in an ever-evolving consumer industry.
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Get in touch
Kasia Blicharz
Kasia is a partner in Advertising, Marketing and Commerce practice with focus on Consumer and Retail. She has 20 years experience in digital, data and marketing. She has worked with some of the leading FMCGs around embedding tech, making sense of data, instilling digital first culture and helping to create robust marketing organizations. Her passion is helping to translate and elevate human experiences into daily work of organizations. Her leading role in AM&C is helping clients to elevate their customer experiences through defining and building digital capabilities and way of working to execute on this. Typically this involves new digital and marketing strategies, technology (customer data, marketing automation, ecommerce tooling), content (brand strategy, UX/UI design, campaign content) and operating model components (governance set-up, make/buy/partner decisions, skill building and organization restructuring).
Robert Collignon
Robert is Director in the Customer Strategy practice with a focus on the insurance and wealth management industry. He has over 20 year experience both as a consultant as well as in working for FSI industry organisations. His passion is to design and deliver winning strategies, brands and customer propositions which benefit organizations and contribute to a better society. Typically this involves business model innovation, digital transformation, new venture design, partnership strategies, digital technology (data management, marketing automation), operating model design and proposition design. Prior to joining Deloitte Robert was the global Head of Brand & Customer Strategy at an insurance organization, he is one of the proud founders of GoBear (www.gobear.com) - a successful FinTech in the financial services industry in Asia and author of ‘Pensioen voor Dummies’.