Digital Connectivity future thinking report

DIGITAL CONNECTIVITY FUTURE THINKING REPORT

Amy Livesey N0682277

Ethics Clause I confirm that this work has gained ethical approval and that I have faithfully observed the terms of approval in the conduct of thie project.

Signed Date Word Count - 3,238

CONTENTS INTRODUCTION 1 AIMS & OBJECTIVES 3 METHODOLOGY 5 WHAT IS DIGITAL 7 CONNECTIVITY TREND EVOLUTION 9 TREND DRIVERS 11 Social Media Gen Z Personalisation Experience Economy TREND CONSEQUENCES 17 The addicted consumer Too much choice Social media wellbeing Public vs private INDUSTRY IMPLICATIONS 21 Beauty Fashion & retail Entertainment FUTURE THINKING 30 CONCLUSION 31 REFERENCES 33 BIBLIOGRAPHY 36 ILLUSTRATION LIST 41 APPENDIX 43

1 This report will focus on the macro trend Digital Connectivity. The report looks at how it has affected industry sectors such as Beauty, Fashion and Retail and Entertainment. The report will also explore where the trend originated from, how it’s evolved and the key drivers. These key drivers being highlighted as Generation Z, Social Media, and Personalisation. The sub trend, Experience Economy will be explored as a driver, to see how there’s a new shifts in consumer expectations from brands and companies. Consequnces of the trend will be looked at, as well as some key debates being highlighted throughout the report. The report will lastly cover the future of the trend and where it might lead to. It will act as a catalyst for continuing into stage 1.

INTRODUCTION

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AIM & OBJECTIVES

The aim of this report is to analyse and critique Digital Connectivity by looking at all aspects of the trend, including the origin, drivers and consequences. The report will help to spark the generation of ideas that can then be used as a platform further down the line.

The objectives of this report will include carrying out secondary research to discover insights about the trend and what’s happening in the different industries surrounding the trend. Furthermore, what’s the trends main drivers and how brands and consumers are responding to it. Insights gained through secondary research will help uncover the future of Digital Connectivity and how it will grow and change in the future. As well as any gaps in the market that can then act as a spring board for stage 1 and 2 of the project.

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METHODOLOGY

The research conducted for this report includes a variety of secondary resources, as shown in the table below. A limitation of the research as a whole was the lack of primary research, as this prevented consumer insights being gained through interviews, questionnaires and focus groups.

Source Books

Advantages

Limitations

They are quick and easy to access. Scholarly books contain authoritative information, which includes in depth and trustworthy research, as well as experts views on themes and topics.

Some books can take years to write and publish, therefore they may not always be the best source for current information. It is useful to check the date in which a book has been published to determine its relevance in todays society. Books can still contain biased views.

Newspapers and broadsheets

They are readily available both online and offline. They The limitations to newspapers are that they can offer a are available to read whenever you like at your own biased opinion as lots of news stories are often twisted leisure. Broadsheets are informative and reliable. or distorted.

Videos

It’s an engaging way of taking in information in con- Limitations are that the information being given, isn’t trast to reading. Ted Talks offer ideas that individuals necessarily reliable as it’s not being backed up by any may not have thought of before. other sources and the individual often has to trust what they’re hearing. Ted Talks are most likely to give an opinion.

Websites

They are easy to access, thereby allowing individuals to manage their time more efficiently. Websites are informative and can constantly be updated, therefore providing up to date news and information about current events.

Research databases Journals and articles Social media

Anyone can publish websites, therefore any facts taken from them would have to be backed up by other sources.

There is a potential lack of credibility and can be inaccurate or biased and sometimes outdated. There is also a huge amount of information available on websites which can be time consuming.

Give lots of reliable facts and figures. Research da- May have restricted access or may have to pay to view tabases were able to be used to support insights that the information. Databases are hard sources to look required evidence of consumer insight. through, in order to find specific information relevant to the work you’re carrying out.

The information is reliable, as articles found in scholarly journals are checked by academics and other experts. They provide factual, documented information as well as providing reference lists that can point you to other relevant research.

As they have to be checked before they are released, they may not include up to the minute news, as this process is time consuming. They also mainly include information of academic interest so are not the best sources for general interest topics.

Social media is a quick, easy and free research plat- Social media however isn’t very factual, and can be biform to make use of. It is informative as it’s useful to ased depending on whose written it, as lots of people are see how people use different social media platforms often giving an opinion. for yourself.

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What is digital connectivity

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The internet has become a fundamental element in people’s daily lives. “Never before has a single technology connected people as comprehensively” (Trendone.com, 2018).

Digital represents technology that relies on the use of the Internet such as computers and mobile devices (IGIGlobal, 2018). Whilst connectivity can be defined as “the state or quality of being connected” (Dictionary 2018). Digital Connectivity as a whole is an important macro trend. “How people connect with others, with information and the world around them is being transformed through a combination of technologies” (Espinel, 2016).

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EVOLUTION

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The origin of the trend Web by Tim Berners Lee would allow everyone, and collaborate across

can be tracked back to the creation of the World Wide in 1996. Tim imagined the web as an open platform that everywhere to share information, access opportunities geographic and cultural boundaries (Berners-Lee, 2017).

Apple launched their first smartphone. The release of their first iPhone helped drive online connectivity, as well as the smartphone market. Since 2007, Apple has released 11 generations of the product. “iPhone sales have risen strongly over the years, from around 1.4 million iPhones sold in 2007 to more than 216 million units worldwide in 2017” (Statista, 2018).

2014

This was a landmark year for growth across all things digital, 3 billion people now had access to the Internet, compared to 25 million people in 1994 (Juniper, 2014). “2014 saw the biggest increase in time spent online in a decade, with internet users spending over three and a half hours longer online each week than they did in 2013” (Hutchinson, 2015).

2018

Mintel’s Digital Trends Spring Report (2018) found that 83% of people own a smartphone.

Such high smartphone ownership shows how much of a connected world we’re living in. This in turn has created a ‘technology addicted’ consumer, allowing endless scrowling online.

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11 TREND DRIVERS

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SOCIAL MEDIA “There are 3.196 billion active social media users worldwide” (Kemp, 2018). Social media has radically accelerated and globalized communication and knowledge sharing (Trendone, 2018), therefore driving the Digital Connectivity trend. Interests, opinions and experiences can be shared with others more easily than ever, through social media. Social media sites like Facebook and Instagram are no longer simply trading platforms. LSNglobal (2018) talk about them as the mega-systems of tomorrow, within which most of us will socialise, shop and live our lives. Social media has become an essential part of life online and has in turn driven Digital Connectivity.

Users are paying for social media with their data and, in return, are sent personalised advertising. “86% of Gen Z think of social media first when they think about a digital experience” (WPengine.com, 2018).

Big Data allows social media users to be targeted with personalised adverts, which are more likely to be of interest to them. According to Geer (2017) Big Data and social media are a perfect match.

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GENERATION Z “Technology would not exist without human beings. It is created by humans for the purposes of humans� (Stahl, 2007).

Technology is created by humans for the purposes of humans, those in particular Generation Z. The Digital Connectivity trend is being driven by Gen Z (ages 2 to 19), as this age group have never known a world without the Internet and therefore have a love for all things social. They are the first generation that has only known a mobile world. According to research carried out by Globalwebindex (2018) Gen Z devote on average around 3 hours to social media each day. They are the most connected generation and are constantly demanding more from brands and companies, which is in turn helping drive the trend.

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PERSONALISATION Technology is constantly evolving in order to please consumers and is therefore becoming increasingly personal. Consumers have endless amount of choice, there is a shift occuring in what people expect from brands, which is in turn is helping drive the Digital Connectivity trend.

Research carried out by WP engine (2018) found that 46% of Gen Z would stop visiting a website if it didn’t anticipate what they needed, liked or wanted. People want to be entertained in new exciting ways, they want both predictive and highly personalized digital experiences. “80% of consumers are more likely to do business with a company that offers personalised experiences” (Hebblethwaite, 2018). Brands are getting continually better at predicting what consumers want before they know themselves, making online shopping and experiences more enjoyable and convenient.

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EXPERIENCE ECONOMY

Experience Economy is all about how “a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event” (Pine and Gilmore, 1998). Brands are being forced to create exciting experiences in order to gain consumers attention as, “attention is one of the most important currencies of the 21st century” (Trendone, 2018).

Advancements in digital technology have allowed brands to create innovative experiences through online platforms, such as websites, apps and social media. From voice assistants and smart interactive kiosks to Augmented and Virtual Reality, people are looking to shop in new, digital ways. Tan (2018) talks about how online and offline are merging when it comes to retail strategies. This is tied directly to evolving consumer needs and innovative technologies that combine the two concepts. The experience Economy is driving connectivity between the brand and consumer, creating a more personal and exclusive experience.

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17 TREND CONSEQUENCES

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THE ADDICTED CONSUMER Gen Z are becoming increasingly engrossed in a digital world, has produced a level of dependency on the Internet. Research found that “22% of Gen Z could only comfortably go less than an hour without accessing the Internet” (Wpengine, 2018). To Gen Z there is no ‘online’, their online and offline worlds are constantly being blurred and they’re becoming addicted to the screens in their hands. Their connection to the online world is so seamless that their human experience is their digital experience, and they are reliant on it. Technology has caused a massive shift in peoples needs, they no longer crave intimate relationships and the feeling of accomplishment that Maslow talks about in his Hierarchy of Needs (see Appendix 1) but have new found needs that rely around technology and constantly being connected through their mobile devices. “Almost 2 in 5 people spend time socialising online than they do face to face” (Bennett, 2012). This shows the dependence the ‘addicted consumer’ has on their phone, as it is an essential part of their day to day life. This can have harmful consequences on the individual, for example loneliness, laziness and poor social skills. As well as a lack of understanding of reality.

TOO MUCH CHOICE “We live in a world of increasing choice. We are flooded with absurd and obscene numbers of options for just about everything nowadays, and it’s driving people slightly crazy” (Schwartz, 2004). It’s never been easier to find what you’re looking for online and this is heavily driven by technology. There is endless amounts to choose from, with Amazon selling 1,161 kinds of toilet brushes (Porter, 2014). Barry Schwartz (2004) refers to this as ‘choice overload’. Too much choice has a cost and is exhausting for customers as well as contributing to bad decisions, anxiety and stress.

Need or a want?

Shopping online is so convenient. Best-Selling Author and public speaker Sousa (2017) says “we really can have it all, and as customized as we want it”. Customers often don’t hesitate to buy, but do they actually need it? It’s often a want more than a need. Fashion retailers like Primark, offer fast fashion at cheap prices that isn’t necessarily designed to last and is therefore extremely damaging to the environment. Too much choice has thus created a very wasteful society. “The average household owns £4,000 worth of clothing, 30% of which have not been worn in the past year. Estimates put the value of this unused clothing at around £30 billion” (Getswishing, 2018). This is having detrimental environmental impacts and “an estimated £140 million worth of clothing ends in landfill each year” (WRAP, 2018). Brands, as well as humans need to rethink their responsibilities as the planet is struggling to overcome the damages being done.

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SOCIAL MEDIA WELLBEING Instagram is becoming a trap, writes Emma Hope Allwood (2018), there are certainly dark sides to social media, whether it’s privacy, the addictiveness or trying to keep up an appearance to get more likes. A survey carried out by the UK’s Royal Society for Public Health “linked use of these platforms to anxiety, depression, lack of sleep, worries about body image and ‘FOMO’ or fear of missing out, with Instagram being the most damaging platform, especially amongst women” (RSPH, 2017). Social media is constantly promoting ‘perfect’ lifestyles, when in the real world this is not attainable. People are getting so caught up in these online worlds that it’s becoming a danger to people’s wellbeing. It is creating lazy consumers as they are more interested in what’s going on virtualy than in reality.

PUBLIC VS PRIVATE

Big data has blurred the lines between public and private. In recent years, big data has become a hot research topic and the increasing amount of it has started to breach the privacy of individuals. Tayeb (2018) talks about the tensions between big data and privacy being more prominent than ever, especially on social media. What companies do with people’s data is uncertain and raises lots of privacy concerns for users, as people feel it is intrusive. With such attention on data protection, a report by Mintel talks about how “All networks must look to increase transparency and provide users with autonomy over their personal information, with clear privacy settings so peopleare able to feel safe when online” (Mintel, 2018).

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21 INDUSTRY IMPLICATIONS

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B E A U T Y

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Digital connectivity has encouraged a complete shift in the way consumers share, discover and explore the Beauty industry. Rapp (2018) talks about there being a growing influence and importance of experiences for Gen Z in the beauty industry. Beauty brands are harnessing innovative technologies to target consumers who are keen to invest in experimentation and discovery. In response to this behavioural shift, beauty brands have had to find new ways to engage consumers in-store and online. Brands have begun to invest in advanced technology like virtual reality (VR) and augmented reality (AR) as a way to showcase their products. AR tech lets users try on products virtually and has helped transform the traditional experience of trying on makeup. “75 of the top 100 beauty brands are now using AR globally to change how products are marketed and tried on by consumers” (Pezzini, 2018). Research by Mintel found that “34% of women are interested in virtual reality apps that allow you to ‘try on’ make-up through your phone” (Khanom, 2018). Brands like L’Oréal, Maybelline, Smashbox and Rimmel all now offer this.

The increasing influence of social media channels has impacted the beauty industry. Cosmetic giant L’Oréal saw social media as a marketing opportunity and were the first brand to sponsor a lens on Snapchat to promote their then new Silkissime Eyeliner. This provided an exciting new way of discovering a product. Today’s shoppers also use social media for product reviews from bloggers, influencers and other consumers. “31% of online beauty buyers research products before buying online” (Mintel, 2017). Technology has posed lots of opportunities for the beauty industry and is becoming increasingly accessible to consumers and not just brands and companies. For example the Hi Mirror, a smart touchscreen skin analyser, that consumers can purchase. It can analyse your skin and identify wrinkles, fine lines, uneven complexion, dark circles and more to provide personalised recommendations from expert dermatologists. This helps people more directly address their concerns, however can have negative impacts as this sort of technology is highlighting peoples flaws.

A limitation to the beauty industry is that it is often wasteful and plastic is being thrown away because the product is no longer suited to the consumers needs. The fact there is “500,000 tonnes of plastic in the oceans” (Ec. europa.eu, 2018) shows just how detrimental this can be. Brands that provide customisation and personalisation help address this mass disposal shame as they provide quality products that people want to keep. Investing in durable, personalised products that are better suited to consumer needs is key to stopping people being wasteful.

However, AR is becoming rather mainstream and brands need to continually engage consumers in new innovative ways.

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F A S H I O N

“If what you’re offering isn’t remarkable in some way, it’s invisible” (Posner, 2011)

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As Digital Connectivity has become more prominent, there has been an essential shift in how people discover, share and shop for fashion. Ecommerce is beating the high street in the United Kingdom, this is shown by a study that found that “55% of consumers shop more online now than they did last year, and on average they buy something online 6 times a month” (EmpathyBroker, 2018). The expectations of fashion and retail can be summarized in three words, everything, easy, now. Posner (2011) talks about the fashion experience being about more than just clothes themselves, but it’s the extras that make a difference and add value in order to boost customer perception of a brand.

Technology has become a massive part of fashion and the retail experience. “Ecommerce retailing has made shopping online so convenient that in store shopping is actually on the decline” (Dennis, 2017). “If what you’re offering isn’t notable in some way, it’s invisible” (Posner, 2011). This backs up the idea that consumers have increasingly demanding needs for brands to live up to, especially due to the rise of digital connectivity. Fashion is fuelled by social media sharing, “as of January 2018, the total number of active social media users amounted to 44 million” (Statista, 2018). Consumers often look to social media sites like Instagram for brand reviews and blogger influence. “Within fashion, Instagram remains ‘the place to be,’ accounting for about 50% of brand posts, according to a 2017 report by Exane BNP Paribas” (O’Connor, 2018). It is easier than ever to shop for clothes online. Along with convenience, brands offer the latest styles at reasonable prices which is admirable to many consumers. However, the fact online shopping is gaining so much momentum is causing consumers to become lazy and fully absorbed in their devices.

RETAIL Even in a digital age, consumers still enjoy shopping in stores. “When a ‘preferred’ shopping experience is implemented, whether it be changing how someone checks out or how they interact with sales associates, 63% of people claim they will shop more” (Wilson, 2017).

Burberry have integrated elements of their online presence into their physical stores, through software that allows virtual trying on of clothes, or live links to events in other stores. Technologies, especially those powered by AI and AR have played a major role in merging the two shopping experiences through their ability to drive more interactive, exciting and personalised experiences. “In fact, 55% of retailers are adopting AI to optimise customer experience” (Visual Retailing, 2018). Dior have also created its own virtual reality headset, which offers the ultimate immersive experience with backstage access to its latest runway shows. “Optimizing in-store digital experience helps fashion retailers increase revenue 25%” (Gonzalez-Rodriguez, 2018). This creates a massive potential for lots of brands that aren’t already making the most of technology and it’s important for brands to cater to changing consumer needs. Trendone (2018) predicts that pretty soon, not only will everything seen online come with a buy now button but technology will make the entire world shoppable.

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ENTERTAI N M E N T 27

Technology has helped drive the Entertainment Industry, whether it’s VR, music and TV or online games and apps.

The entertainment industry has used digital technology to provide consumers with more exciting, fun and personalised entertainment. VR is a fully immersive, interactive experience that was released in 2016, but has picked up pace in recent months with other industries like fashion picking up on this. When it comes to VR experiences, seeing is believing. “Of those that have tried the technology, 79% seek to try it again” (Leibach, 2015). A current limitation with VR is the price, as the average headset is £300, making it not very accessible, “54% of people have no plans to buy a virtual reality device at all” (Morris, 2016). Another threat is that it’s actually taking away the social aspect of entertainment, as it immerses you fully in your own surroundings.

Other ways the entertainment industry is using technology is through what people are watching. YouTube and Netflix have taken over TV as they are catering to the changing shift in how people view and interact with one another. “On average, Gen Z spent 34% of their video time watching YouTube, compared to 27% watching Netflix, and 14% watching live TV” (McAlone, 2017). People enjoy listening and watching videos as a form of entertainment, whether it’s on their laptop or mobile phone, it’s convenient and can be taken anywhere and watched anytime. Netflix has also become increasingly popular in recent years. Netflix uses big data to provide personalised recommendations for consumers in order to improve user experience. “The recommendation system actually influences 80% of the content we watch on Netflix” (insideBIGDATA, 2018). Consumers are also wanting increasingly immersive entertainment resources that are exciting and engaging. Black Mirror are set to release an interactive episode on Netflix, where viewers can choose their own path.

CD’s are a thing of the past, streaming music is the past, present and future. “The digital music industry has been gaining momentum over the last decade thanks to the consolidation and growth of a wide range of digital platforms for accessing and playing digital music, such as streaming services and downloads” (Statista, 2018). Digital Connectivity has really transformed music, Shazam has allowed customers to download a song as they hear it, no matter where they are. Streaming services like Spotify use digital connectivity to give consumers unlimited access to songs. Spotify have “more than 100 million users” (Marr, 2017) and have a history of pushing technological boundaries. They also use big data to personalise entertainment as it allows them to offer personalised adverts and suggestions. A current limitation to big data lays with privacy concerns and the dangers with brands getting hold of vast amounts of data. Do Spotify know when and where you’re listening to songs? It’s food for thought for brands as these types of questions are a key concern for lots of consumers.

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FUTURE THINKING

Due to the fast pace of Technology, it can be expected that even more changes are to come. Throughout the report it’s clear the impact the trend has had on consumers, brands and industries. The report has addressed the problem of the ‘addicted consumer’ and how social media and technology can be damaging to individuals. Consumers are more interested in what’s going on virtually than in reality. Future developments could either work with or against this. VR has very much worked with this, by providing experiences that are very much isolated and antisocial.

Digital Connectivity has been heavily driven by Gen Z, the first generation to only know of a digital world. These are the generation brands should be listening to, as they are the consumers of the future. According to Weber (2018) Gen Z want to innovate in ways that have not been seen before. This in turn provides opportunities for brands and companies. The cultural shift in consumer behaviour has caused brands in all industries to alter their marketing strategies.

Through exploring Digital Connectivity and it’s effect on consumers in society and industry, some possible research topics have been drawn out of the report and have helped generate ideas for future research. The first idea is looking at the digital experiences consumers are craving from brands. Whether it be through AR and VR, apps and social media, or in store and online. But what are the actual ways in which consumers are benefiting from technology?

Another interesting research area would be the effect Digital Connectivity is having on the High Street. Technology has caused for a massive shift to occur in retail, with Debenhams set to close 50 stores according to Hodgkin (2018).

What are the positives and negatives of this? Is the High Street a thing of the past, and is digital retail the future?

Lastly the final possible research point is about the increase in owning goods amongst consumers. How and why has digital technology increased consumer consumption? In particular focusing on Millennials and Gen Z, these are key demographics, as they are techy savvy and constantly craving innovation and new experiences.

CONCLUSION

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Digital connectivity is a trend that in recent years has become more prominent than ever and is influencing how society, consumers and brands act. It has allowed for increased connectivity, especially between brand and consumer. Brands that have responded to this cultural shift quickly, due to the rise of technology, have been most likely to succeed. Social media is present across all sectors as it’s influencing consumers and how brands advertise and market their products.

Throughout the report it is clear that brands need to be aware of what’s driving the trend in order to get ahead of the game. In a digital age, consumers have increasingly demanding needs. The cultural shift has been further driven by Generation Z and their constant desire for innovation, excitement and connectivity. Brands have responded to these needs by providing consumers with new digital experiences that are new and exciting. Consequences of the trend are also prominent throughout the report. Highlighting the dangers of technology, such as addiction and convenience of online shopping which causes people to over consume. Brands have responded to the cultural shift in consumers behaviours by using technology like AR and VR to create digital experiences. This is seen across all industries, including beauty, fashion and entertainment.

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APPENDIX Appendix 1

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