The clash between an old and new economy is accelerating while humans continue to exhaust the planet. Young people are increasingly seeking a haven in a digital metaverse; cities and the elderly are being left behind feeling lonely. What are the consequences for consumption? Jorg Snoeck outlines the retail trends of 2022.
What are the key conclusions after 2021?
“In 2021, it became clear how dependent we are on a globalised value chain, in which production has moved to foreign countries. For example, coffee beans have reached their highest price in ten years due to problems in the supply chain and crop failures caused by the changing climate. In the coming year, companies must brace themselves for disruptions in the global chain, as they are becoming inevitable. Scarcity is looming.
Food will undoubtedly play a central role in the future. The world population continues to grow, which means more production and more carbon emissions, but soon there will not be enough farmland. We are exhausting the earth, and a battle for its limited resources is developing. Chinese President Xi Jinping’s new Silk Road is intended, among other things, to transport food to Asia as quickly as possible – an investment of more than a thousand billion dollars that must now start to pay off.
Our endless drive for consumption, with more and more things being manufactured, bought and thrown out, is driving the world to a breaking point. Humanity has developed the capacity to self-destruct. Along with global economic developments that push us beyond all geographical and natural boundaries, the boundaries between people and nature are also being crossed. The loss of wildlife ecosystems, demographic developments and global warming are all contributing factors. Our entire food system needs to be overhauled, as we clearly demonstrate in our book The Future of Food.
So what could and should change in the supply chain?
“The relationship between the business world and the planet together with society needs to be restored. After all, we are one ecosystem. That is the fact of which critical citizens are becoming increasingly aware. Companies that fail to take responsibility will come under pressure: talent, customers, public opinion, legislation and activist shareholders will turn away from them.
Especially the youngest generations – Gen Z and Millennials, the consumers of the future – are realising that the consumer capitalism of the past decades has left society with a hangover. They do not want to bear the burden, but they do it nonetheless. Things have to be different in the future, moving away from mass production and mass consumption, away from waste and dissipation.
We are on the eve of a complete reset. Transparency seems to be the key to opening the door to a fairer and more sustainable system. In the complicated food chain, blockchain can help make great progress in the traceability of products, and thus in transparency, food safety and fair trade. The technology has the potential to profoundly change trade relationships in the long run.
Just imagine what the impact of smart contracts could mean for the relationship between farmers and supermarkets, between coffee farmers and coffee roasters, or between A-brand manufacturers and purchasing centres. More than that, the system would even allow for direct trade between producer and consumer. In other words, it is a proper paradigm shift.”
Apart from blockchain, which technological developments will be leading in 2022?
“The word of 2022 will undoubtedly be ‘metaverse’. The new internet will be a virtual world, where users can immerse themselves entirely and fulfil their human needs. Facebook is going all out, with its new name Meta. Their employees already hold meetings using virtual reality headsets by default. For younger people, popular games such as Fortnite and Minecraft come closest.
The metaverse represents a digital universe that is increasingly merging with the physical world: luxury brand Balenciaga already designed clothing that can be worn online, in the game Fortnite, as well as in real life. The collection is for sale both in a virtual store and brick-and-mortar stores. In addition to a physical identity, each person will have a digital shadow that can become just as important as the person of flesh and blood.
Could there be people who live entirely in the metaverse? In Japan, there are already ‘hikikomori’ who do not leave their room for months at a time. That will become easier and easier: the metaverse will become a place where you can work, make a fortune with cryptocurrencies and even invest in virtual real estate. Even possessions and art are going digital: in 2022, we will be bombarded with virtual gadgets that will appear on the market as NFTs. With this certificate of authenticity, virtual products gain value because they can be traded. For example, Quick, a Belgian fast food chain, has already sold its secret Giant sauce recipe as an encrypted NFT.
The metaverse may well be the most significant disruption humanity has ever experienced. But who will seize control of each person’s digital shadow? The race is on between the technology giants from the United States and China. After the battle for world domination, the battle for virtual world domination is now breaking loose.”
Meanwhile, what will the physical world look like?
“Those who can afford it will swap their flats in the city for a house with a garden in the suburbs and still commute to the office once or twice a week for meetings with colleagues. Cities are in a tight spot.
Digital nomads can even work from anywhere. They emigrate or work online from regions where the quality of life is higher, and costs are lower. This could lead to a brain drain: the younger generations, so crucial in securing our pensions, are leaving. Who is going to pay for that? Belgium now has 11.5 million citizens, of whom only 4.4 million work. Over a third of Belgians live alone, and only 28 % of couples have children. So no one is on standby to take care of the growing group of elderly people, let alone maintain them.
It is becoming a vicious circle because, to put it bluntly, people are living too long. If they want to keep up the same standard of living, their pension will not suffice, and they will have to rely on savings. That means fewer inheritances for the next generation and less inheritance tax for the government. Or they will have to consume less, but then they could become lonely. Ironically, it is precisely those lonely elderly people who are often lured into xenophobia or extremism, while immigration is desperately needed to guarantee their pensions. Strong inflation will accelerate the impact next year.”
Some fear that high inflation could lead to a wave of bankruptcies. Is that going to happen soon?
“Unfortunately, 2022 will be the year of bankruptcies. As we have had two years of Covid, it will inevitably take its toll. Whereas in 2021, the economy and many companies were kept alive artificially by relief measures and periods of catch-up shopping, 2022 will be the year society will have to wake up from its coma. What I already predicted in 2020 will sooner or later come to pass: the support will dry up, and things will start crawling out of the woodwork.
The retail and hospitality industries will continue to be the most affected. A wave of bankruptcies will wipe out employment, which in turn will hit a large section of the population that had already been struggling. Hospitality and retail workers are already a very vulnerable group, characterised by high insecurity and low wages.
For society, the consequences are substantial since at least a third of the working population is employed in these areas. The result: an increasing gap between rich and poor, further polarisation and a thinning out of the middle class. In the long run, some even expect that the Western middle class will disappear altogether, while that in the East continues to grow. The power – and the market for brands and retailers – is shifting.”
A tough pill to swallow. Do you also see hopeful evolutions and signs?
“Certainly, R&D and system modification can save the world’s population. The World Expo in Dubai is a good example. The Netherlands is exhibiting a piece of technology that takes the whole world by surprise. The Dutch have designed a system that can extract 1,200 litres of water from the air so that an ingenious system will eliminate the need for air conditioning inside. On top of the dome, edible plants can grow thanks to the diffusing of the collected water.
With this solution, the Dutch provide a sublime example of system change. Suppose you can produce food without being dependent on soil or climate. You would get a completely different food system, especially if automation means that even people are no longer needed.
Another example of system change is ‘the Great Green Wall’, measuring 8,000 km in length and 15 km in width and stretching across the entire width of Africa (eleven countries). It aims to combat global warming and desertification. The Great Green Wall brings coolness, jobs, food and hope to the local population. They will not have to emigrate, unlike the growing numbers of climate refugees that 2022 will also bring.
What is the road to recovery for retailers?
“New business models are generating increasing friction in the retail landscape. Meal delivery companies such as Deliveroo and Takeaway.com may even have to defend themselves in court, as their way of working is not in line with how it has been done for decades. Joining them now are Gorillas’ express delivery drivers, the Chinese and soon, perhaps, the Czech online supermarket Rohlik. More and more newcomers are also targeting the Western European grocery market, which ‘old-fashioned’ supermarkets still dominate.
The gap between an ‘old’ and ‘new’ economy is growing, with traditional companies finding it increasingly difficult to catch up. Consumers, too, have become accustomed to a new, technological world since the start of the coronavirus pandemic, and these new habits are lingering. For example, e-commerce experienced the greatest growth among older people and people who had never ordered online before. Meanwhile, consumers expect nothing less than complete ease of use, fast service and a personalised experience. If the traditional players want to keep up, takeovers and collaborations will become inevitable.”
