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Cotton USA – What customers want

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Delegates from along the global cotton supply chain – from the trade to cotton farmers – recently gathered in Berlin for the first global Cotton USA Brand & Retailer Leadership Summit. The speakers seized the opportunity to discuss central issues and challenges facing the supply chain.

As this event progressed, it became increasingly clear that partnerships along the supply chain are gaining importance. Rising expectations as regards CSR and sustainability are forcing retailers and brands to familiarise themselves with upstream processes. Be it brand or producer, the key to success in today’s world is understanding customers’ needs and what they believe is important. This point was repeatedly raised in the presentations and panel discussions.

Keynote speaker Dr Patrick Dixon made this point most emphatically in his paper entitled “Take hold of your Future”. Considered one of the 20 most influential living futurists of our time, Dr Dixon and his company Global Change consult many of the major multi-national corporations across the world. Dixon fascinated his audience with strategic considerations on global changes and demographics, highlighting new challenges in the global supply chain, whilst describing sustainability as a central aspect of every company philosophy. He also discussed changing procedures and priorities in consumer marketing and communication.

Dixon described “speed” and “customer service” as two of the most striking challenges of our era. The speed at which we work and function is rapidly increasing all the time. New technologies and the internet have contributed greatly to this development. Dixon: “Companies lose 80 percent of their customers in the first 20 seconds of waiting on online portals.” This time window is quickly becoming even tighter as younger generations growing up with the iPad do not accept waiting as an option.

He described demographic data as a key to success, encouraging firms to channel it into corporate planning. In this context, Dixon stated: “This data gives us all the important information we need to predict the future of any country. One billion children are currently on this planet and it won’t be long before they are adults.” Consumer needs are rapidly changing whilst the developing countries will encounter growing urbanisation. “Over the next 10 years, 300 million Chinese adults will move from the country to the cities.”

Age structures are an additional factor. Whereas Turkey has a population of 75-80 million and more than 18 million children, Europe’s population is dwindling and aging. These aspects have great implications for all companies. This is why every enterprise needs to be aware of how its target groups are changing, whilst developing its own success strategies and adapting to the morphing needs of its customers. Dixon showed that the devil is in the detail, using clothing labels as an example: Older people often struggle to read care labels even with reading glasses because the print is far too small. This is one instance, he says, where companies can adapt to customer needs.
Modern technologies change markets

Online sales are on the rise all over the world and mobile phones are increasingly being used for online transactions. “50 percent of all online purchases in the UK are now ordered on cell phones,” Dixon revealed. The mobile world with its infinite number of apps is opening up all sorts of opportunities for location-based marketing. Knowing what potential customers do, how and where they spend their time, helps companies understand their target groups and develop new products accordingly.

It is, he continued, immensely important to know what consumers are thinking and feeling today and tomorrow, as well as which products they will be wanting tomorrow even if they do not know them today. Apple has pointed the way forward here. The future of successful marketing, he continued, lies in emotion. He claimed that cotton is an extremely emotional fibre found in all aspects of our lives.

This is a point that both trade and industry should use to their advantage, focusing on the emotional facets of cotton as a natural fibre. Sending out positive emotional messages is the most compelling way to appeal to consumers. The objective is to highlight the emotional bonds between the brand/trade and the consumer. Bonds, or solid and enduring partnerships and collaborations, are likewise of central importance for a successful future supply chain strategy, particularly in times of rapid change and uncertainty.

Lianne van der Wijst, GFK Holland and Kim Kitchings, Cotton Incorporated/USA, shed light on the global apparel and home textiles market from the consumer’s point of view, highlighting how demographic findings on the growing world population or increasing urbanisation can deliver important clues to market trends. They also underlined that the proportion of over 65-year-olds is on the rise (around 29.6% by 2060, GFK). Tomorrow’s 65-year-olds will clothe themselves more youthfully, always on the lookout for modern styles. Economic factors have an enormous influence on consumption.

Whereas Europe’s consumer significance is on the decline, interesting developments can be observed in other regions of the world. “Following the rise of the BRIC states, people’s attention is now shifting to the MINT states,” says Lianne van der Wijst. The MINT states are Mexico, Indonesia, Nigeria and Turkey. According to market researcher GFK, France, Germany and the UK boast the highest fashion sales in an otherwise stagnating Europe. As globalisation continues unabated, the trade landscape is also changing, says van der Wijst. Global players are taking over the global markets and changing the faces of major cities.

This is creating a whole host of new opportunities for greater individuality in rural areas. The growing clout of new technologies is radically transforming consumer behaviour. According to GFK, online purchases are drastically on the rise above all in Germany (22%), the UK (15%) and France (10%). Buying decisions are being made on the suppliers’ online portals, even if the actual purchases are subsequently secured on the high streets. The GFK has found that the influx of additional technology and information has created a new species of consumer, dubbed the “Xtreme Shopper”.

This kind of customer wants absolute control and is determined to win the battle for the best deal every time. He is competitive and optimistic, and always online. Accounting for 60 percent, the Xtreme Shopper’s smartphone is his most important shopping tool (GFK study). The Xtreme Shopper has already become a majority group in the Asia-Pacific region, including China and Japan. In the US, this group accounts for around 26 percent, compared to 8 percent in Germany. Xtreme Shoppers rely heavily on the opinions and comments voiced in their social communities and are more likely to forge deeper bonds with their preferred brands and stores.