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Jul 17, 2016

How Millennials created a Brexit world

In today’s Brexit world, Millennials (Generation Y) are questioning not only the political order they grew up in, but the social and commercial frameworks their parents forged for them.

Generation Y has grown up with the high hopes of their parents, added to the expectations of an elite political class. In addition, Generation Y defined the world of online and learned to know how to challenge and question the order of their world. Generation Y is the generation that grew up with Napster, MySpace, Pokemon,  Oasis and Blur, websites for hobbyists, email and torrent, raves, ecstasy and technology

In their teenage years, this global cohort looked at the social norms, questioned the natural order and challenged what they saw. In the UK, Generation Y was the first to go to college with a student loan, they lived through an expanding EU, they saw the end of the Eastern Block and were customers of a University education system with lowering points of entry. This was the generation who recognised that they could have an alternative persona online, whilst presenting a very conservative appearance to the physical world. They loved their tattoos, Robbie Williams and David Beckham. These were the years of celebrity power.

In the online world of the 90’s, 2000’s and 2010’s, you could experiment with relationships, ideas, social practices and divergent habits. The explosion of online adult sites was quickly followed by online gambling and betting. Where did online poker playing come from and when did it become socially acceptable for celebrities to be hailed as Poker role models?

In the last 30 years, a quiet revolution has been growing which 3 weeks ago, crashed onto the UK harbour walls in the form of a Brexit tidal wave of social upheaval. In the last 3 weeks we have seen the murder of an MP, a change in our Prime Minister and overnight the UK Government has moved from the centre-left to the far right and back again to the centre line of British politics.

All UK political parties are now trying to find their purpose, whilst thrashing around in the quicksand of social upheaval. Our political leaders are being questioned like never before. Our business leaders like Mike Ashley and Sir Philip Green are being hauled in front of Parliamentary Select Committees to explain their success to interrogative politicians. Many of these political advocates are career politicians who have frequently underestimated what is needed to lead successful entrepreneurial commercial organisations.

At the turn of the century, the Houses of Parliament changed the way UK Plc did business. Times were good, credit was strong and shoppers bought ‘stuff’ on the tick. Entrepreneurs simply adapted their business model to reflect the change in rules. Now times are tough the political class are questioning the moral code of Entrepreneurial Britain, because they, the politicians could not for-see how the rules they created would be used.

The lesson here is that we need to remember not to blame those who abide by the rules but to ask the rule makers if the legislation was correct in the first place. More fool the rule makers for not having the where-with-all to test the rules before they became common practice.

Let’s break it down further.

The Millennial generation is now in their 30’s and 40’s and are actively pursuing their online lifestyles with their family and friends. So the quiet revolution continues.

Generation Y will be followed by Generation Z, a generation that grew up watching their Millennial parents change the world. Generation Z saw their parents working zero contract hours, having their pension ages increased and paying more for their health, old age and their children’s education. Generation Z will be the product of the overworked, underpaid disadvantaged Generation Y’s who won’t be able to leave their children a cultural, personal or financial inheritance.

Generation Z will be risk adverse, anti-big society and anti-big business. They will be heavily invested in social causes and vocational careers. The entrepreneurs of tomorrow will build small local and community-based businesses. The next Bill Gates, Richard Branson or George Soros will not come from Generation Z.

92e798ad-d458-41a8-b3b8-179f6d0cb5c1-originalI recently watched a TEDtalk entitled the Four Horsemen by Scott Galloway which advances the belief that the people will shop in 5 online stores. Facebook, Amazon, Microsoft/Linkedin, Apple and Google. The site we use today to buy, keep in touch, transact and confirm, will be bought by one of these companies. Those online businesses not purchased, will die.

If you think Galloway’s analysis is too far-fetched let me promote a not so fanciful notion. How we use shopping centres in the future will change. A recent article in the Miami Herald confirms that a developer has decided to ditch plans to build the Miami Worldcentre super mall and resubmit the application to include a High Street/ Main Street format.

What the plan conspicuously doesn’t include: designated big-box structures for the two department stores, Macy’s and Bloomingdales, that would have anchored the original scheme. The new blueprint reduces the total amount of retail and restaurant space to about 430,000 square feet from the originally planned 760,000 square feet.

Read more here.

In the future, grocery stores will be more artisan in look and feel, with alternative protein foods the order of the day. Big production will give way to locally sourced and ‘hand-made’ products. Mass produced brands will need to be repositioned to meet the needs of the shopper demanding authentic, healthy alternatives. Generation Z will want to buy close to the source, will want to see what is being grown and where. Authenticity will be key.

But don’t assume we in the UK will only demand these product types. If we have learned anything over the last 3 weeks, it is that we Brits don’t like being told what to do, even by those who give us money. Just ask those on benefits who voted ‘Leave’ in the Referendum. Sunderland, Mythr Tydfil or Bolton all rejected the EU.

In his article “How Sunderland became a poster child for Brexit“. published in the New Statesman July 8th, 2016 Graeme Atkinson writes:

The reality is that just over 150,000 jobs in the North East rely on trade links with the EU. With high unemployment there is no longer a prosperous evening economy in Sunderland, either. It’s common for metropolitan areas to see their inhabitants spilling out of workplaces into bars and restaurants, spending their hard earned money. Unfortunately after rush hour, the city centre is deserted. It wasn’t so long ago that Wearsiders didn’t even have a cinema in which to enjoy their leisure time.

Why did these towns and cities vote for Brexit? The answer is simple…why not? Everything previously tried to regenerate the hope and aspirations of these blue-collar towns had failed.  The growth in multi-generational benefit dependency has bred an isolated, local culture. One that is understandably resentful wealth, the establishment and privilege, and that is fearful of a dwindling opportunity.

With the Brexit vote, all social classes had their say. It gave the opportunity for historical political affiliations to be discarded and for the individual vote to count for something. It’s all about personalisation today.

This vote wasn’t about a lack of education, opportunity or social class. It was about the national perception that UK society was being crucified by EU Big politics, Big legislation and Big companies. As Napoleon once famously said ‘Britain is a Nation of shopkeepers’… and we Brits like that. Small is good. That’s what we told the world on Referendum day.

So the chances are, that preaching about what we can eat will fall on deaf ears. The shopper will still demand ‘fun foods’ and sugary drinks because our society likes these products. Let’s hope the government doesn’t try to impose a sugar tax on the British population. It is likely to be met with another “not so quiet” revolution.

If it tastes good, it will have sugar or salt or fat in it (or all three). You can’t tax taste, as former Chancellor George Osbourne found out when he tried to impose a tax on pasty consumption. Just ask Coke what reaction they got to a well-intentioned recipe change. How quickly did they bring back Coke Classic?

We have been brought up buying food that becomes cheaper, year on year. Generation Z will be the first generation in 30 years to experience food inflation as a norm. Generation Y parents changed their world and some would say, not for the better. Cheap is not always good. They grew up with online and they broke industries with online. Just ask Napster how successful Generation Z was.

When Steve Jobs and Apple gave Generation Y a legitimate voice, with the launch in 2001 of the iPod, and iTunes in 2003, downloading became mainstream and Napster (which was free but illegal) died. Not through litigation, but because Apple made the downloading of music easier, more socially acceptable, cheaper, more adaptable and faster. Once that battle had been won, the Millennials headed for the next leisure industry on their global consumption radar – Hollywood. Just ask EMI, HMV and Sony what happened to the DVD business.

During the recession, the Generation Y Yummy Mummy and time stretched MAMIL Dads (Middle Aged Man In Lycra) discovered Boot camps in the local park and mountain biking. In so doing they broke the health club industry resulting in health club consolidation. What happened to Esporta, one of the UK’s largest health clubs? They were brought out of receivership by Virgin Active. Golf has fallen out of favour, with golf courses now being sold off for housing. It takes too long to play. “Golf is a waste of a good walk”, so the Mark Twain line goes.

So what will Generation Z change? Where will the BBC be in 5 years? Will ITV still be independent? It’s no longer about the network, it’s about content. ITV has fabulous content but a limited global reach. Where did Netflix come from? Ask Amazon Prime how much money they have in their war chest to grow their business. Why did Clarkson, May and Hammond join Amazon Prime? Was it the money? Of course, it was, but it was also about brand investment. The BBC’s relaunch of Top Gear failed. Let’s hope the launch of Grand Tour proves more successful. Amazon is potentially a stronger global platform for this talented presenting team.

Latest estimates calculate that Netflix and Amazon Prime each have in excess of $5 billion each to build their business globally. It is rumoured that Amazon is looking to buy a large supermarket in each country across the EU. They want real estate to bring their brand closer to home. The Amazon UK play with Morisson’s and Amazon Prime in London may just be a fact-finding mission.

My guess is retail banking is the next industry for a shakeup. Early adopters of Paypal are questioning “why so long?” Amazons ‘1-Click’ proved that credit cards had to go contactless. Real money is on the decline. Bank branches are falling into the ‘so what category’, whilst mortgages are becoming a shrinking finance vehicle. In the UK due to legislation changes, affordability tests and pay to loan ratios, mortgages are on the decline. Yes, the size of mortgages that are being approved is rising, but the number/volume of mortgages applied for has stagnated. The bank of Mum and Dad is fuelling buy to let mortgages, but the legislators have this segment in their crosshairs. Mark Carney wants to cool this sector down to reduce price inflation. (This link takes you to the FCA.org site)

Start-ups are toying with crowd-funding and private investors to pump life into their dreams. The bank loan is becoming a thing of the past. The cost of business entry is reducing and the need for institutional investors for the SME sector is declining. The regulators are not encouraging banks to take risks with the commercial sector (we all remember 2008), and the desire of the entrepreneur to float their business is becoming obsolete. Selling your going concern to another company, private equity house or overseas investor is the order of the day. In the UK service economy, we don’t need huge offices, we just need to be online.

Let me ask you this question, how many screens are in your handbag, jacket or bag right now?

As I sit in my favourite Starbucks, I am using my MacBook Air to write this article. Next to me is my iPhone 6+, hooked up to the Starbucks complimentary wifi, allowing me to listen to BBC Radio 5 live‘s, broadcast of the final hours in the office for Prime Minister David Cameron. I am accessing this broadcast for free on my  Tune In radio app.

In the corner of the laptop, I am also streaming Bloomberg (also free) as they cover the arrival of Theresa May at Buckingham Palace as she becomes our next Prime Minister.

This is a journey of some proportion, in that the trip to Buckingham Palace acknowledges that the Millennials are change agents. When Theresa May confirms to the Queen that she can form a majority Government, the UK will have completed its quiet revolution.

My guess is that the only standout point made from my words above is, that I use an iPhone 6+.

“Yeh, I know, ‘sooooooo not fashionable” …I went ‘large’ on the phone to get rid of my iPad. Why have 3 screens when 2 will do? My iPhone acts a radio, library, camera, TV, cinema and workstation. With Siri, who needs to type? Online storage, no problem. Dropbox does it all. With blue-tooth headphones, I have a fully operational call centre in my pocket. That’s progress.

One day the laptop will be dead, hence the rush for cloud applications on high definition screens. Small isn’t good anymore, adaptability is the key. That’s what Generation Y and Brexit have taught us…to add value, change is necessary.

The downside to this coffee shop lifestyle is that another home office desk jockey is sitting at the table next to me. Not a problem normally, but today my fellow “Starbuck-ian” is whistling along to “December 1963 (Oh what a night)” by The Four Seasons, that is being piped by the coffee shop!

Time to return to the office… you can’t have it all… yet! But Generation Z will expect it all …online.

Where will your brand be?

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David Edwards: Engagement Director

About the Author:

David co-founded Big River Solutions with his wife Christine in 2004 to address the emerging relationship between CPG technology, operational practice and process within category management and shopper marketing disciplines. Traditionally a siloed community with any CPG organisation,  David believes category management and shopper marketing value should be central to any client consumer engagement program.

Since its formation, Big River team has become a trusted advisor to many clients across Europe and North America. Latterly, the Big River team has extended to Africa and Australasia. Next stop the Far East!

For an informal chat in the first instance call David

David can be booked for speaking events, after dinner speeches and sales conferences.

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