A Look Ahead: Three Mega Trends to Watch

Rising costs, changing customer demographics and the privacy paradox will continue to impact merchants in the years ahead, said Chris McDonald, executive vice president and general manager, North America, at marketing solutions company Abacus. He offered tactics to help alleviate the impact of these trends on your business.

1. Rising cost structures and low inflation will continue to put pressure on merchants. Energy, healthcare, postage, paper, fuel -- all are adding to your costs, McDonald said during his talk “Charting an Upstream Course” at the New England Mail Order Association’s fall conference, held in Groton, Conn., last week. Compounding these cost increases, consumer discretionary income is starting to decline.

What does that mean to merchants? “The status quo won’t work,” said McDonald. “Your operations and management principles must change. Efficiency in operations is now, more than ever, a business advantage,” said McDonald. He believes this is one of the driving forces behind the industry’s recent spate of merger and acquisition activity.

To make your operations run more efficiently, he offered the following tips: “Challenge everything you do. Make your vendors accountable in order to gain incremental value. And measure performance to gain insight into the full economic impact of your actions.”

2. Customer demographics will continue to change, he noted. For example, by 2015, caucasians will make up 65 percent of the U.S. population, down from 74 percent today. Hispanics will account for 45 percent of the population growth by 2010. And by 2015, only 20 percent of U.S. households will be the two-parent variety.

“How is your company reacting to these changes?” he asked rhetorically. “Are you ignoring them or embracing them?”

3. Consumers’ call for data security coupled with their cry for targeted, relevant messages equals a real dilemma for marketers, he said. “And yet it’s imperative for marketers to tackle this challenge. Consumer privacy and data security are key issues in our industry, and I don’t think enough marketers pay attention to them,” said McDonald.