The new demand-driven economy is changing the rules of the game.
Massive demographic and socio-economic shifts are fundamentally transforming the world of consumer behavior in Israel and across the globe…
The new demand-driven economy is changing the rules of the game.
Massive demographic and socio-economic shifts are fundamentally transforming consumer behavior in Israel and around the world, and in turn are impacting the way goods and products are produced and moved.
Business owners who wish to remain influential in their field must internalize these changes in order to stay relevant and competitive.
The transformations taking place in the market can be attributed to four key phenomena, closely interconnected, which directly influence the decisions that shape our lifestyle:
- Consistent growth of major urban centers
- An era of abundance, empowering stronger purchasing power than ever before
- In the vast majority of households, both parents earn an income
- Inclusivity is steadily increasing
Shopping at the Speed of Light
The changes mentioned above contribute to a constant rise in consumer expectations, presenting businesses with challenges they have never faced before.
These expectations are reflected in areas such as the personalization of products and services, as well as delivery times that, until recently, belonged to the realm of science fiction.
In short, we have developed a desire to buy anything at any time – and to receive it within an exceptionally short timeframe.
Today’s e‑commerce is breaking records on a daily basis.
According to industry research, the volume of goods moving through online channels grows by an average of about 15% per year.
And when we say “online,” we mean everything – not only consumer products such as clothing, electronics, or food. Banking and healthcare are excellent examples of highly personal services that are now making a safe and complete transition to the digital sphere.
It is safe to say that in the not‑so‑distant future, businesses that fail to find a way to meet the absolute demand for efficient online commerce will simply cease to be relevant.
Significant impact on logistics and real estate
The pace of change has therefore become exceptionally fast-paced and dynamic.
While the impact on consumer culture is clear to all of us, there are also other processes taking place in the background that are beginning to influence the logistical operations that are closely tied to commercial real estate.
The growing demands for efficient inventory management, increased production, excellent service, and fast delivery require a comprehensive logistical strategy, with a significant impact on the operational expenses needed to run this complex operation.
Raw materials are becoming more expensive, shipping and delivery costs are steadily rising, and storage along with the maintenance of dedicated facilities add yet another layer of expenses.
At the same time, the salaries of the large teams operating all of this continue to increase, while giants like Amazon are investing vast resources in robotic solutions aimed at reducing the size of their massive workforce.
One more undeniable fact we are all aware of is that real estate prices continue to rise.
The global demand for logistics spaces keeps intensifying, and Israel is no exception.
It is also important to remember that Israel is a relatively small country, and its residents are already among the most active online shoppers.
This reality creates a strong and constant demand for logistics facilities today, yet one that will inevitably remain limited in scale in the not‑so‑distant future.
Where is it all going?
The next stage will be no less interesting.
Large-scale logistics centers for sorting and distribution are already being established, but this trend, too, is about to undergo an interesting shift.
We are all familiar with the story of China and its meteoric growth following the relocation of the world’s largest companies’ production centers to its territory.
Until now, the Far East has been considered the preferred destination for manufacturers thanks to its low production costs, made possible by the availability of cheap labor.
In recent years, the United States, in its constant pursuit of reducing costs and streamlining production and transportation processes, has been shifting significant parts of its operations from the Far East to nearby Mexico.
Western countries and major corporations understand where the wind is blowing and are already working to relocate production itself closer to home – to major urban centers.
Looking ahead, once the challenge of running a leaner supply chain is resolved, what will production and supply chain managers need to focus on in the coming decade?
What is the future of mobile technology?
Will we be able to shop simply by speaking into a device on our wrist, and ensure that customized products are delivered by drone to the roof of our apartment building just two hours later?
Will 3D printing contribute to the decline of certain manufacturing industries?
Will importing raw materials directly into urban centers mark the end of expensive storage of finished goods?
And will cars and trucks drive themselves, making last‑mile delivery easier to manage than it is today?
And if you thought things were challenging today – here’s a small taste of what’s yet to come.