Change

GLOBAL INVESTOR 1.17 —47
To date, the industry still lacks transparency,
but fair cotton standards and labels have
emerged and companies have developed
governance standards to foster sustainability.
In the future, we are likely to see new brands
emerge that will reinvent the business model,
using recycled or recyclable materials, or better
manufacturing standards.
Reshaping the automotive industry
If we apply sustainability to the automobile industry
and the fight against climate change
and pollution in this case, we can expect millennials
to favor electric cars over diesel cars
and shared cars over owned cars.
The emission scandal involving Volkswagen
in 2015 has changed the automotive industry.
Traditional automakers are in private
discussions about the end of diesel in ten
years. Stricter emissions testing leaves no
choice for the traditional carmakers but to engage
in electric cars. Developments in technology
companies such as Google or new entrants
such as Tesla are pushing car companies
to already act today. This year, the manufacturers
have revealed ambitious electric
auto development programs. Daimler raised
its capex program at the start of the year and
will develop premium electric cars, which is a
segment dominated by Tesla at the moment.
Continental, a supplier to German original
equipment manufacturers (OEMs), also just
announced a step-up in capex. Volkswagen
has announced that, by 2025, 25% of its vehicles
will be electric. BMW was among the
first to launch electric vehicles. Companies
have recognized the need to spend money now
and in the years to come.
Autonomous driving is another development.
More and more features are being added
to cars, from autonomous parking to semiautonomous
driving. While legislation hurdles
still have to be passed, we can envisage fully
autonomous driving becoming a reality in the
next decade or so. Given that millennials have
already adopted sharing behaviors, autonomous
driving will facilitate the development of
the sharing model for cars. Again, traditional
OEMs have recognized this development and
are acquiring companies in the sharing car
market to offer such services themselves.
Growth through sustainability
economy. We see spending diverted away
from traditional retail products. The sportswear
industry is benefiting strongly as sports
items have become part of everyday wear in
the search for health and wellness. Eating
smart and from organic or local sources instead
of eating food produced through chemically
polluting-intensive agricultural practices
or industrial processing has led to the development
of specialty grocers such as Whole
Foods or Sprouts Farmers Market. The traditional
food retailers have also evolved to address
this trend, and have captured a bigger
share of the natural/organic industry in recent
years. Smaller brands are appearing in the
staples industry and gaining market share. In
the healthcare industry, millennials are embracing
alternative medicine rather than conventional
medical treatments and prescription
drugs. Natural remedies and alternative medicines
feel safer and cleaner and are more in
line with millennials’ values.
Millennials are an influential and rapidly
growing consumer market. Established industries
must now adapt their business models if
they want millennials on board. Companies
must deliver good social and environmental
performance and engage in sustainable practices
or their future growth could be at risk.
New companies are being created to embrace
new opportunities.
Julie Saussier
Research Analyst
+41 44 333 12 56
julie.saussier-clement@credit-suisse.com
“Sharing instead
of consuming leads to
the development of
the sharing economy.”
Julie Saussier
More generally, this search for sustainable
behavior is pushing millennials to adopt new
consumer habits, thus opening up new growth
opportunities. Sharing instead of consuming
is leading to the development of the sharing