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4 urbanization trends to incorporate into your business strategy

Cityscape set against blue background

With more than half of the global population now living in urban areas — and two-thirds of all people expected to do so by 2050 — cities have become our primary engines of economic growth. They are also changing in ways that will carry ripple effects for businesses of all sizes around the globe. 

New York City is “The City that Never Sleeps,” but with rapid urbanization and ballooning e-commerce, more cities are obtaining sleepless status. With this shift, they now operate sophisticated fulfillment and delivery networks around the clock, scrambling to meet the needs of the most impulsive and demanding shoppers — all at minimal cost to consumers.

"Rising consumer expectations, coupled with enhanced logistics capabilities, are now a staple of modern living."

In other words, rising consumer expectations, coupled with enhanced logistics capabilities, are now a staple of modern living. As such, here are four trends that businesses should consider as they develop products and services for the urban market:

Rapid urbanization in emerging markets

According to McKinsey, Asia is set to exceed half of global GDP by 2040 and drive 40 percent of world’s consumption. Emerging markets fuel this shift: While most western countries urbanized a few decades ago, many of the Asian economies are now experiencing both rapid urbanization and growing income levels.

As a result, products once viewed as luxuries in these areas have since become affordable to a broader swath of consumers. In turn, supply chains, financial systems, communication capabilities and transportation networks are now more sophisticated.

When UPS recently introduced a new shipping service for small and medium-sized businesses, for example, it targeted not just the United States but also Canada, the United Kingdom, China and Hong Kong. The urban opportunities of the future are not just in New York or London. They also reside in Shanghai and Mumbai.

Connecting consumers through technology

Cities will spearhead the transition to a hyper-connected environment where humans and things seamlessly interact. The next generation of wireless connectivity, 5G, will become available in most large cities in the next decade.

It will serve as the catalyst for technologies such as artificial intelligence, the Internet of Things, autonomous vehicles, drones and augmented reality.

"The urban consumer will have access to more innovative services through technologies, and companies will have to build their businesses around them." 

These technologies will transition from buzzwords to the foundations for long-term investment and economic growth. According to one estimate, 5G could account for 3.2 percent of China’s entire GDP in 2025.

UPS is already on the leading edge of connecting consumers through technology, using drones for medical deliveries in North Carolina and testing self-driving tractor trailers in Arizona.

Such moves fall in line with a broader global shift: The urban consumer will have access to more innovative services through technologies, and companies will have to build their businesses around them.

Getting closer to customers through logistics

Traditionally, it’s been more economical to concentrate inventory with a hub-and-spoke model that replenishes various stores.

But given the surge in e-commerce, particularly in urban areas, large fulfillment centers located outside the city core aren’t always as economical. Retailers need flexible and adaptive logistics solutions to meet the evolving demands of consumers.

UPS has responded to the need to get closer to the customer by launching Ware2Go, a new technology company and digital platform that matches available warehouse space and fulfillment services with merchants.

And UPS My Choice for business saves entrepreneurs time by letting them see when a shipment is arriving. Small businesses receive day-before and day-of delivery alerts, as well as an estimated time-of-delivery window. They also now have the flexibility to make delivery changes and reroute packages to a new location that better aligns with their fast-moving schedules.

Empowered consumers increasingly give their business to brands that share their values — and ditch those they view as out of touch.

Making cities green

Cities are at the center of sustainability movement. Whether lowering carbon dioxide emissions, conserving resources or reducing congestion, we see this shift not only in regulations but also in investment and innovation.

With a system known as Loop™, UPS is testing deliveries and pickups using a durable tote. This could both provide package cost savings and help end consumers minimize the environmental impact of their home deliveries.

Empowered consumers increasingly give their business to brands that share their values — and ditch those they view as out of touch. Companies should design their services with this reality in mind.

Regardless of the size of your business, the urban consumer must be at the forefront as you develop strategies for the future. Keep these four urbanization trends in mind as you brainstorm ways to take your business to the next level.

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