A new scarcity is upon us

The Futurist: MT's new columnist Tracey Follows says the 'age of abundance' is over. Businesses that can't polarise towards a more luxury market or a budget market, will struggle.

by Tracey Follows
Last Updated: 28 Sep 2022

A new scarcity is upon us.

In May 2022, Andrew Bailey, the Governor of the Bank of England warned of ‘apocalyptic’ food shortages. At the time, the reason given was a blockade in Ukraine but all around the world squeezes on food supply continue to emerge.

In the Netherlands, farmers are being put under pressure to cut emissions, and The Ministry of Agriculture’s moves to reduce excess nitrogen emissions could yet put tens of thousands of farms and farmers out of business. In The US food plants all over the midwest have seen fires damaging food plants, and the rest of the world fears increasing shortages of nitrogen fertilisers, a key crop ingredient for our ongoing food security.

Meanwhile, pandemic-related lockdowns have blown up our global supply chains and war is encouraging nations to re-evaluate their resourcefulness. Given China controls 70%-80% of the supply chain for EVs and lithium-ion batteries, manufacturers are confronting a severe lithium shortage.

The West, without much refining and processing capacity in its territories, is left wondering where its supply will come from. Lithium, cobalt, nickel and graphite are going to be very hard to replace if east-west supply chains collapse altogether. Norway and Portugal might be looking at battery factories and refining facilities, but that’s not going to make up for what will be lost.

Domestically, despite new Prime Minister Liz Truss’s recent energy cap, homes will go un-heated and cooking will be curtailed as fuel prices surge. Even within the newly-announced measures a typical household’s energy bill could rise to £2,500 a year from 1st October (from £1,971). That’s some improvement considering that before the announcement a typical bill might have been closer to £3,549 a year. But the cost of all this will be borne by the nation as interest rates continue to rise, and could escalate even further with many estimating that the support package already totals somewhere in the region of £150Bn.

Until this week, support for businesses was rather meagre in comparison. However, on Wednesday, the UK government announced they would also be capping the wholesale prices of gas and electricity for businesses, though it will only last until 31st March, making it very much a short-term approach, particularly tricky for businesses that rely on accurate planning.

Meanwhile, consumers have only just overcome the trauma of their recent holiday chaos, as airports do their best to reunite travellers with their luggage or compensate them for their losses. During the summer months, a quarter of flights from or within the UK, USA and Europe were disrupted. The bad news is, this could become the norm. If fuel costs continue to rise and recession takes hold, returning to pre-pandemic travel (where travel was frictionless and affordable for the most part) will become a pipe dream.

It’s a depressing picture of growing scarcity, whether it be in energy, materials or food.

Much of society had been so used to what they called the ‘age of abundance’, located within the first-world with its digital services and its branded experiences and plethora of premium price points, that hardly any mainstream commentators seriously considered it would be possible to return to a time where whatever was needed was not at one’s fingertips on a store-shelf- or a smartphone screen. But that time is here.

As consumers we are going to be asked to travel less, to eat less, to shop less, to consume less, and to waste less. We will be encouraged to share more, repair more, re-sell more and store more. Only weeks ago, Selfridges announced that they are aiming for 50% of their transactions by 2030 to be in the re-sale, repair, rental or refill.

I still hear brand managers talking about premiumisation and subscription services, but who is going to have the disposable income for those lovely little extras we have come to expect? We are being heavily nudged to set aside those expectations and only purchase what is ‘necessary’, a kind of language we first heard during the Covid lockdowns: only ‘essentials’ could be sold or bought. It now seems that was preparation for this emerging world of necessities not luxuries.

Today, if your business cannot polarise towards a more luxury market or a budget market, then it’s going to get caught in the middle where people are most squeezed. As those people begin to struggle not only to pay for the little extras but also for their mortgages, even owning one’s own home could come to be seen as a luxury rather than the necessity we’re used to.

Tracey Follows is the founder and CEO of futures consultancy, Futuremade, and author of The Future of You.