RBC's Imagine research explores disruptive forces reshaping the world. What are its latest insights?
Nik Modi: RBC Imagine is meant to provide a lateral perspective, regardless of geography, product category or function. This is becoming increasingly important in a world where convergence across sectors is happening at a very rapid pace.
Think about how the pharma industry impacted the packaged goods space via GLP-1s, or how AI had direct implications on the utility industry.
Joe Coletti: The latest RBC Imagine flagship report, The Great Recalibration, identifies five themes that operate as systems-level forces reshaping the landscape across sectors.
Those themes are Stratified Society, which focuses on transformative technologies and how they will redraw class lines; Synthetic Everything, how substitutes will infiltrate every aspect of our lives; Rise of the 8th Continent, how digital platforms are repositioning the global order; Shifting Superpowers, the rebalancing of economic and geopolitical norms; and Crisis Capitalism, how resilience has emerged as a defining principle.
Robert Kwan: I think RBC Imagine is a powerful tool when pairing the potential longer-term outcomes stemming from the five themes outlined in the report with a shorter-term investment thesis.
For example, Crisis Capitalism starts with the premise that instability is the norm. In the last year or two, we've seen onshoring, nearshoring and China-plus-one supply chain strategies. These may not be optimal from a pure cost perspective, but strategies that mitigate risk against various types of events will increasingly become essential.
What are the implications of these trends for consumer experience and behavior?
Modi: When we talk about Shifting Superpowers, we focus on country-level geopolitics. But from a consumer standpoint, Asian influence is having a dramatic impact – from KPop Demon Hunters to the popularity of matcha lattes and kombucha. Korean beauty is growing triple digits in the U.S. right now.
As this next generation of consumers age, they're trying to optimize their lives. We're going to see 'silver communities' emerge, maybe with longevity integrated as a service.
The biggest intersection is health, consumerism and tech. A few years from now, most of U.S. will have wearables that will tell us exactly what is happening in our bodies in real time, and that's really going to govern our decisions. The axis of influence is shifting dramatically into the home.
"Wearables will tell us exactly what is happening in our bodies in real time, and that's really going to govern our decisions. The axis of influence is shifting dramatically into the home."
Nik Modi, Co-Head, Global Consumer and Retail Research
How will production and supply chains be affected?
Modi: Intelligent assortment is an advantage. Retailers could have a customized assortment based on who is shopping in their store. That would help reduce out of stocks, increase velocity and relevance for the local market.
AI is also speeding up innovation. P&G has talked about the fact that they invented a new molecule for their beauty business in six months, whereas normally it would have taken six to nine years.
How are these trends changing trade routes and cross-border investment?
Kwan: We're at a really pivotal time. The war in Iran has the potential to radically change the approach to supply chains, and we think that North America is very well positioned to supply more energy to countries that historically relied on the Middle East.
The real key is whether North America, and especially Canada, can respond quickly, giving energy buyers visibility that the required infrastructure will get built. If not, the opportunity could be lost.
Crisis Capitalism may result in companies and countries requiring greater inventory, and over-contracting to secure energy supply. For example, will it be good enough to just replenish strategic petroleum reserves to pre-Iran war levels? Or will SPR targets be at materially higher levels?
"North America is very well positioned to supply more energy to countries that historically relied on the Middle East."
Robert Kwan, Head, Global Power, Utilities & Infrastructure Research
How can companies build resilience and adapt to these cross-sector forces?
Modi: One area is the need for redundancy in the supply chain. Just-in-time is not the right model in a world where disruption is normal.
Partnerships and AI can deliver a more integrated and coordinated supply chain. For example, non-competitive companies with similar types of production processes could leverage each other's capacity during downtime.
As AI is being integrated into every aspect of a business, there's also a need to rethink employee training and core competencies, to overcome cyber threats.
Kwan: Every sector is impacted by energy. The growth in all forms of energy demand creates opportunities not just for power utility and infrastructure companies, but also engineering and construction firms, and manufacturers of construction equipment and transformers.
