What will the cooling industry look like in 2030?
It's a bold question that was asked just before Christmas by the European cooling and ventilation groups EPEE and EVIA. In their collaborative conference named "EUREKA 2016: Heating, Cooling & Ventilation: Sustainable technologies for a better life," they brought experts from around the industry together to imagine what the so-called Generation Z would require from their refrigeration and HVAC — and thus how the industry would need to adapt to create the conditions.
This month, the two groups released their report, with the intention of starting to point people in the right direction. EPEE and EVIA said they intend to follow up the report with national events in each country.
The report's introduction sets out the case: "It would be impossible to imagine our lives without heating, cooling, ventilation and refrigeration — yet we tend to overlook the industry that is providing all these technologies. Today, the HVACR industry stands at a crossroads. Whilst striving for ever more innovative sustainability, energy efficiency, health and comfort, preserving the sustained competiveness and attractiveness of the industry represents a major challenge. What will the future look like for this industry? More importantly, what will future generations expect from it? How can the industry respond?"
Generation Z (also known as post-millennials) is defined as those born between the mid-1990s and early 2000s. They represent a population of around 2 billion globally and are estimated to account for 31 percent of the workforce by 2025 — with 1 in 2 Gen Zers expected to be university-educated.
They share characteristics, beliefs and driving factors that make them distinct from the current generation, EPEE and EVIA contend, therefore the HVAC and refrigeration infrastructure they require will be different to the conventions that we have in the present day. A fundamental issue is that the internet has been a regular feature of their daily life since early childhood, and they are comfortable with technology and with interacting with people around the world on social media.
The EUREKA forum defined some key points about these Gen Zers.
They are very aware of the human impact on the planet; they want to make a difference; and they are concerned about hunger, disease and the environment. But they are a generation that learn, think, communicate, act and even eat differently — and they are economically mobile with an average five different careers in a lifetime, encompassing 17 jobs and 15 different homes.
Perhaps most interesting is the forum's summary of the "Generation Z identity."
- Visual over verbal
- Facilitator more than teacher
- Would rather try and see than sit and listen
- Flexibility over job security
- Collaborating over commanding
- Screens and devices over books and paper
- Learner-centric over curriculum-centered
The challenge, then, is to evolve the cooling industry appropriately to ensure it meets their needs.
"We know now that Generation Z will be even more demanding than current customers and that their demands are fundamentally changing the way the HVACR industry will operate," EPEE says. "Maintaining the status quo is not an option. By being prepared, the sector can turn challenges into opportunities and continue to provide heating, cooling, and ventilation every day across the globe."
The forum highlights six demands that will need addressing:
1. "I want the full service, not just a product"
Generation Z will be looking for convenience and user-friendliness, buying a concept or a function rather than focusing on a particular product. This will require a shift in mindset — moving away from complex, technology-driven products toward easy-to-manage and fully integrated solutions.
The challenge here, they say, will be to rethink the classic relationship between producers and consumers and shifting to service-based models.
2. "I want the product to be exactly what I need"
The future consumers will be more demanding and will want to be unique, so they will require customized solutions exactly tailored to their needs, with possibilities of self-learning, self-adapting and self-management. Technological innovation such as 3-D printing and robotization will reinforce this trend, the forum says, but finding the right balance between standardization and customization at an affordable price will be a challenge.
The forum envisages a rental model for the HVACR sector, based not on a product (e.g., an air conditioner), but on the function (e.g., cooling) and additional services. The pricing will shift from a pay-per- product to a subscription-based model. Consumers will increasingly lease and buy packages that include the function as well as service, maintenance, and continuous commissioning options.
3. "I just want to pay for a service when I need it"
The sharing economy will also spill over to the HVACR sector, the EUREKA respondents believe, with people accessing products and services rather than owning them. Driven by the Internet of Things (IoT), new technologies will increasingly enable customers to share and consume resources more efficiently and consciously on the basis of the pay-as-you-use principle.
4. "I care about the impact I have"
Highly aware of the human impact on the planet, Generation Z wants to change things by living more sustainably, the forum believes. For this to happen, they will be keen on having easy access to a range of information on products' performance and footprint.
But they note that the challenge will be striking the right balance between making products fit for the future from an environmental and a human well-being perspective while maintaining their affordability.
5. "I know the world is big, so I want to control what is around me"
The forum believes that while globalization will remain part of our society, the consumers of tomorrow will be more sensitive to their local context, both from an environmental and economic perspective. They believe that "Made in" labels could become increasingly a key criterion for consumers when choosing a product.
6. "I am a digital native"
Since Generation Z is comfortable with digital technology and social media, this is certain to have a bearing on the cooling world. The forum believes the key will be to managing and provide a wealth of data in a user-friendly way.
Visual tools and indicators, such as indoor air quality or low-GWP refrigerants, and easy-to-understand information will help consumers make informed choices.
The EUREKA forum posed a number of challenges, and EPEE and EVIA believe it is now down to the industry to formulate its plans: "We know that future generations will still want our industry to exist, but we also know that they will want their heating, cooling, and ventilation to be provided in a different manner. ... The journey to 2030 can seem long, but change needs to happen today!"
The important factor, they conclude, is collaboration, particularly when it comes to working with policymakers, as the HVACR industry embraces many disciplines: "In order to be more resilient and sustainable, we must work together to adapt to these trends. With a sharing mind-set, our industry must develop better ways of working together and sharing knowledge, best practice, and innovation to respond to the demanding needs of Generation Z."
