*The following is a summary of a presentation that was delivered to the Retail Council of Canada at their Retail Marketing Forum in the fall of 2021.
We all know that there are no facts about the future. But while humans as a species are pretty bad at predicting what’s to come, we can be good at pattern recognition.
To understand how we came up with these trends, we need to figure out what caused them to appear. Throughout our history we have had MOMENTS OF DISRUPTION that changed the way we think. Since the last big disruption in 2008, our world has evolved a lot. Digital was always changing the way we interact and consume brands, but the last 18 months have been particularly disruptive.
The particular disruption that COVID has brought about has accelerated changes that were already present, created greater scrutiny of existing resources and created some new behaviours that have supplanted existing ones. As with any other crisis, it is about rebalancing and reallocating time, energy and money.
If we try to analyze and formulate our conclusions for a new normal, we can identify these 5 trends that are most likely to shape our new future.
Trend #1 Levelling the playing field
If we look at the pre-pandemic world, we notice a certain hierarchy where retail experience WAS the differentiator. For example, Apple as one of the leaders in retail had their high-end stores in the most expensive malls in the country and their extraordinary digital customer experience was only a part and parcel of retail experience. We saw a lot of digital-first (eCommerce) brands go Bricks and Mortar. Some brands would go even as far as to say that “eCom is not our brand” and that’s why they are not doing it. Pre-pandemic, more established brands would only allocate 5-10% of their marketing budgets to their eCommerce channels, simply because they were only responsible for 5-10% of their revenue (or much less).
The global lockdown changed that overnight as traditional retail channels were shuttered, sometimes for months on end. In this moment, eCommerce became the ONLY sales channel brands could use to drive revenue.Brands that weren’t online had to move FAST to establish a presence, because if you did not have one, you did not have a sales channel. During this time platforms like Shopify flourished because they were already well-built and easy to use. And as an outcome of that we saw the shift in marketing spend from traditional forms of advertising to online. Since everyone began working from home many didn’t see the need to spend on Out of Home, especially in urban centres that typically relied on commuter traffic to deliver eyeballs. The implication of that became whether you like it or not, you are now a digital brand. You may not have been ready or wanted to be one, but the realities of the last year have made it almost impossible to stay in the past.
Trend #2 Competition Everywhere
Prior to the pandemic, companies that had a very well established B2B model recognized the potential opportunity of using the same infrastructure and resources with a B2C banner. And so, they established a new brand through which to sell the same product but at a higher margin. Well, now we are seeing B2C now going D2C (direct to consumer), why? Because for a lot of brands the retail channel evaporated and D2C became their only play. To add to this, we have begun to see the trend drop-shipper as a “brand”. This digital phenomenon involves someone buying a bunch of white-labeled products, buying a logo on Fiverr, spending $90 on a Shopify template, standing up a “brand” in a matter of weeks. This trend is informed by a particular aesthetic marketing “lifestyle” that is so prevalent in social media, further fuelled by cheap ads on Facebook (ahem, excuse me, “Meta”). What may look like an established lifestyle brand is actually 2 people ordering copycat products under the impression of a brand.
We also saw the development of ghost kitchens and hyper-local start-ups by people who suddenly had more time (and a safety net of government funded pandemic income) who said, “I wonder if…” and effectively created life-style businesses that were supported by the attitude “Buy Local” of so many of us adopted.
This competition is heating up the digital marketplace and the implication is your digital media and marketing plan at large just got a lot more expensive. At Art & Science we’re seeing some clients now having to spend 20% more to get pre-pandemic results. The digital marketing platforms so many brands are using were designed as marketplaces—more competition equals higher prices for the same ads.
Trend #3 Deepening the Relationship
The shift to zero party (whether you like the term or not) data acquisition is about getting customers to volunteer information about themselves in order for brands to better serve them. However there needs to be an exchange of value, leaving us to ask, what are you giving your customers to get access to their data?
Consumer expectations for personalization are increasing particularly for the brands they know and care about. Consumers want to see and feel like their support is valued and that you’ve taken the time and energy to market to them what they want and need. The good news is technology affords this possibility and is the way for us to understand our Most Valuable Customers (MVC). The implication for this trend is that a CRM strategy is no longer a “nice to have”. The future of your marketing plan has to consider a robust customer relationship management strategy that delivers content that is welcomed and appreciated, and not just background noise.
Trend #4 Value Alignment
For the last several years, we have discussed the role of younger consumers and their desire to spend dollars on brands that share their values. It was not a surprise that people wanted to know where brands stood on the BLM movement after the murder of George Floyd in summer of 2020, or the Colin Kaepernick kneeling protest a couple years earlier. Brands that could have previously stayed out of and away from these issues now needed to declare where they stood on the topic of racial injustice. This pandemic has shown us how unequal aspects of our society are and the implication is that if you are an organisation that employs people you MUST have a position on these topics. You can no longer expect that employees (or customers) leave their personal values and beliefs at the door. They are looking for alignment with these values as the work and shop.
Trend #5 Talent Gap
Back in January 2021, we had predicted that there would be about a 20-25% turnover in staff. By July that number grew to ~40%. What’s even more mind blowing is that in the month of August 2021 in the US, 3% of the workforce just QUIT. That is 4 million people who handed in a resignation. And this “great resignation” is not tied to one particular industry (although data suggests service and hospitality industries have been particularly affected).
When we combine this trend with the rapid evolution and adoption of eCommerce, automation, and the leveraging of technology in general to serve our more connected ambitions, we see consequence to the retail and service sectors being twofold; that you will pay MORE for talent, but that you will need fewer bodies than you once did. Technology affords you scale and efficiency, and in turn you should be able to hire the best ambassadors for your brand, regardless of the channel you’re using to drive sales.
Of course, we are coming back to retail with reopening, but I think that this return should be a return to experience. The future I see is that we all go to the mall one day and can leave without bags in our arms, because our eCommerce and physical stores work so smoothly together, that we are thinking about retail as being a manifestation of eCommerce in large.
— Spencer Saunders, President & CEO at Art & Science