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 establishing patterns to an extent.
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 so called MOMENTS OF DISRUPTION that changed the way we think. Since the last big disruption in 2008, our world has developed a lot especially in the digital realm. We saw the beginning of social media and mobile, the expansion of digital marketing, new streaming services, more promotional activity and an increased role of private equity.
But then 2020 hit and that once again it accelerated changes that were already present, created greater scrutiny of existing resources and, in this case, created some new behaviours that disrupted existing ones. As with any other crisis, it is about rebalancing and reallocating time, energy and money.
Staying at home for remote work once again changed the way we shop.
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. The development of eCommerce would get a tiny part of a company’s annual market budget for why spend more than 5-10% on eCommerce if only 5-10% of sales came from online platforms?
The global lockdown changed that forever. Despite the slow return to in-person shopping, in 2020, E-commerce became THE sales channel. 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. For a number of retail brands the storefront became a depo where people could pick up their online order. And as an outcome of that we saw the shift in marketing spend from traditional forms of advertising to online. Since everyone suddenly began working from home and no longer needed to take transit to work, companies began to ask themselves “Why should we pay for ads on TTC?”. 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, creating a vernier brand, buying a logo on fiber, spending 90$ in Shopify template and paying a subscription fee to be ready to roll in a matter of weeks. It’s informed by a sort of aesthetic of marketing particular in social media that creates this perception of a life-style brand when in reality it’s 3 people running a show who are just really pretty good marketers to give the optics of something substantial.
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 income who said, “I wonder if” and effectively created life-style businesses that were supported by the attitude “Buy Local”. 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. Our clients now have to spend 20% more to get pre-pandemic results and the reason for that in part is that the digital marketplace for performance media is bid-based. These platforms were designed and built to maximize profit, meaning the more competition flows into the space the more expensive it becomes.
Trend #3 Deepening the Relationship
What informed this trend were changes in legislation that are now forcing brands to look at how they are collecting personal information. We witnessed a“Death of the cookie” in terms of our ability to track and continue remarketing to people and understand how many times they came to the eCommerce platform before they made a purchase and a lot of these changes have limited our abilities as digital marketers to demonstrate attribution. The shift to zero party data acquisition made it possible for marketers to get permission from consumers to collect their information and use it to personalize their marketing efforts. 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 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 last summer events. We knew that people would demand this from B2C brands but what surprised me is that even in B2B what we used to call “the back-office space” the administrative side of business, there was an expectation set by employees to address where the company sits, what their values are, and how they can demonstrate that they are committed to making positive changes. Now, these social issues have not just suddenly appeared. No, they have been here for a long time. 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 issues. You must walk the walk and then talk about it. You can’t fake it and if you do, you will be called out for it.
Trend #5 Talent Gap
Back in January, we had predicted that there would be about a 20-25% turnaround in staff, but by July of that year that number grew to 40%. What’s even more mind blowing is that in the month of August in the USA 3% of the workforce just QUIT. That is 4 million people who just handed in a resignation and this “great resignation” is not tied to one particular industry. What contributed to this bigger than expected turn around issue in Canada was the fact that for many years immigration was a big source of growing our economy and supporting all our sectors and with the beginning of the pandemic all the immigration processes slowed down or stopped completely.
In the digital sector, in addition to that 40% turnover, we saw the greater demand for all skills digital. We saw high demand for digital skills from healthcare, banking and insurance – categories where people have re-evaluated aspects of their physical infrastructure and understood that they need to go digital.
Ultimately the implication of this is that you will pay more (and better) for workers, but you will need fewer of them. Technology affords you scale and efficiency.
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