Even though we expect that brick-and-mortar will still drive 83% of grocery sales in 2025, virtually everything about how consumer brands are created, marketed, merchandised, and sold by then will be digitally enabled.
These Recent Developments Showcase 4 Key Trends Every Brand and Retailer Must Consider
Purpose-driven brands, livestream shopping, and grocery ecommerce all gained momentum in 2020 and 2021—they are also all examples of one of four megatrends that will affect the industry going forward. To stay ahead of the curve, brands and retailers must develop strategies to address the following areas.
No. 1. Understanding innovation from China. China’s retail and ecommerce market has historically been markedly different from other countries, particularly those outside Asia. But in the coming years, retail trends in every market will increasingly mirror those originating in China. It’s critical for brands and retailers alike to be aware of the latest developments. One of our international clients recently told us their retail inspiration has shifted and now largely comes from China.
No. 2. Tapping into social commerce. Media and commerce are converging, and nowhere is this trend more prevalent than on leading social media platforms like Facebook, Pinterest, and TikTok, which are moving from inspiration to facilitating transactions. This year, US social network users will spend a daily average of 1 hour, 35 minutes on the platforms and will embrace shopping while there. We estimate that US retail social commerce sales will almost double between 2019 and 2021, reaching nearly $40 billion this year.
No. 3. Evaluating a retail media strategy. Following Amazon’s example with its surging ad business (Amazon’s ”Other” revenues, composed primarily of advertising, increased 87% year over year (YoY) to more than $7.9 billion in its Q2 2021 earnings), marketplaces like Walmart, Instacart, eBay, and Etsy have already established meaningful high-margin digital ad businesses. And a wave of multichannel retailers like Target, Best Buy, Kroger, and The Home Depot are developing their own retail media networks. We forecast that US ecommerce channel advertising—a close proxy for retail media—will rise 27.8% this year to $23.92 billion, as brands selling online tap the power of retailers’ first-party data for performance advertising.
No. 4. Becoming more sustainable. Consumers have long sought authenticity and transparency from the brands they purchase, and 2020 reinforced how consumers and brands think about sustainability. Images of reduced pollution and restored wildlife resulting from the pandemic showed us the positive impact that less travel and consumption could have on the world. Climate change, too, has risen in importance. Rentals and resale have taken off as antidotes to fast fashion and as more environmentally conscious ways of looking good. Companies like thredUp, Poshmark, Tradesy, TheRealReal, and Depop are bringing resale to the masses. These companies are not only operating their own websites, but also partnering with retailers like Fabletics, Walmart, and JCPenney. And brands such as lululemon and REI have launched their own resale platforms to better control their brand experience aside from gaining extra revenue streams.