The most significant opportunity lies with the blurring lines between economy and culture. Brands with a tech stack that enables both performative positioning and authentic action will find sustained success.
The pandemic accelerated the growth of digital retail by five years in a matter of months. Marketplaces and the Direct to Consumer (D2C) market witnessed exponential growth. In the UK, 770,000 new businesses were launched – of which 35,608 were online and mail-to-order businesses. That’s a 260% increase from 2019. In the US, e-commerce penetration in 3 months equaled that of the decade that preceded it.
Need, safety, and convenience were the primary motivators initially, but consumers’ needs and expectations have grown far beyond that. It’s the age of the conscious consumer – and they wield their power by rewarding brands that stand for causes that align with their values. Value-based marketing is here to stay.
The next stage of the evolution will revolve around the where, why, and how of commerce. The digital retail space is primed for innovation, and the following two trends will direct the coming change.
Trend 1: Evolution of where and why brands sell
Marketplaces are expected to contribute 50% of online transactions in the near future. Amazon’s market capitalization grew by $650 million in the last year, and Etsy added over 1 million active sellers. This makes the need for an easy and frictionless experience – from buying to delivery – apparent. 27% of consumers said they consider ease of experience a true differentiator in the US.
However, a great experience alone isn’t going to suffice in the near future. When asked about sustainability, 83% of consumers said they expect brands to design products that can be recycled and reused – and 50% of consumers said they are willing to pay more for that. Put that in context to $650 million Amazon added to its market capitalization. If they weren’t consistently receiving backlash for their lack of commitment to sustainability and community support, one can confidently say that number would’ve been much higher.
Andrew Dunbar, GM EMEA, says,” Go where your customers are, keep providing great customer support, and communicate consistently. However, that isn’t a differentiator today; it’s table stakes. Today’s consumers are more value-driven. They are ethically driven and environmentally conscious. For example, they’re always looking for brands dedicated to recycling and reusing. But they reward action, not words. Many have already abandoned fast-fashion brands for those like C&A that designs with sustainability front and center. This behavior will extend to marketplaces in the near future; who brands align themselves with will matter.”
Trend 2: Evolution of how and why brands sell
The case for shared value-based marketing is already made – the changing patterns in consumers’ buying behavior are evidence of this. That’s precisely what makes this approach to marketing a double-edged sword. Consumers have the power to reward and dole out punishment.
Ethics matter with value-based marketing, and your actions must match your words. Brands that fail to do so will very quickly find themselves canceled. That doesn’t just mean being called out in the digital world; it also means losing buyers to competitors who better align with your customers’ life choices – impacting brand equity and the bottom line.
Andrew Dunbar, GM EMEA, says, ”When done right, value-based marketing can bring a significant change to your brand and your bottom line. A great example of doing it right is Ben & Jerry’s. Their actions match their words, and their transparency has won them nothing but love. At the same time, many fashion brands worldwide are being called out for not walking their talk. With the rise of the BLM movement, statements of support came rolling out. Still, it's easy to see through those brands just capitalizing on an opportunity, versus those who are genuinely motivated to support change.”
Digital will remain central to the future of retail
Economy and culture are now inextricably intertwined – and a businesses’ tech capabilities are crucial to meeting the expectations of the conscious consumer. Andrew Dunbar, GM, EMEA, believes that every retailer needs to reevaluate its tech stack now. Does their existing architecture have the flexibility to evolve with the business?
“Businesses can’t limit themselves to the easy path. With every competitor looking for an advantage, both the technology platform and the operating model must be flexible enough to allow for change without requiring a major overhaul. Businesses need to be honest about their current platform, and indeed their team structure, and embrace an agile approach that allows for, and even assumes, regular change. I recommend an approach of continual reassessment, where every component is evaluated against business needs. From a technology perspective, every tool within their tech stack needs to be modular and performance monitored. The right tools are essential to put value-based marketing and operations in action, and there can’t be sacred cows. Composable architecture presents significant advantages for any organization, by embracing that need for change, and ensuring each component stands on its own merit,” continues Andrew Dunbar, GM, EMEA.
Taking a page from the value-based marketing strategy of Ben & Jerry’s, a web page dedicated to how they act on their commitment to the value of sustainability could be a good starting point. But it’s their transparency and consistent communication around how every decision they take is guided by the same commitment that cements the success of their approach. Does your organization have tech maturity to create transparency and consistency?
Brands that recognize this and invest in innovation that enables consistent action will earn their consumer’s loyalty and dollars. They will not only get ahead but stay ahead.
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