- Insider Intelligence analysts spoke about key trends that should be top-of-mind for marketers in retail.
- Key ecommerce trends mentioned include purpose-driven brands, livestreaming commerce, and grocery ecommerce.
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The retail and commerce space is continuing to shift and accelerate. There are several trends that are reshaping the landscape—many of which will have lasting effects.
Earlier this month, Zia Daniell Wigder, Insider Intelligence’s SVP of Content, as well as principal analysts Suzy Davidkhanian and Andrew Lipsman, spoke about the key trends that should be top-of-mind for marketers in the retail and ecommerce space right now. Below is a snapshot of what was discussed and what the ecommerce future might look like.
Purpose-driven brands are taking center stage right now, and it’s crucial for retailers to understand what that means, especially as more consumers look for brands to be socially responsible, environmentally friendly, and give back to their communities.
“This is no longer a marketing gimmick,” said Davidkhanian. “It’s really critical for brands to think about how they exhibit being socially driven, environmentally friendly, and that also includes DE&I initiatives.”
“Regardless of how you put your program together, it’s really important to think about how do you help ensure that your entire ecosystem reflects the DE&I initiatives,” she said. “That also includes an inclusive work environment … like Old Navy which recently announced how they’re not only doing one merchandised place for all the sizes, but also price parity, which is a really big deal in fashion apparel.”
China has become the absolute edge of innovation when it comes to retail, and livestreaming commerce is no exception. “It was born in China roughly five years ago, which is shocking given just the sheer size of this market right now,” said Wigder. “I actually did a webinar back in May with Alibaba that was celebrating the five-year anniversary of them launching Taobao Live. This $300 billion market has grown up really in these past few years. When you think about that number, $300 billion, that’s larger than every other ecommerce market in the world in total, with the exception of China and the US. The UK is out there, but only around $240 billion. So just a huge market, and one that is now responsible for 12% of all online purchases in China.”
In the US, this trend is just starting to emerge. “There’s a lot of experimentation going on,” said Wigder. “Consumers are in a curious phase at the moment. A lot of them are watching influencers talk about products. Relatively few are buying.”
There’s a variety of reasons why it’s taking much longer for livestreaming commerce to catch on in the US versus China. For one, the US doesn’t have China’s ecommerce penetration—where over half of all purchases are made online. What’s more, China has also been combining entertainment and online. Whether that’s through super apps, WeChat or through Alibaba, that’s been long at the core of online shopping in China.
There are some brands that are already engaging in livestream shopping. In fact, one of the most popular ways is by partnering with a social media network. “The benefit there is they already have that massive existing audience and you already have consumers that are going there for entertainment purposes,” said Wigder. “So, you’re not trying to attract an audience to your site for a completely different purpose perhaps than the one that they originally went there for.”
“You’ve got a handful of different examples here,” she said. “Walmart partnered with TikTok last December. Sephora has worked with Facebook. Facebook itself has actually launched Live Shopping Fridays, where they’ve got other brands like Petco and Abercrombie taking part.”
Grocery ecommerce surged during the pandemic, creating a new behavior for many first-time adopters. Despite moderating growth rates in 2021, the long-term prospects for category growth remain strong.
In 2020, we saw a nearly 64% jump in grocery retail ecommerce sales, reaching $109.01 billion. This year, sales will reach $122.39 billion and continue rising year over year.
“There’s a massive opportunity that’s happening here, and it’s completely transforming the industry because this is an industry that [while] it’s the fastest growing online, it’s also one of the least penetrated still, at less than 10% penetration,” said Lipsman. “In fact, this year it’ll be about 9.6%.”
“So, it’s going to transform grocery because in brick-and-mortar, margins are very thin,” he said. “Every single incremental dollar that shifts over to digital, if a brick-and-mortar retailer is not holding onto that dollar, what does that mean for their profitability, right? A 1% or 2% decline in that top line can squeeze away a huge portion of that retailer’s margin, so the implications are huge. If those dollars in particular start shifting over to Amazon, the implications get even more important.”
There have been a lot of dollars moving to this new channel. In order to adjust to the shifting trends and the economics of the industry, many retailers now have to think about how they can grow their revenue in different ways, especially if those dollars aren’t coming through the store. Therefore, the next big thing in digital advertising is the emergence of retail media.
“When it comes to retail media, it’s an incremental revenue stream that retailers may not have had before,” said Lipsman. “But guess what? It might not be a big revenue stream, maybe even a couple of percentage points on the top line, but it’s an incredibly high margin. Within the context of grocery where you have these super thin margins, to go into the digital ad business where you can have 30 and 40% net margins at the end of the day if you reach scale it can completely transform the economics for a lot of key players in grocery retail. It is a really significant trend, one we’re watching closely and one that we plan to cover really in depth over the next months, quarters and years ahead.”