7 consumer trends that will define the digital economy in 2021
While few will say they’ll miss 2020 when it’s over, the events of the past year – read: the pandemic – will continue to shape consumer behavior and, in turn, the way brands market to them in 2021.
“Roadmaps totally went out the window,” said Julia Kirkpatrick, Pinterest’s director of brand research.
Evolving consumer behaviors include how they shop and what they buy, new priorities about what matters, and heightened expectations about their customer experiences (CX).
“Our pre-pandemic customers are no longer the same,” said Fiona Blades, chief experience officer of MESH, a market research firm. “Their needs are changing.”
1. Online shopping to play a bigger role
Consumers have certainly become more comfortable with online shopping as a result of the pandemic. Case in point: Cyber Week, the five-day period between Thanksgiving and Cyber Monday, broke all sorts of records this year around, as many Americans chose to shop online to avoid crowds in stores amid COVID-19 concerns.
Data from Adobe found that consumers spent a whopping $34.4 billion during Cyber Week, which represents a 20.7 percent year-over-year (YoY) increase. In comparison, the YoY increase from 2018 to 2019 was 13.4 percent.
What’s more is that even though many people are spending more time at home, with access to larger devices like PCs and laptops, smartphones still accounted for 41.1 percent of online revenue during the five-day period, which is up 7.4 percent year over year. That number will only continue to grow in 2021, especially as 5G becomes more widely available and completely redefines what’s possible from a CX perspective online and on mobile.
Also of note: Social media is driving more online sales. Over the Thanksgiving weekend, for example, social media drove one out of 10 visits to retail websites, a 17 percent YoY increase. The growth here is what is important to watch, as social media only drove 3 percent of online revenue. Organic search was the biggest winner during the period in increasing revenue share, at 11 percent growth YoY. Paid search continues to dominate both revenue share and visit share this year (25 percent and 24 percent respectively), but direct traffic isn’t far behind (21 percent and 22 percent).
For consumers that need for instant gratification—even when shopping online—curbside pickup options saw strong growth among shoppers wanting to avoid crowds and shipping delays, a trend that is expected to continue well into the New Year.
At the end of the day, an experience-driven approach to commerce—across channels—is going to be imperative in 2021. And remember: Shoppers want online shopping experiences that minimize friction: “they don’t shop Amazon because they like the brand or want to wear Amazon t-shirts,” said Alex Hamilton, director of innovation at Isobar, pointing to Amazon’s innovative and personalized online experience as the secret to the e-retailer’s success.
2. Can’t touch this
As the online holiday spend shows, consumers expect contactless experiences in 2021 as they will continue to take measures to limit exposure to the coronavirus, experts agreed. Forrester predicts brands will look to replace touch screens, in-store feedback buttons, credit card PIN pads, and other touch media with contactless interfaces that rely on gesture, voice, and proximity.
The pandemic has also been an accelerant for augmented reality (AR) and virtual reality (VR) experiences, said Ivan Markman, chief business officer of Verizon Media. With social distancing the norm, brands have found new ways to engage, with an “overwhelming appetite” for events, he said. For example, the organizers of London Fashion Week in September used VR to replace some fashion shows.
Burberry marked the start of London Fashion Week with its first-ever virtual fashion show.
“With social distancing, immersive content and immersive experiences will be another topic that will keep us busy,” Markman said. With the expansion of 5G, platforms will have more potential to transmit those experiences on devices more seamlessly. And with the arrival of the 5G iPhone 12, more consumers will be able to access them.
Digital platforms will start adding connections on extended-reality experiences for consumers, and “there will be huge demands for brands to meet them in these experiences,” Markman said.
3. Solidarity spending
Given the upheaval of the pandemic and Black Lives Matter movement in 2020, purpose and corporate social responsibility are going to be a requirement for most brands, as consumers now demand it, said Adobe CMO Ann Lewnes.
“Now it’s not just a nice-to-have,” she said. “You’re seeing companies far and wide making that a big flag-planting measure everywhere.”
Consumers have developed a stronger affinity for what Pinterest’s Kilpatrick called “solidarity spending” – being more considerate about why they make a purchase and who they purchase from, and to buy from merchants that stress their values. She noted as an example how some consumers are making a choice to shop Black-owned businesses to support the Black Lives Matter movement.
In addition, consumers have learned to value community more highly than “stuff for its own sake” and will expect to see brands help to rebuild a better society post-COVID-19, said Marie Stafford, lead of the intelligence team at Wunderman Thompson.
“It’s about thinking as a brand: What is your net positive impact? There are deep roots on this,” she said.
Sustainability also matters to consumers, who expect brands they buy from to address their environmental impacts in packaging, recycling, and production.
4. Talk to the bot
Consumers’ bar for personalized experiences is rising and expectations are higher, said Ali Reed, managing director UK at marketing agency Essence. He noted how one Gen Z participant in a focus group, for example, was “genuinely angry” about hearing ads for a garden center in his streaming audio.
One powerful way to keep up with these consumer expectations is automation, and current technology now gives marketers choices. Five years ago, people didn’t expect to have a speaker in their living room they could command to do things for them, said Tim Irwin, CEO EMEA, of Essence**.** Now 66 percent of marketing insiders believe most interactions between brands and consumers will take place via AI within the next 10 years, from the consumer’s digital assistant to the brand’s service bot.
Marketers are going to need to spend some time brushing up on technology, advises Mastercard chief marketing and communications officer Raja Rajamannar. The connected car, for example, is turning vehicles into a rolling office, where CX will need to be addressed as if it were taking place in the living room. And that voice-response system at home will require marketers to develop a “sound signature,” just as they have a logo, or else they may become invisible to consumers.
“There’s all these new technologies coming,” Rajamannar said. “All the rules of marketing will be stood up on their heads completely.”
5. Couch-based content consumption
The lockdown, and so many people continuing to work from home, means a lot more time spent streaming media on platforms such as Netflix and Hulu, a behavior expected to last long after COVID-19, experts said. Indeed, streaming media became mainstream media, with viewers hooked on “Tiger King” and signing on to Disney+ to watch “Hamilton” while theaters are closed.
Research from Adobe Digital Insights, which used Adobe Analytics to analyze over 24 billion video starts and over 6.6 billion hours of video content viewed online across OTT, desktop and mobile phone platforms, uncovered patterns of binge-watching over the last few months and found that consumers were completing videos more often during the pandemic than they had previously. When analyzing video time spent, OTT was the primary growth driver.
Cord-cutting “already was a thing and really leapfrogged,” said Todd Kaplan, VP Americas sodas, at PepsiCo. “None of this stuff was new, [but] people are now using them properly.”
It’s a huge opportunity for brands, thanks to the “explosion in viewing time,” added Babs Kehinde, senior director, publisher development at Pubmatic. Beyond just the typical commercials, brands can consider strategic product placement within content as well.
6. Wither brand loyalty?
The growth in online shopping has turned many products and services into commodities, experts said. Craig Dempster, global CEO of performance marketing agency Merkle, cited research that shows 75 percent of consumers have tried new websites and brands during the pandemic, and 65 percent expect to integrate them into their post-COVID-19 lives.
Millennials and Generation Z have always been seen as less brand-loyal, and that trait is now growing, said Ryan Hedges, VP of strategy and experience at The Marketing Store. Many consumers are not buying what they used to, instead turning more to comfort and nostalgia, as seen in the sales growth shown by General Mills breakfast cereals, or the ratings of “Thundercats” episodes from the 1980s trending on Hulu, he pointed out.
These shifts are going to affect how marketers handle their loyalty programs. Rewards programs had already been evolving away from point-reward schemes to more experiential rewards, but with hospitality and travel paused, it has forced marketers to rethink their rewards to offer more service that can be delivered in a digital environment.
“Loyalty points mean nothing if I can’t spend them,” Hedges said. “Showing them real value, instead of lip-service value is going to be key, and that’s going to expand and grow in 2021.”
7. Health and wellness
It’s no surprise that after most of a year marked by the constant worry about coronavirus infection, anything health-related is going to be top-of-mind for consumers.
“Safety has become the new trust. It’s absolutely fundamental now, and it’s what people are looking for from brands at the moment.”
Fiona Blades, president and chief experience officer, MESH
Even companies not in the healthcare space will need to make health-based decisions. Fer Machado, CMO of Burger King, noted his organization had to make a quick decision to require masks in all its stores.
“When crisis hits, you want safe options,” he said.
People are also reconsidering how to invest their time – and they’re investing in themselves, said Pinterest’s Kilpatrick. This can mean making full changes in their lives, she said: “Heightened emotion and self-investing go hand in hand.”
For example, home workout services have exploded in popularity during the pandemic. Bicycle-workout company Peloton alone is expecting profits to rise by 40 percent this fiscal year.
Ironically, while the pandemic has brought on a back-to-basics type of mentality, it has also been good for some indulgences. Consumers are putting a different emphasis on what luxury means to them, said Ed Pilkington, CMO of Diageo. He noted that sales of $100-plus bottles of spirits are booming because people want luxuries they can access since they can’t treat themselves in other ways.
“I’m not going out to dinner in an expensive restaurant that will cost me $200, $300, $400. So a bottle of Don Julio 1942 [tequila], which is $130 … is actually great value,” he said. “People are working out that value equation and finding out they can access that.”
It’s safe to say that COVID-19 is going to continue to shake things up as we move into 2021. According to James Morris, CEO of creative/entertainment and sports at Dentsu Aegis Network, moving forward brands will have to address their role in societal change: “The big reflection of this year is that we can do more – and we need to do more.”