Brands must adapt to three disruptive forces this Christmas

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Brands should be looking to create shoppable moments within their existing plans and using test-and-learn approaches in the build-up to Christmas, writes Carat's head of strategy

Christmas is usually one of the most predictable moments in the calendar, built around tradition and ritual.

But last year was a Christmas like no other. And while this year should feel like more of a return to normal, it’s also likely to be markedly different to what has gone before.

Even though it’s just weeks away, much like everything that’s happened over the last 18 months, it’s still hard to make concrete predictions in terms of where the pandemic will take us next.  But based on what we’ve already seen throughout the pandemic, we believe that signs are already indicating that Christmas shopping behaviours will be heavily disrupted.

While 16 August saw the end of blanket self-isolation and most likely marked the end of the ‘pingdemic’, many of us have become used to making choices between events to preserve our ability to attend holidays or important occasions.

If we listen to the experts, we are unlikely to need further lockdowns in the UK but may also need booster shots and vaccines and are likely to see a resurgence in the Winter months.

So, we believe that reticence to jeopardise the important events, particularly Christmas Day itself, will continue throughout the year, particularly with people being less likely to want to spend much time in busy retail areas, looking for more and more opportunities to shop differently.

Three important areas will be heavily disrupted

Throughout the pandemic, we’ve seen the incubation period for future trends massively accelerate, particularly when it comes to digital and ecommerce. So, to understand and anticipate how retail might be impacted now for Christmas 2021, we’ve looked ahead to what might be coming next.

Dentsu’s Shopper DNA research, developed with the support of Foresight Factory, a leading consumer trends agency, is an extensive piece of research focused on identifying the key retail trends for 2030. Our analysis draws on different sources, including expert interviews, primary consumer surveys, a thorough review of upcoming and possible industry, technological and scientific advances over the coming decade and extensive desk-based research.

Pulling together several key trends from this report, we believe three vital areas will be heavily disrupted this Christmas and offer the greatest opportunities for brands to capitalise:

Disrupted Distribution

We believe that the growth in online retail will continue to accelerate as we move into Christmas 2021 and beyond.  Shopper DNA highlights two key trends in this space which we expect to shine through and take hold.

Democratisation of retail: Over recent years, we’ve seen a growth in DTC platforms across a range of different brands and services.  In 2020 alone, the Direct Selling Association in the UK reported a 45% growth in sales through DTC channels, based on a survey of its members.

The popularity of such channels will be accelerated through the growing use of social media sites to buy directly from retail brands. The number of UK consumers who have purchased directly via social media has grown steadily in recent years.

Titan retailers: While expecting to see the growth in DTC platforms, we also believe that titan brands such as Amazon will continue to expand in market share and their ability to engage more areas of the UK consumer’s life. Already in 2019, Amazon accounted for 30% of the UK e-commerce market.

The most clear and present danger that Amazon poses to other UK retailers is future customers’ potential to select them as key choice partners. This single company serves as a one-stop-shop for a majority of commercial needs.

Implications:  With warnings already being issued around the supply chain for Christmas due to the impact of both Brexit and shortages for key materials and logistic services caused by the pandemic, consumers are even more likely to seek out opportunities to purchase digitally through whatever channels offer the greatest ease and best experience.

Brands should look to ensure that they have put the right approach to create seamless purchasing paths for both new and existing customers.  Building the right data infrastructure alongside relevant contextual targets is a critical element in executing this successfully.

Disrupted decision-making

Even in any normal year, Christmas is a time when many people feel a greater sense of connection and responsibility to those around them and are more likely to give to charity.

And we’ve also seen something similar happen throughout the pandemic. Building on two trends outlined in Shopper DNA, we’re expecting Christmas 2021 to be a time when more people make choices driven by a desire to support their local communities and give something to those in need.

Shopping by values:  As environmental and social issues have gained greater consumer and media attention; brands have been called upon to join the fight. The triple bottom line (People, Planet, Profit) is becoming more widely adopted.

For example, 60% and 53% of UK consumers claim to consider ethical and social considerations when buying groceries and beauty products in 2020, up from 53% and 40% respectively in 2016.

Before the pandemic, some brands’ efforts received sceptical responses from parts of the consumer marketplace: the adoption of rainbow branding in support of the LGBTQ+ community, without meaningful action backing this up, became a prime example.

However, we saw a real drop off in cynicism around purpose as the pandemic hit, as many brands matched talk with action.

Community commerce: A fast-evolving digital retail landscape means that analogue stores will struggle to continue without a strong pull factor. The pandemic has driven a shift in focus from town centres to local high streets.

In 2020, 36% of GB consumers felt the need to be involved in the life of the community or neighbourhood, up from 31% in 2019, and this has been accompanied by a reassurance in shopping in local high street shops such as butchers and greengrocers.

The mounting need for community, coupled with a growing desire to support local and independent businesses, provides fertile ground to bring people to the high street this Christmas.

The allure of local environments and less crowded spaces, as well as the home — significantly boosted by Covid — will negatively impact larger shopping destinations. Whereas closer-to-home, experiential retail has the potential to appeal to a more convenience community and experience-seeking consumer.

Implication: Christmas presents a great opportunity to connect with consumers around the core values and causes that have meaning for different groups.  But purpose-driven marketing should always be approached carefully, and brands should ensure that they have real credibility in this space to avoid charges of badging or woke-washing.

Dialling up local credentials and/or support for local retailers and community causes this Christmas provides an opportunity to tap into consumer desire to stay local. Experiential could be a route to driving people back to the Highstreet but needs to be considered in the context of consumer fears about close contact with others in the lead up to the 25th of December.

Disrupted Discovery

Christmas shopping online is great when we know what we want to buy, but many of us have at least a few people who require some shopping around to find the perfect gift for.  Brands will have to think differently about how they stand out and inspire would-be gift buyers, but this also presents a big opportunity to engage differently.

There are two future-facing trends within the report that we could see emerge to help brands capitalise on this.

Media as stores: Everything and everywhere is becoming directly shoppable. Consequently, purchasing opportunities are becoming increasingly frictionless. Physical and digital spaces alike are increasingly being organised around what is being sold. Online, this is fuelling demand for ways to shop all available content directly.

In 2018, 30% of Brits showed interest in TV programmes that allow them to directly buy things they see in the programmes (e.g. what a character is wearing or using) by clicking on the screen – with interest reaching majorities 16- to 34-year-olds. Consumers are now also able to purchase everything from clothes to alcohol directly via social media. And by 2020, 46% of 16–19-year-olds had discovered new products via social media ads.

Shoppable content ultimately helps drive consumers from the discovery stage to an actual purchase, both by placing products in a more curated, lifestyle-based context and enabling more convenient impulse buying.

At a time where people will be looking for inspiration for what to buy but will be less likely to be in-store browsing, this type of content provides a win-win for both brands and consumers.

Brand-engineered serendipity: We believe that the rise of 5G in the 2020s will see data being produced, collected and processed at far greater speeds, with average speeds reaching around ten times faster than 4G.

At the same time, new forms of data capture will become increasingly commonplace. Not only will such advances provide retailers with access to an increased and richer set of customer data, but the emergence of AI computing will allow machine learning to derive a greater understanding of the data being collected and make connections across different data sets. Taken together, such advances will put far more actionable intelligence in the hands of retailers to understand and pre-empt consumer needs and offer hyper-personalised solutions both in-store and online

While this is the most future-facing trend of all we have referenced, we already see examples of this with companies such as Skin Trust Club, a skin testing and recommendation service. The company enables customers to send completed home skin swab tests to a lab for analysis. The results are used to deliver personalised skincare product recommendations, considering the customer’s exact skin type, UV count, level of air pollution and weather data.

Implication: This Christmas presents the perfect opportunity for brands looking to explore what might be possible in this space, and they look to surprise and delight potential gift buyers

Brands should be looking to create shoppable moments within their existing plans and using test and learn approaches in the build-up to Christmas to understand what resonates best with their key audiences and their gifting needs.

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