#NEXT2022: Social commerce & omnichannel strategy will dominate

by Louise Burgers. We all know that consumer spending has gone through dramatic shifts since March 2020 when the world shut down and global supply chains were disrupted – and have yet to recover. Retail buyers were forced to rethink both what they spent on due to health, safety and isolation; how they acquired goods and services; and what a changed consumer would be spending on – when they started spending again.

What’s Trending in Consumer Spending – Gaining Lift from the Consumer Shift, is a report from the global CMO Council, which partnered with Commerce Signals to track insights into buying behaviour during Covid and beyond  . Commerce Signals analyses week-by-week changes in spending behaviour of US consumers, based on payment data for 40 million US households. “For consumer brands, retail and ecommerce, the big question facing marketers now, is what spending will look like going forward? How will changes in consumer behaviour and thinking impact future spending patterns? How should consumer-facing businesses respond?”

The Chief Marketing Officer (CMO) Council represents the corporate marketing leaders and brand decision-makers across a wide-range of global industries and its 16,000 members control more than $1 trillion in aggregated annual marketing expenditures, running complex distributed marketing and sales operations worldwide in 110 countries. The report includes interviews with senior marketers across a variety of industries, consumer products and media categories, to understand how companies view the future of consumer purchasing behaviour in a post-pandemic world.

“Our findings demonstrate that consumers are both resilient and resourceful. Their desire and willingness to spend, not only on essentials, but on entertainment, leisure and lifestyle, are a powerful force in the US economy. Spend priorities change, but consumerism persists. Likewise, the ingenuity and agility of businesses, brands and marketers to meet customers where they are, both in good times and in bad,” reports the CMO.

Covid and the adaptive consumer

The report starts by recording that the bottom dropped out of spending for the vast majority of consumer categories when the pandemic lockdowns first took effect in March 2020, the world over. “Overall card spending declined by close to 11% in March of 2020, compared to the same period over 2019. Only a few essential retail categories, led by the grocery stores, showed improvement over March of 2019.” Retail sectors such as restaurants, department and clothing stores, also recovered more slowly, as consumer spending shifted to other categories aligned with the new priorities of a stay-at-home lifestyle, such as sporting goods, food stores, furniture stores and mass discount stores, like Walmart and Target, indicated Nick Mangiapane, CMO of Commerce Signals. In the US, the data showed that overall consumer card spending fully recovered to 2019 levels for the same period by June of 2020, well into 2021, as the home became the focal point and command centre for all facets of the household experience over the last couple of years – from working at home, to shopping online and turning to in home entertainment options, such as streaming media.

We know that ecommerce is on a massive growth trajectory, both in South Africa and around the world. In the Ecommerce Trends 2021 report from ecommerce.co.za, it states that online spending, globally, is four to six times ahead of its time: “Pre-2020, South Africa’s online retail sector was small by the standards of developed international markets. Despite only accounting for less than 2% of retail sales, however, the sector was enjoying double-digit growth – up to 20% year-on-year in fact, according to World Wide Worx. This rapid growth in both scope and value, was accelerated by the COVID-19 pandemic and subsequent lockdowns, even though etailers were at first subject to the same lockdown restrictions as other retailers when South Africa went into a hard lockdown in March 2020.”

The SA Ecommerce report goes on to say that the pandemic has had two distinct impacts. “First, there was a huge increase in ecommerce adoption by consumers and businesses which most likely would not have entered the online market for some time. The same was true worldwide. According to an Adobe report released in May 2020, it would have taken between four to six years to reach the levels of online spending that took place in the first months of 2020. This growth has not slowed down, with consumers increasingly comfortable with online platforms, and online business models becoming more sophisticated and frictionless for customers.

“The second is that online service offerings have grown exponentially. Businesses that were already online, capitalised on the boom in ecommerce sales, and more ‘traditional ‘brands invested in omnichannel opportunities. Similarly, suppliers to ecommerce businesses, from payment gateways to courier services, increased their service delivery, supporting the growth of the sector as a whole. While there are still a few large brands that dominate the space, with more people actively utilising online services, overall trust in the sector has increased, and niche brands have benefited from this.”

The massive shift to online purchasing

Even in the US, there were dramatic shifts to spending on online channels, as consumers where either locked down, or chose to avoid crowded spaces such as malls. For the entire year of 2020, online retail spending rose 50% in the US, compared to 2019, while in store card sales grew just 1%, despite the shift away from using cash. As the economy opened up, however, instore sales made a significant recovery. The surge in online sales has slowed in recent months. The huge pivot of the pandemic was the improvement in the online purchasing pipeline, with all major retailers investing to improve the online shopping experience for customers – from the US to South Africa.

BOPIS (buy online, pick up in store) has been another major global trend driven solely by the pandemic for health and safety and reasons of convenience. Consumers have become more and more comfortable with someone other than them doing their shopping. Drive up options are likely here to stay; as is the 60 minute or same day delivery options driven by South African retailers during the pandemic. “Almost every brand that we work with is restructuring their strategy to make sure that their ecommerce experience and their store experience mimic each other, meaning it’s easy to purchase, to understand where the inventory is and to give them the experience that brands are looking to deliver to their customers,” Jennifer Foreman, SVP and head of growth marketing at Trax, is quoted in the CMO report.

In South Africa, according to the Ecommerce report, investment in technology and supply chains is increasing; and omnichannel strategies are crucial. What is very interesting in our disparate market demographics – is that everyone is being catered for, from millennials to pensioners, and high-end niche brands to spaza shop owners. “However, despite the accelerated growth in the sector, declines in consumer spending have also impacted sales. Online retail has not remained unaffected by economic pressures and etailers have needed to focus on marketing and customer service to differentiate themselves and to attract loyal customers.”

Understanding and engaging the post-pandemic consumer

“If there is one thing that marketers learned from the COVID-19 experience, it is that brands and retailers need to be agile and flexible to the changing needs of consumers. The ability to pivot quickly to address changing consumer preferences, priorities and trends was essential during the pandemic, and marketers believe it is critical for the future. Companies need to meet consumers where they are today and where they will be tomorrow. That requires heightened levels of behavioural, spend and market data; greater personalisation and intimacy with customers; improved ad targeting segmentations; and increased localisation of marketing efforts and campaigns.” Important to note:

• Marketers, more than ever, need to vigilantly monitor and predict consumer needs and behaviours at the most detailed level and respond quickly to these changes.
• Covid has impacted different regions, countries, and consumers differently, depending on the level of hardship caused by repeated lockdowns for health and safety – not economic reasons. Those in travel and hospitality industries out of work and unable to access Government benefits, are obviously not spending at the same level, as consumers who are back at work fulltime. This means that localised campaigns are important for various urban areas and depending which region the brand is active in. With supply chain issues impacting manufacturers across nearly all industries, throughout the world, brands also may need alternative supply routes; or need to source product or raw materials locally; as well as align marketing efforts with product availability by region.
• Social commerce will be the next driver of retail and brand sales – from online to in store. It is the next step for brands outside of the ‘cookie-less’ online environment and tightened privacy laws. Plus, it will boil down to having the right data, instead of all the data, for brands to create meaningful experiences for all their customers.

“The lessons of the COVID pandemic are many. But chief among them is the critical need for brands to be able to pivot quickly based on the changing needs and requirements of customers. Understanding where consumers are today and where they are going tomorrow, based on timely access and predictive analysis of data, will be essential to business and marketing success in the months ahead,” the CMO concluded.

Main image credit: Pexels.com.

Louise Burgers is the Publisher and Editor and Co-Founder of RetailingAfrica.com. She has spent over 20 years writing about the FMCG retailing, marketing, media and advertising industry in South Africa and on the African continent. She has specialised in local and Africa consumer trends and is a passionate Afro-optimist who believes it is Africa’s time to rise again and that the Africa Continental Free Trade Agreement (AfCFTA) will be a global gamechanger in the next decade.

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