#NEXT2022 – Us all: Happy New Year…! 2022: Burns down Parliament
by Louise Burgers. This is what is next for retailers and brands to navigate in 2022.
by Louise Burgers. It’s already been a sombre start to 2022, with the funeral for our Nobel Laureate Archbishop Desmond Tutu and the shocking fire at South Africa’s Parliament in Cape Town. Having spent Christmas in quarantine with Covid, which was thankfully Omicron Lite, I had a lot of time to rest and reflect on the year ahead. One hundred years ago in 1922, a visionary British author, W.L. George (1882-1926), predicted that by 2022, humans would no longer consume food in its natural state, preferring to take four pills at each meal. Luckily for today’s retailers, he got that wrong, as he was surprisingly accurate in a number of his other predictions.
Over the past two years we have all been faced with life and death scenarios; we have all suffered loss; many of us have now had Covid and been debilitated by the brain fog and exhaustion that accompanies even the milder disease; we’ve lost friends or family to the incomprehensible anti-vax dark web; we’ve all been affected by personal and collective trauma; and we have all had to rework our life goals and our business strategies for this new world and changed society. Our world is changed. Business is changed. We are changed. Our children have had to grow up a little faster. It’s not all negative of course. Many have thrived in the uncertainty and launched new businesses or made beneficial life-changing decisions. There’s a global trend in people leaving jobs they hated to follow their dreams or launch new projects that better serve their passions. We’ve had to think fast and act fast, taking risks we may never have before.
Most importantly, I think all the above has enabled us to narrow our focus on what we need to do. I’m excited about the incredible achievements in social commerce and true omnichannel retailing; coupled with the innovation our major retailers, right down to innovators at grassroots level which have opened supply pipelines into the mass market. After COVID-19 upended all trend predictions for this new decade, most savvy trendspotters have been wary of predicting trends, as the pandemic continues to sow devastation around the world – changing society, slowing economies, and generally creating uncertainty. At the end of 2021, we asked the question of our contributors and partners: ‘What’s Next’. This is what we believe is next for the retail industry, including brands:
1. What is certain, is uncertainty
This pandemic is not the only one we will experience this century. It is also not the only globe-altering challenge which current generations will face, as climate change is catastrophic in some areas. To thrive, we must learn to live and work in this uncertain environment, creating and honing in on opportunities as they arise. We will have to be bigger risktakers, we will have to live more in the moment, and we will need to prioritise purposeful change, both in our working lives as well as our personal lives, if we are to experience job satisfaction and happiness, as a collective and personally.
2. The post-pandemic window of opportunity
Trendhunter.com describes the period following on from the pandemic as a ‘window of opportunity’, born out by history. The Renaissance followed on from the Bubonic (Black) Plague in Europe; and the Roaring Twenties’ hedonism and societal shifts followed on from the Spanish Flu and World War One. A period of chaos follows global disaster and disruption, before a reset happens that creates significant and positive changes to society, economics, politics, and self.
3. South Africa’s consumer spending recovery stretches into 2023
Fitch forecasts that South Africa’s real household spending will grow by 1.9% in 2022, a deceleration when compared to its 2021 estimate of 4.6% growth. However, Fitch notes that the COVID-19 pandemic and related restrictions had a negative impact on household spending in 2020 and has created a low base for real household spending to grow from, following a contraction of 7.2%. “While we forecast total household spending to increase in 2022 when compared to 2021, it will only rise above the pre-Covid levels of 2019 by 2023. This means that South Africa’s consumer spending recovery will spill into 2023.”
4. Omnichannel and social commerce dominate in 2022
Retailers will need to focus on upgrading both their online and instore experiences in the future, making it easier for customers to understand and see available inventory, make purchases, and also build on new hybrid models such as the buy-online/store-pickup models, the CMO Council advises.
5. Leverage social commerce and influencer marketing
Social media has changed the way brands engage with consumers. Right now, 88% of Gen Z and Millennials turn to social for guidance on their purchasing decisions and eight out of 10 consumers purchased off the back of seeing it on a content creator’s platform, says Greg Bailie, head of growth and innovation at Nfinity Media. Social platforms have added an entirely new layer to the full retail experience; and social commerce is at the top of etailing and omnichannel strategy.
6. Marketing and MarTech investment ensure economic recovery
As we emerge from the pandemic, marketing and MarTech lie at the heart of the economic recovery for business. But to make sure MarTech investments count, marketing needs to have a very effective working relationship with IT, that spans strategy and management. “The urgency to unearth actionable data insights and improve the customer experience through MarTech has never been greater. Much of a company’s future rests on revenue growth fuelled by digital marketing and delivered by a technically savvy workforce. MarTech is fundamental to meeting both CMO and CIO objectives,” reported the CMO Council in the fourth quarter of 2021.
7. Understand the pervasive Metaverse
Of course the Metaverse is a trend, which is why Facebook rebranded to Meta, ensuring that the metaverse will remain on all trend lists for a long time! Trendhunter has great insight in this regard: “The term ‘metaverse’ refers to a virtual reality space in which users can interact with a computer-generated environment, as well as with one another. Tech companies are racing to develop the potential of these digital spaces, with emphasis on social life, culture, and brand presence.” The takeaway here is that the speed at which technology is evolving means more digital services that provide immersive experiences to users. Of course, brands need to be there, to participate, create, brand, and sell.
8. Brands will continue testing the waters on NFTs
One of the most insightful articles we carried this year was from our columnist Kirsty Bisset, HaveYouHeard MD, who outlined how brands can use NFTs to engage with customers. NFTs, which are nonfungible tokens, are going mainstream in markets like Japan, China, and the United States where, according to a recent Harris Poll, quoted by Bisset, 40% of US millennials are both familiar with NFTs and likely to buy one. Facilitated by the digital frontier being challenged and extended by the decentralisation of the web and the creation of new areas or metaverses, on what seems like a daily basis, NFTs are becoming more popular and now brands are exploring opportunities.
9. Prepare for the end of cookies
In 18 months’ time, Google will withdraw support for third party cookies in Chrome. We’ve known it’s coming for some time, but this is the year brands, publishers and organisations implement new identifier strategies. The consequences, according to AdWeek, will be further pushes on global privacy; squabbles around ownership of publisher contextual data; and the testing of new solutions for audience targeting and ad delivery. There are over 100 cookieless solutions in the market looking to capitalise on this. So, 2022 is shaping up to be a significant year in connecting data and content with brands.
10. Plan around global supply chain challenges which will persist
Consumers, retailers, and suppliers are predicted to face rising costs and decreased inventory due to pressure on the global supply chain, reports Salesforce. Manufacturing capacity, logistics costs and labour shortages have become pressure points in the industry, which is likely to cause higher retail prices for merchandise. On top of that, product availability is likely to decrease due to shipping delays, during peak retail seasons.
11. Retailers need to be agile to meet changing consumer needs
Understanding and engaging the post-pandemic consumer means that brands and retailers need to move quickly to address changing consumer preferences, priorities, and trends. This 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. Source: What’s Trending in Consumer Spending – Gaining Lift from the Consumer Shift, a report from the global CMO Council. While marketers are optimistic about the future, according to a recent Salesforce State of Marketing survey, 66% of South African marketers believe that challenges are afoot. This is primarily due to the constantly shifting customer expectation.
12. Shopper convenience is key to all retail and brand strategy
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 Council report.
13. Consumers are looking for consolidated shopping experiences
If you don’t have your own ecommerce site, make sure that your products are available on the big product aggregator sites; and invest in social commerce – it’s the next big thing. The consumer is moving more and more to single space shopping platforms. There is no better single space shopping platform than social media, wrote Craig Hannabus, strategy director at Rogerwilco and a columnist on Retailing Africa.
14. Transparency in ingredient and nutritional value labelling is essential for SA consumers
“COVID-19 fast tracked the South African consumer’s shift to online shopping in the Food and Personal Care categories. Whereas 22% of online consumers claimed to shop for these categories online pre-Covid, this increased to 52% during Covid. This trend is likely to continue post-Covid, with 56% of online consumers stating they will continue to include online retailers in their retailer repertoire in the future,” says Esti Prinsloo, NielsenIQ BASES director of sub-Saharan Africa. More and more consumers are pursuing a healthy lifestyle through the products they choose to purchase and use. Manufacturers need to address these rising consumer needs to find new drivers for growth,” Prinsloo adds. “South African consumers are looking for transparency, especially in terms of ingredient and nutritional value labelling, which they want to be clearly indicated. Clean ingredients are becoming a necessity which will help boost brand trust for those brands that utilise them and indicate so on the packaging.”
15. Why businesses need to prioritise cross-generational marketing in 2022
It’s important that brands include a younger demographic that they may have missed previously in sales and marketing strategy. They should adopt a multigenerational marketing approach; and generational inclusivity needs to be a marketing priority for all brands in 2022. “We know that the pandemic shifted consumer behaviour in many ways, but brands need to view this as a great opportunity. The best way to strategically leverage that opportunity is to take the guesswork out of digital marketing,” says Reagan Kok, CEO at Hoorah Digital.
16. Integration of online and offline experiences
As ecommerce thrives, people’s expectations of physical retail stores will change. They may, for instance, be places where consumers go to experience the goods you’re selling before buying online, says Greg Gatherer, account manager, Liferay Africa. Retailers can play into this by creating a seamless experience between the online and offline worlds. At the same time, they need to ensure that those store experiences are authentic, and data driven. Here, a digital experience platform can be particularly helpful as it allows the organisation to seamlessly integrate data from across the organisation to create the best possible experience, no matter where the customer might be.
17. Investments in AI will grow
In McKinsey’s Global Survey on AI adoption, 56% of respondents report AI adoption in at least one function, up from 50% in 2020, with the greatest increases coming from companies in emerging economies. Nearly two-thirds of respondents say their companies’ investments in AI will continue to increase over the next three years.
18. Contactless payments continue to rise
Gareth Grant at The MediaShop says that some marketing lessons in the financial sector stood out for him this past year. “We’ve seen a continued rise in contactless payments. COVID-19 has had a dramatic impact on the rise of contactless and cashless payments in South Africa. As much as cash is still king in the informal sector, we are seeing a rapid increase in the adoption of other cashless solutions in the form of POS devices linked to mobile phones,” he says. “Another observation during this year has been the growth of Money Transfers which has rocketed during the course of continued lockdowns and as consumers have limited movement. As long as someone has a mobile phone, they can receive a money transfer and withdraw the cash from an ATM. Money transfers transcend more than your traditional banks, and we see the likes of telecom companies operating heavily in this space.”
19. Increasing influence of the Chief Growth Officer (CGO)
The rise of the chief growth officer (CGO), as well as chief revenue and commercial officers, within organisations is happening at global brands. New CGOs have often previously held Chief Marketing Officer (CMO) roles. Nonetheless, some major companies are turning to other executives to take over the reins of growth, which will impact CMOs, reports the CMO Council.
20. Necessity will be the strongest consumer driver in 2022
It is critical for brands to understand their own portfolios, price laddering, relative price position, and promotional effectiveness. Assortment and innovation are also key as they feed into larger trends related to wellness, organic, and sustainability, reports Nielsen IQ. “The ‘great grocery edit’ in 2022 will see consumers intentionally edit their baskets, re-write their grocery lists, and quit brands all together for options that better meet the necessities of health, well-being, value (of both price and purpose) and availability. Today’s consumers, with a heightened state of needs and challenges, are pausing at the point of purchase to ask themselves, ‘do I need this?’,” wrote Genevieve Aronson, global head of thought leadership, Nielsen IQ. “Take note, consumers will not hesitate to dump the brands that aren’t delivering on the needs that are now deemed a personal priority. Despite another year of unpredictability, consumers will fight to maintain any sense of control by flexing their power of choice.”
Curated and sourced from: RetailingAfrica.com; CMO Council; AdWeek; McKinsey; Kantar; WPP; TheMediaShop; Liferay Africa; Hoorah Digital; Rogerwilco; Salesforce; Nfinity Media; HaveYouHeard; Nielsen; Fitch; Trendhunter; Trendwatching.
What’s certain for 2022 is more uncertainty. Yet, in this uncertainty, are windows of post-pandemic opportunity that retailers and brands need to have strategies for.
Main image credit: Pixabay.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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