As anybody in business, you probably think about the future and what the next big thing is. What will steal the hearts of consumers? Who are going to be the winners?
A massive change in retail and ecommerce is already underway thanks to the younger generation who no longer see big, long-standing incumbents as trustworthy and want to spend their money on different brands with modern values.
This is visible not only by the mall and retail location closures across the US, but also the growing support for the anti-Amazon movement. The biggest player in ecommerce (and opening its own physical locations) has come under fire for bad working conditions, misleading promotions and literally stealing other brand’s working ideas and replicating them under its private labels.
All this shows that consumers are more aware of their buying behaviors and brands that work the old way are no longer in favor. The shift in preferences is benefiting the smaller, ethical companies, driven by values and making quality products.
Here are the top characteristics the modern customer appreciates:
1. Purpose-driven brands
Millennials are driving a change in spending, shifting the market from products to ideas. It is no longer trendy to just buy things. All latest studies show that a brand needs to have a higher purpose other than making money for its owners.
Companies dedicated to doing good are becoming household names. The “1-for-1” donation model pioneered by TOMS is ubiquitous now and seems to be working great for companies selling all kinds of other products. Consumers want to feel good when spending their money, it is no longer just about buying status. In fact, social responsibility, ethical consumption and supporting the underprivileged is the new status symbol.
More innovative ways of giving back are stealing the hearts of buyers and ensuring the success of brands like IHeartDogs. They list each price tag on their website as the equivalent of dog food shelter dogs get from the sale of this item. They also donate for rescue missions, rescue dog training and disaster relief. The brand is so successful, its founders launched a new IHeartCats site with the same idea.
2. Convenience is key
The customers of tomorrow don’t have the time to shop – they want everything with minimal friction. That’s why sellers should be everywhere, online and offline to meet the customer wherever it’s convenient.
When we are tired of grocery shopping, traditional supermarkets start offering home deliveries on demand or even as a subscription of set “shopping basket”.
Sellers of larger items like home goods are now thinking about the customers without a car and offer deliveries of in-store purchases. Fashion retailers launch exclusive online collections which can be delivered to a convenient store location.
Trendy products like cold-pressed juices and protein bars made by innovative startups are offered in weekly supply bundles because they realize people won’t order one single bottle of smoothie online and wait for it.
And digitally native brands are opening up physical locations or entering retail chains to get larger exposure to more conservative audiences and connect with fans. QR codes, dedicated video channels and influencer partnerships help keep the community engaged with content even when shopping offline.
So brands that understand their place in the consumer’s mind will be the household choice.
3. Niche appeal
The brands of the future are also very niche. They will cater to very narrow segments of the market in order to establish a truly intimate connection and enter people’s lives.
That’s because consumers are seeking products that work for their specific needs and don’t fall for the one-size-fits-all anymore. When people have access to almost unlimited options of apparel, cosmetics and other personal items (at least in more affluent countries), the choice is about personal expression and not about price.
This is visible even in the proliferation of smaller, targeted brands under one corporate hood like H&M: H&M, COS, Monki, Weekday, & Other Stories, Cheap Monday, H&M Home, ARKET and Afound all cater to different customer groups in various price ranges.
Such fragmentation allows a huge company to serve a large variety of customers successfully without alienating them with a blanket approach. Smaller niche companies, on the other hand, are able to position themselves strongly and gain momentum precisely because they do not go after the whole market and concentrate on solving a few problems very well.
Murry Ivanoff, whose company Metrilo helps direct-to-consumer brands, shares his observations, “I work with about 30 cosmetics brands at the moment and each of them is different, targeting a different customer. Going for a very narrow niche works because it gives focus – they know they cannot beat the incumbents with mass products.”
4. Professionally run
For a few years, we witnessed the proliferation of amatheur entrepreneurs launching online stores and selling stuff. Not that they will completely disappear in the future, but the brands of tomorrow are leveling up the game.
Emerging direct-to-consumer brands are leading the way of innovation and they often need VC money. This comes with lots of data analytics, stricter reporting, more structured operations, more professionally done marketing, hiring experts, etc. For consumers, this means better looking websites, no bugs at checkout, improved security and less scams, better customer service, more relevant upsell offers, accountability and so on.
In short, ecommerce is becoming a legit industry and the winners will be professionally run companies with quality products.
The future of brands looks bright at least from a consumer point of view because it will separate wheat from chaff. Good earnings will go hand in hand with good products and practices.