We can now confidently say Europe and the United States have entered the endemic stage of the COVID-19 pandemic, and with limited impact on consumer behaviour, this latest “new normal” happens to make 2023 a year of interest for consumer goods.

As we look to 2023, we’ve asked our marketing expert and Partner David Wharram and his team at Elixirr Digital to weigh in on what we’re likely to see in retail throughout the year. Which pandemic trends have prevailed and which have floundered? And what do we think the future of this industry holds for consumers like you and me?

Here are David and the team’s thoughts:

A renaissance of intimate customer-brand relationships

If you have been following consumer regulations, you will be acutely aware of how regulation regarding data ownership has impacted brands in the last 18 months. Consumer data is now owned by the digital storefront and cannot be shared with third party sellers. For example, if you sell products on Amazon’s platform, you can no longer ask Amazon to send over all the data on the customers you have sold your products to. That data is now owned by Amazon and simply cannot and will not be shared with you. This regulatory change is forcing brands to develop new ways to access their customers and their data. 

That’s where direct-to-consumer (D2C) offerings enter. Customers can directly interact with brands they trust and in exchange brands gain full ownership of the data and content. These value drivers will only grow in importance over time. Notable examples of D2C models that arose almost unexpectedly during the pandemic were offered by Heinz and Lays. 

Heinz to Home

“Heinz to Home” is a subscription-based service offering both standard and personalised tins and bottles delivered directly to your door. Launched in 2020 with just 3 weeks of development, Heinz to Home owes its existence to the ingenuity of some stellar intrapreneurs. They recognised that more people were shopping online and sought deeper connections with their preferred vendors during the pandemic. In return for providing this service, Heinz has now regained complete control over the relationship with and data about their most valued customers. Additionally, there is fresh opportunity to upsell loyal customers with premium products with higher margins. For example, a personalised tin of beans is £6. 

The case of Lays

Lay’s snack.com is another example of successful D2C. Snack.com is a fully-owned site on which Lay’s offers their entire product range – even their most obscure products. Customers looking for something very niche will be able to find it here – a unique and valuable proposition. Furthermore, personalisation is being incorporated across the platform, from products to digital experiences. On the site, customers are able to build their own product bundles, like a bundle of 30 different crisp packet types, which costs about $20 USD. Direct-to-consumer is certainly a trend that will continue to provide value to customers in a post-pandemic world.

Digital communities

Another way brands are reconnecting with their customers is through digital communities. These are branded online communities that bring people together around a common interest or product. By establishing digital communities, consumer brands own the “whole funnel” in terms of data and gain valuable insights to better serve customer profiles. From virtual interactions insights can be gleaned, like how people research products, what questions they have during the purchase process, which are not yet ready to buy, how they go about researching products, and what questions they have throughout the purchase process. 

Digital communities work best when brands are genuinely connecting people around a common passion. Tate and Lyle is a great example of a branded community building connections between people who love baking. But a digital community around insurance, for example, is less likely to have the same impact… So, our tip to you is: assess the relevance of a digital community for your brand. Digital communities don’t work for everyone, but when they do, they are strong and create symbiotic opportunities between consumers and the brands they love.

Let’s get “phygital”

Some predicted that with the pandemic-induced demand for digital experiences, consumers would be ready to immerse themselves in the worlds that the metaverse has to offer. This, unfortunately, has not proven itself to be true (to-date). The demand for digital during the pandemic has not translated materially post-pandemic. If you don’t believe us, what do you think is the rationale behind Meta’s recent cut of 10 thousand jobs from their metaverse team? As technologists and retailers, we are being forced to ask ourselves: why is the metaverse not “cutting it” in the way we thought it would? Are we engaging in the metaverse because it’s “in” or because there are actual sales and commercial opportunities linked to it?

This year has proven that we’re not yet ready to embrace a completely virtual reality, however we are seeing a desire to blend the digital and physical in one forum together – what some are calling “phygital” experiences. An excellent example of this type of hybrid experience is The Reformation Shop’s seamless in-person and online experience. In London, shoppers can try on items they prefer in the physical store and then order everything online, right from the fitting room. Another example is the Target app (the United States’ 7th largest retailer) which is enhancing shoppers’ experiences through hybrid offerings. Guests can scan product barcodes while shopping and get product details, customer reviews and questions and access to exclusive discounts as if they were shopping online. If the shopper is not ready to purchase in the moment, they can save it to a list and have it shipped to their home.

We are seeing augmented reality for the sake of augmented reality flop but finding ways to bring the best of brick-and-mortar to ecommerce and vice versa looks promising.

Enough with NFTs…at least until we consider sustainability

Between 2020 and 2021, the non-fungible token (NFT) market grew dramatically – up 21,000% over this period. NFTs were everywhere. But as we close out 2022, the hype has fizzled, and it will be interesting to see what sticks once the dust has settled. We think in time NFTs could find a home in consumer brands as early as 2023.

Over this past year, we’ve seen brands experiment with NFT use cases. A compelling retail example is luxury handbags. Imagine including an NFT with the purchase of a bag with a personal note from the person who stitched it. This is the type of high-quality personalisation and thoughtfulness luxury clients value, creating strong emotional connections between the retailer and the next generation, luxury consumer. 

One of the biggest roadblocks to NFT adoption in retail is environmental consequences. Sadly, NFTs, as currently conceived, are one of the worst polluters. Minting a single NFT using a proof-of-work blockchain uses the same amount of electricity an average American household uses in about 47 days. Compare that to more traditional forms of marketing such as leaflets or even emails. It is fair to say that in 2023, brands must be mindful. Without proper due diligence, they can come across as hypocritical or paradoxical to the consumer, e.g. “Please download this NFT of our website to support and learn more about our sustainability performance.” Thankfully, blockchain experts and communities are actively developing methods to reduce or eliminate the environmental impact that NFTs have, which is paramount.

Consumer pressure to do right by the environment is mounting. Consumers have high expectations in terms of carbon emissions and less packaging for products. We will increasingly see the same thing for websites. A good example of this is Buster and Punch’s initiative to assess the carbon efficiency of their website and make their website carbon neutral. If developers can create a commercially and environmentally sustainable way to mint NFTs, we recommend that retailers seriously consider offering them to select consumers.

TLDR: Our take on 2023…

No one can be 100% certain what 2023 will hold, but we are confident that being on the right side of the winds of change will lead to a successful year for any consumer brand. Building meaningful connections with your highest-value customers will always be a winning strategy. It’s also important to remember that in a post-pandemic world, people are hungrier than ever for community – be that online or in-person. The most innovative brands must figure out a winning strategy to remedy customer needs and pains with a precise offering that marries familiarity and touch of modernity – whether it’s sustainable NFTs, hybrid “phygital” experiences, or direct-to-consumer platforms.

Want to supercharge your retail strategy next year? Get in touch with David and our other experts today.