Updated: Jun 22
#1 More retailers will set up personalisation engines
The trend that won’t come as a surprise to many is that we expect to see more retailers set themselves up to deliver mass personalisation through their first party data in 2022. The major retail players in the US were faster to react to the opportunity presented by tightening consumer privacy standards than us here in the UK, all of whom are now leveraging their first party data as a rich and scalable solution through newly established ‘retail media networks.’
We’re catching up however, with Boots and Tesco forging the way in the UK, both of whom announced their new first party data propositions in Q4 of this year, perhaps unsurprisingly given the power of Advantage Card and Clubcard data. We wouldn’t like to predict who will be next but there are plenty of retailers that come to mind that are brilliantly positioned to build out their own audience networks and reap the rewards.
#2 Retail media toolkits will include more upper-funnel, awareness-driving channels
Retail media was considered for a long time as a conversion channel only. This never really made sense when you think about the volume of people shopping in major UK retail stores and therefore the awareness that can be achieved, but against the backdrop of an uninspirational world of cardboard, it’s probably a little fairer.
Today, however, is a completely different story. Retail media is now rightfully recognised to be able to deliver brand-building advertising, as well as drive lower-funnel conversion, owing to the greater diversity and sophistication of media opportunities and the convergence of the physical and digital worlds.
This means, we believe, that we’ll see more retailers add upper-funnel, awareness-driving channels into their toolkits in 2022, in order to deliver more integrated co-marketing campaigns with their brand partners. Online this could be digital display or video, whereas offline this could be DOOH – all with the opportunity to geo-target to ensure ads only reach shoppers within a set distance to stores where the product is stocked.
#3 Q-commerce platforms will command a greater share of advertising spend
Quick commerce is growing explosively but the reality for most brands is that it represents only a tiny portion of their sales today. This, coupled with media propositions in their infancy and a fragmented market, can make it difficult for brands to invest marketing budget in these platforms.
As players are either pushed to the sidelines or bought out however (this has already begun) the market leaders will quickly become apparent. These players will still be relatively small for brands – the q-commerce market is expected to grow to £3.3bn vs. the £205bn grocery market. That said, we believe that they could command strong levels of advertising investment owing to their unique proposition – they can offer brands unrivalled data opportunities, access to specific audience types, as well as access to specific missions – the distress purchase comes to mind here (painkillers, nappies, foil for the turkey…).
We anticipate that brands, particularly portfolio FMCGs, will start to write q-commerce marketing spend into their budgets in 2022, although we also anticipate that these budgets will continue to carry the burden of the ‘innovation’ label.
#4 The in-store experience will be re-imagined
Although online retail sales continue to grow, £7 in £10 are still expected to take place in bricks & mortar retail by 2024. Even in 2020, 61% of consumers reported to either only or mostly shop in physical stores. This proves the need for continued investment into the shopping experience, although it needs to be in line with changing shopper expectations and behaviours.
Many predict that shoppers will either seek a high touch, emotive-led ‘experience’ or expect a speedy, friction-free ‘transaction’ in a post-COVID world. A great example of the former is Netflix, traditionally an online brand only, who will open their first physical store next year, recreating sets from popular shows and showcasing live how AI recommends viewers new shows. A great example of the latter is Amazon, again an online brand making moves into offline, with their Amazon Fresh ‘just walk out’ shopping concept.
In this new world, we believe commerce marketing plays a significant role. For the former, think immersive retail theatre, bigger and better than ever. Think hyper-personalisation in store, leveraging customer data in real time. For the latter, remember that at its core, commerce marketing is designed to connect the dots along the path to purchase to enable a seamless customer experience.
#5 Digital in-store channels will grow in popularity
We expect retailers to invest significantly in digital in-store channels in 2021, in line with shoppers seeking a greater level of relevancy and personalisation. Digital channels provide a multitude of benefits to advertisers – compliance is strong, brandability is high, not to mention the opportunities for more sophisticated targeting and dynamic creative optimisation. And in a world where there’s still uncertainty in relation to COVID restrictions, the opportunity to activate campaigns on channels that are flexible and reactive is key.
Although much of the growth of digital in-store channels is likely to come from existing formats, we expect to see new formats emerge too, notably scan as you shop advertising, launching next year in Tesco, and new full store front digital fascias which will be trialled in select WHSmith Travel stores.
#6 Social commerce will step into the light
Last year, there was a 95% increase in social commerce sales in the UK, with the channel generating £374.8bn in revenue globally and growing rapidly. This year, we’ve seen all the major platforms react accordingly, advancing their advertising propositions to boost social commerce. Instagram have launched new shopping ad formats, Pinterest have upgraded their ‘Collections Ads’ and Tik Tok have just launched 4 new advertising and e-commerce products as well as a new self-serve platform.
Next year, we expect to see further developments from the platforms themselves as well as third parties like Shopify entering the space to act as social commerce enablers. Although livestream shopping is significant in China, we’re not sure that this will take off in the UK just yet. But we do expect brands to re-frame their approach to social media, moving away from the thinking that social channels act purely as a ‘window shop’ to drive awareness towards the view that they are fully-fledged shopping channels that can deliver volume conversion.
#7 The self-serve model will continue to flourish
Citrus and Criteo have been leading the way in establishing an on-site advertising solution for retailers that enables brands to self-serve. The model affords retailers a streamlined media process that ultimately drives profitability and incrementality, and delivers to brands a greater level of ease, transparency and data access. We expect more retailers, particularly mid-sized players, to buy into this type of solution next year, and perhaps some to even pioneer their own solutions.
#8 HFSS regulation will ignite a renewed ‘in aisle battleground’
With HFSS regulation coming into play in 2022, brands that are high in fat, sugar and/or salt will face new restrictions around secondary sitings, multi-buys and the use of branding. In general, the sentiment is that although the new restrictions will hurt, this is an opportunity to connect with shoppers in a new, deeper way, and wean them off the ‘drug’ of price promotions. Although the regulation only comes into force in October next year, preparation is already well underway by those impacted. We expect to see more cross-collaboration and test & learn between brands and retailers next year.
When HFSS regulation was first outlined, many brands talked about doing one last ‘big blow out’ ahead of the change. We expect to see this from some brands, but not all – we anticipate many to stagger their activity to avoid a whiplash effect on shoppers from the sudden change.
We also expect to see a new ‘in aisle battleground’ (on or offline) with the need to standout at fixture for HFSS brands being more important than ever. Many are talking about the need to ‘double up at fixture.’ Consequently, retailers are already innovating here, particularly in the physical world, and we anticipate this will continue – from digital in-aisle signage and bespoke fixturisation to aisle takeovers and more creative hotspots.
Finally, will brands and retailers follow the letter of the law or the spirit of the law when the regulation comes into play? We anticipate brands to be a little more creative than their retail counterparts who, under the current direction, will be liable if something is incorrectly promoted in their store.
To discuss any of the above, debate or even add to the trends we've highlighted, get in touch - we're always keen for a cuppa, even if it's virtual.