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Good morning, <<First Name>>!

For someone who loves innovation and improvement as much as Scrooge McDuck loves swimming in his money, I've sure tried a lot of things with this newsletter!

I started this newsletter because I wanted to bring all this amazing information to you – but I just didn't know how. I've often looked to my newsletter heroes to try and learn, and I've worked on becoming a better writer.

And in the end, I'm glad to have discovered that this genuinely is helpful to you!

However, since I sent out the first newsletter, on April 20th 2020, it's been like nails on a chalkboard that I didn't have a name for my newsletter.

And now finally, I've found it. I've christened the newsletter The Business of Marketing.

Because it's only by understanding the underpinning currents – by understanding the business of marketing – that we can make better decisions.

So, in the spirit of this bird's-eye-view-thinking, let's talk about what 2020 taught us about the future of retail.


The irrevocable things 2020 did to retail

There are three developments setting the pace for the next 10 years in retail.

1. The DTC boom, where new and old DTC brands enjoyed impressive growth.

Even before the pandemic, DTC brands were chipping away at the names we're used to seeing on store shelves. But at the peak of the pandemic, consumer confidence took a nosedive and many big brands hit pause on ad campaigns.

Empty store shelves were just the thing to encourage consumers to venture out and try something new.

2. Boomers are shopping online now. Who'da thunk?

They were the least likely of the gens to move online, but move they did. And they like it, too, because there's now a widespread preference for online shopping, the use of digital payments and mobile games among boomers!

3. Brick & Mortar started recasting mid-season.

A long list of household names, including JC Penny, Nieman Marcus, J-Crew, Brooks Brothers, Debenhams and Arcadia, shut their doors in 2020.

Post-pandemic retailers and shopping malls are redesigning the physical store to deliver unique services, encourage product discovery and support e-commerce.
 

We can't give all the credit to Covid-19 for 2020 tho.


It simply sped up the inevitable by reinforcing some newly learned behaviours – we want to keep buying our groceries online – and hitting pause on others – we can't wait to stop cooking at home and start eating out again.

As 2020 made our reluctance to admit to the big changes that have been cooking for the past 20 years irrelevant, two things are now glaringly clear:
  1. The change in consumer behaviour is brought on by a global shift in demographics.
  2. There are now more single-person households and urban living.
The impact of these two facts will only become more evident as we charge into the '20s.
 

There are 3 types of retailers that will thrive (and one that won't).


Because modern retail is all about convenience. And technology is bringing online and offline retail closer together.

Marketplaces are at the top of the food chain.

Amazon, Alibaba, Etsy, eBay, Aliexpress and JD.com are defining what consumers should expect from online retail.

They're setting the bar for what technologies and supply chains are required to deliver thousands of products to millions of people quickly and cheaply.

Surfing in their wake are the marketplace-brands.

These brands skipped building their own platforms in favour of using existing marketplaces as sales channels. By selling on multiple marketplaces, they're instead focusing investments in products, brand and communications.

This approach is so popular that it created a new type of business model called Amazon Roll-up companies, which own and operate several single-product brands and scale them through venture capital.

Then there are the large regional retailers.

These retailers have already established supply chains, a large physical footprint and a loyal customer base. Wallmart+ is a great example of how a regional retailer can turn its network of physical retail stores and distribution networks into a marketplace.

And finally: the laggards.

Almost 1-in-3 traditional retailers in the US and Western Europe fall into this category. These brands are the least likely to survive because, so far, they're treating e-commerce as a passing trend.

Over the past decade, they've prioritised expanding their existing locations and opening new ones at the expense of digitalisation.

Their problems were compounded as they started 2020 overburdened by debt and lagging behind on even the most basic tools for e-commerce. Consolidation has been the saving grace for some, while others have had to close the doors for good.
 

The re-birth of brick and mortar is here.


In a bittersweet way, physical retail needed the pandemic to break out of its 10-year funk.

Because the role of the store has changed post-lockdown.

China was the first country in and out of the pandemic. 

In China, as in the rest of the world, online retail surged during the lockdown, and that growth continued throughout the year.

After lockdown, foot traffic in Chinese malls never fully recovered. But even though fewer people visited malls, the conversion rates for certain products (e.g. luxury fashion) went up.

American retailers and mall operators are betting on that retail stores will continue to play an important role in certain customer segments and product types.

Experts believe the future of brick and mortar is in offering more unique services and turning product discovery into an experience.

Many have already downsized and many are turning to pop-up style locations that are designed to support e-commerce sales.

During the pandemic, many shopping mall owners turned to social e-commerce and built their own marketplaces.
 

The new DTC brands know that retail is getting crowded.


They also know there's no better place to be seen than Instagram and TikTok.

As more brands compete for the same audiences, traditional customer acquisition tactics (Facebook and Google) are turning out to be less effective and more costly than before.

So, the latest generation of DTC brands are focused on building distinct brands and standing apart in how they communicate.

They're ditching the sterile, picture-perfect look that's so common on IG with bright, bold colours and over-sized fonts.

Beyond aesthetics, the new generation of DTC brands is also doing business differently.

They're using their products as a platform for busting taboos, celebrating diversity, and empowering people who have been left out by mainstream and traditional brands.

Social is a natural progression of retail as it closes the loop between browsing, sharing and shopping. 

Although real adoption rates remain low, a recent poll in the UK found that 2-in-3 shoppers would be more likely to purchase without leaving the social media platform.

Social e-commerce is already huge in China.

And if the adoption rate of TikTok outside China is anything to go by, we can be certain social e-commerce will soon become commonplace for everyday items.
 

There's a lot happening in retail – outside of e-commerce – that will reshape what people expect from retailers.


Here are some tenets to set your brands up for success over the next decade:

Retail is all about convenience.

Look to the marketplaces if you want to understand what behaviours and habits are already commonplace among consumers.

Aiding product discovery is more important than ever.

Offering unique services that aren't possible through online interactions are the future of physical retail.

Be bold. Have a community.

Because what's new today can be lame tomorrow. The way you survive novelty is to be bold and stand out from day one. A strong community is what will drive your sales, a good product alone isn't enough.

Design your brand to withstand social scrutiny.

Make sure both your business and your products are up to snuff. Obsess over offering convenience and remember that the future of social e-com is a curated experience for your community.
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In case you missed:

The cost of privacy for social media platforms

We’re still a few months away before IDFA becoming explicitly opt-in, and analysts already weigh in on the damage to social media platforms as a result.

“Facebook and Snapchat are likely to see the biggest impact from users opting out via these new prompts. MKM says that Twitter and Pinterest will also see impacts, though to a lesser degree, with Google and Amazon at the bottom tier of exposure among the big tech players. MKM also notes that many other ad providers outside of the large players will also see reduced effectiveness as a result of the change.”

The marketing campaign of the decade

Driving a widespread adoption and use of the vaccine will require both expansive and expensive marketing campaigns. It’s going to take the best of our rational thinking, empathy, data and creative storytelling to break through the cacophony of lies and conspiracy theories. 

The first campaigns for Moderna and Pfizer are already out, and now the world’s largest media houses are reinforcing a positive message about the vaccines. I wonder if that alone will that be enough to bring anti-vaxxers on board?

A different kind of loyalty program

This is a really inspiring example of blockchain being used to bring age-old business models to meet modern consumer needs. It’s also a brilliant use of a blockchain-based loyalty program that incentivized people to make choices with social and environmental benefits.

Coming to terms with TikTok

After a lot of drama, confusion and avoidance, brands are getting in the swing of things.

Many have accepted that fact that TikTok isn’t IG with more videos. But a far more difficult pill to swallow was coming to terms with giving up control. In many ways, TikTok is the ultimate UGC platform where users can mould your carefully crafted campaign to their whims.

How weak AI has already reshaped the world

We don’t need to achieve singularity to write the perfect novel, create a perfect cappuccino or post the best social media update. Run of the mill AI is already disrupting industries.

Take Ant Group, for instance, an AI financial services business founded in 2014 and employs 9000 people. It already serves 700 million customers. Compare that to Bank of America, founded in 1924, that employes 209 000 people and serves 67 million people with a limited offering.
These 5 articles are from my daily digest where I curate the best content covering everything from emerging trends in marketing, consumer behaviour, retail, public policy, strategy and technology. You can sign up here.

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“If your stories are all about your products and services, that’s not storytelling. It’s a brochure. Give yourself permission to make the story bigger.”

- Jay Baer

Until next week,
Aliyar

PS. Are we connected on LinkedIn? No? Let's remedy that, shall we?
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Thanks for reading and sharing! BR, Aliyar.
Had so many espresso shots you can't remember why I'm sending you these emails? You're receiving these email because you opted in (on my website aliyarhussain.com) to get this weekly espresso shot of knowledge, confidence and inspiration to your inbox. That was a good move, but if you want to take a bad turn down a dark alley, you can easily update your preferences using the links below. | Aliyar Hussain, Rysäkuja 3 a 5, Helsinki 00980, Finland

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