🛒 retail.tea.leaves // week03.23
The Changing Consumer
This is confusing: resale and luxury are both up.
Resale is outpacing overall market growth. And could be a path to a more sustainable offering for many businesses. It also neatly fits the current narrative around the economy as a whole.
Luxury, on the other hand, is immune to that narrative (for now, at least). It’s discovered the fountain of youth, as all the growth last year came from Millennial and Gen Z shoppers. (Price hikes and influencers are primarily to thank for the growth here.)
Both categories are big with The Youths.
And when their powers combine:
The luxury secondhand market is growing 11 times faster than traditional retail
Yet more proof of what I predict will be The Year of the Splinter.
Related to growing secondhand and thrifting activity, Etsy is exploding, the platform "ended November [2022] with a million downloads in one week".
What else does it hint at? More interest in sustainability and authenticity. Handmade potentially blossoming beyond a niche offering.
Remember that "new normal" we kept getting promised? Turns out it may not look as much like the "old normal" as some tried to sell us on.
- People like convenience! Streaming and other at-home replacements are stickier than some expected (which is mind boggling that some people are surprised by this). Maybe the pandemic accelerated our path to fully automated luxury communism.
- People are starting to spend through that free pandemic money and other savings, which means consumer spending may catch up to inflationary and recessionary concerns this year.
- Thrift is in. That means more information gathering, more searching for savings, and earlier shopping windows are here to stay.
Nearly all consumers read reviews, but 21% don’t want you to contact them to ask for one. They don’t want you to contact them at all. Roughly half want to hear from you less often than weekly (guess I’ll just ignore this?).
These are UK numbers, but I don’t imagine people elsewhere are wildly different on this. In general consumers think you are ignoring their feedback too.
With all this in mind, what should you focus on this year?
Rewarding customer loyalty (or you could make this part the core of your brand experience moving forward and see how that works for you).
Let's Get Digital
An analyst firm has predicted that Amazon Prime membership dropped in the US, for the first time ever. Amazon is cagily refuting the claim with word play, but would they really admit it?
There’s a new AI on the block for retail media advertisers: Horizon’s Neon. It’s purpose is to help advertisers better compare performance across retail media platforms so they can get a more efficient budget allocation. It sounds like data standardization and predictive analytics for ROI maximization via ROAS, which is no small thing.
The Playbook
Sell a product that is purchased for its effectiveness at one thing (cleaning dishes, amping you up, etc)?
Try using pictures with multiple copies of the same product in it.
What's the play for 2023?
Shifting spend.
Clients are expected to decline their spend on Meta by 10%-15% in favor of Google, the search giant’s Performance Max automated ad product, direct mail, and test channels like podcasts, TV and other social platforms.
Another DTC brand said it was decreasing spend on Meta by 25%-30% in the coming months and will then further evaluate the return on investment.
&
In preparation for a potential recession, several sources said they were prioritizing profitability over growth and finding cheaper ways to advertise, such as affiliate marketing.
It seems the name of the game is fiscal responsibility mixed with balancing brand and performance marketing.
My take: everything is lining up for Meta to be a platform of opportunity this year. Budgets are moving elsewhere but the company will not go quietly into that good night. It derives revenue from engagement, and that's where all of its efforts are currently focused.
It's weird that Facebook Ads could be the zig to others' zag this year.