The recovery won’t be equal

As part of the Hearst family, we hosted an online survey across several of the global media company’s lifestyle titles to understand how people are feeling financially and results were mixed. 32% said they feel better off financially, benefitting from little or no commuting costs, however 16% are worse off and within that 10% say their financial position is ‘much worse’.
 
A K-shaped recovery: While some parts of the economy are expected to recover this year, others are not, so we will  find that some cohorts of consumers will be better off (or at least back to normal) while others will find 2021 extremely tough based mainly on the sector they work in.  Up to 39,000 jobs have been lost or are at risk in travel, 660,000 in hospitality and 230,00 in retail (Source: Centre for Retail Research) and yet Tesco added 16,000 jobs, Amazon 10,000 and both construction and real estate sectors have more vacancies than they did in 2019 (Source: ONS). There is going to be a redistribution of what people do and how much they earn.
 
The products we buy will be shaped by restrictions (and change with them): buying behaviour will continue to be shaped by the restrictions we face and only returning to some sort of  normal when its possible: when the Government introduced Eat Out to Help Out in August it meant supermarket alcohol and food sales dipped for the first time since March.

Beware not reading the room

The past few years have seen brands called out for racist campaigns or lack of diversity in the board room ,so when brands changed tack during the pandemic with an outpouring of emotive campaigns not all were well received - 66% of consumers claim they can recall when brands acted in self-interest—such as raising prices on essential items (Source: Deloitte). Just 24% of people say they want brands to ‘show that they care’, with over a third preferring ‘actions not words’ (Source: iCrossing/Hearst). Consumers sensitivities are now heightened, and brands must consider messaging carefully, being truly authentic in ‘purpose’.

Brands are a key component of our society and play a role in shaping the national mood. 2020 saw a number of advertisers reflect public opinion by boycotting Facebook advertising for a month but reactions during the initial stages of the pandemic were often hit and miss as many brands tried to empathise but failed to convince they were truly understanding , highlighted by the similarity of many pandemic ads.

Moving into 2021 as people feel stressed and nervous expect sensitivities to be heightened when targeting or messaging doesn’t feel right or isn’t authentic or empathetic.

Trust: 2020 put pressure on ‘purpose’ as the onus was to operate ‘for the greater good’. While many brands stood up to be counted trust in businesses across all categories is in decline (Edelman Trust Barometer).

Consumers are clear that deeds are more important than words on key topics: 43% said ‘ensure diversity in senior management’ is the most important thing business can do to support Black Lives Matter, whilst paying employees fairly (79%) and stopping supporting companies that fail to prevent fake news (69%) are important to rebuilding trust. Tellingly few believe organisations will do this (Source: Edelman).

Social CRM to play a larger role: With physical interaction removed, the slew of ‘we’re with you’ emails became wallpaper as brands struggled to find new ways to stay in touch with consumers. With more time spent on social platforms brands are shifting the role of social to be a communication channel to keep consumers informed of updates; 67% of business leaders say they increased presence on social media in 2020 (Source: Deloitte)

2020 was an accelerant for digital behaviours as well as changing buying habits, (63% of us tried new shopping behaviours). This change correlated with nearly a sixth of UK consumers switching a brand/retailer, and half of whom expect to continue this behaviour once normality returns. (Source: McKinsey). Brands that performed well were those with innovative, consumer centric strategies. With the outlook for 2021 uncertain we can expect more fluctuation.

Digital consumption accelerated in 2020, particularly online commerce. UK e-commerce share of retail rose from 20.3% to 31.3% between the first and second quarter of 2020, over three-times the growth in the previous two years (Source: Organisation for Economic Co-operation and Development). Nike hit its target of online sales accounting for 30% of its business three years early.

It wasn’t just consumer behaviour that changed. March to August 2020 saw remarkable changes in the value of brands; after taking 42 years to become a $1 trillion company, Apple took just six months to reach $2 trillion and Tesla increased in value by 242% to become the world’s most valuable automotive company (more than Toyota, VW, Daimler and Honda combined).

Whilst 2020 was a period of change, many new behaviours were out of necessity and we have already seen return closer to ‘normal’ – ecommerce share fell from 31% to 28% over October and November and Netflix ‘only’ added 2.2 million new subscribers from July to the end of September.

What is important is not what happened in 2020 but where we are now – what behaviours remain or are still in flux. A Deliotte survey of C-suite executives showed 41% (the highest of all responses) said they wanted to implement more digital technologies and platforms to react more quickly to customer needs.