It’s that time of year when pundits look into their crystal ball to make predictions about the coming year. Actually, I don’t mean to be glib about this. Predicting what the future may hold is a tremendously useful exercise, and something business owners don’t always have the time to do. It’s all too easy to get caught up in the day-to-day realities of running a business, but we really do need to step back and think about what’s happening in the world around us.
Here are my four predictions for 2020 and for the new decade we’re about to enter.
#1: 2020 Will be the year of business-oriented podcasts
Many people have dubbed 2019 the year of the podcast, and I tend to agree (full disclosure: my colleague, Brian Lange and I have one called Future Commerce). Podcasts aren’t new, of course; consumers started listening to them in earnest when they purchased their first smartphone. What is new is the level of sophistication of today’s podcasts. Podcast-based media companies like Gimlet Media and Serial Podcast are exceptionally good, and they’re creating a bigger appetite for on-demand audio in the market. It didn’t surprise me in the least that Spotify opted to purchase Gimlet Media for $230 million back in February, or that Spotify also bought Anchor, a startup that makes it easy for people to record and distribute podcasts. Spotify recognizes a good opportunity when it sees one, and is on a podcast buying spree.
It used to be that people who wanted to work in radio or media had to get a job at a network, so it’s pretty radical that podcasting allows them to hang their own shingle (distribution is still a challenge, which is why Gimlet Media jumped at the chance to leverage Spotify’s reach). Still, it’s worth noting that excellent content is no longer the sole purview of networks, like NPR.
Brands are getting in on the action. The House of CHANEL paved the way with its 3.55 podcast, which launched in 2017. Since then they’ve been joined by Barneys, Gucci, Margiella and Saks, which launched its own podcast earlier this year. Explains Kate Oldham, Sak’s senior vice president and general manager of beauty, jewelry and home: “the format allows us to reach a much broader audience, both in-store and on a national level.”
Kate is on to something profound. Podcasts are one of the few long-form formats that allow brands to tell their stories directly to consumers. More than that, the channel pulls your customers to your brand rather than pushing your brand onto the consumer, as is the case with email, SMS and algorithmically targeted display or social media ads. By definition, podcasts allow you to own your audience and grow it organically. With the right content you can acquire your audience without paying large sums of money to Facebook or paid search.
Final thought on podcasts: we think of them as audio only, but in fact, many are video based.
#2: Local will be cool again
My second prediction is a topic that Brian and I covered in a Future Commerce podcast, Local is Power. A key take away: There is massive untapped potential in local and smart brands are starting to make moves.
According to SpotOn, “In 2018, there were 30.2 million small businesses in operation in the United States, accounting for 99.9% of all businesses in the country.” Consumers are increasingly eager to support local businesses, especially as they read stories about the giant marketplaces abusing warehouse workers or sourcing inventory from factories all decent people blacklist. Local is decidingly cool again.
More than that, it’s extremely consumer friendly. People can touch, sniff, assess, try on, and ask questions about inventory. As the chart from BrizFeel shows, online shopping has a lot of drawbacks.
And local stores are turnkey. From point of sales to inventory showroom and customer service, everything is under one roof.
#3: The tide may turn on Amazon, as evidenced by a slowing or tapering off of Prime membership adoption.
My third prediction is the tide may begin to turn on Amazon. I think Amazon was super valuable coming out of the Great Recession, especially for people who wanted fast delivery of competitively priced mid- and low-end products. But now consumers are witnessing the realities of Amazon’s infrastructure and logistics and it isn’t a pretty picture.
Additionally, there’s the Amazon Effect, by which I mean Amazon has set a standard for fast delivery and customer service that the rest of the ecommerce universe was forced to adopt in order to remain competitive. Paradoxically, the Amazon Effect now means that consumers don’t need to go to Amazon in order to get the Amazon experience.
Of course, Amazon Prime was a huge draw. It offers a lot of benefits above and beyond free shipping, including Prime Video and Prime Music, but will that be enough to keep its Prime membership growing by leaps and bounds? I have my doubts (which are supported by a recent 2PM article by Web Smith).
The report was quite informative. For instance, it describes the experience of being in an airport terminal and seeing people of high net worth who are “mixing” consumer brands; e.g. buying from the low end of the market and mixing it with pieces from the high end of the market, like wearing Old Navy with Louis Vuitton.
Amazon isn’t luxury, nor is it off-price. It’s somewhere in the middle – and the middle seems to be rapidly disappearing (again, the anecdote from the Web Smith piece). This may be a problem for Amazon as Gen Z begins to align with DTC more closely and Boomers age out of Prime.
Gen Z, the largest purchasing power generation ever known, will grow up with an anti-Amazon predisposition fueled not just by unappealing products but also due to:
- Having similarly great experiences directly with other brands
- Change of heart around data / privacy implications
- Issues around sustainability and employment practices
#4: Consumers will increasingly shop their values, forcing brands to step up
This is a topic that Brian and I discussed frequently throughout 2019: While the consumer wants to get more for their money, the definition of “more” is changing. In today’s world, “more” equates to social value. How is the product made? Did it destroy an ecosystem and raise global temperatures, or was its manufacturing easy on the earth? Who made the product, and were they paid a living wage? Increasingly, consumers make purchasing decisions based on these considerations.
This trend, which began with companies like Patagonia, really came into the forefront with Toms, a DTC shoe brand that donates a pair of shoes to people in need for every pair it sells to a consumer. Warby Parker did the same for glasses, and that altruism is setting a new standard for consumers. Companies like Everlane aim to show consumers exactly how their clothes are made, and by whom, in a practice the brand calls “Radical Transparency.”
Brands that prioritize social values — and lead with those messages — are grabbing a bigger and bigger slice of their markets. As I mentioned in my LinkedIn article, “Victoria’s Biggest Secret: Sustainability,” Victoria’s Secret may still be a dominant player with 24% of the intimate apparel market share, but last year the smaller, socially conscious DTC brands managed to seize 36.2% of the market. As consumers flock to these brands, they’ll create their own effect, forcing all brands to adopt sustainable and social ethics practices and positions, just as Amazon forced all online retailers to offer 2-day free shipping.
Do you have some 2020 predictions of your own? Let us know what they are!