EXPECTED CONSUMER MARKET TRENDS DURING 2021
The Bureau of Market Research (BMR) recently released a research report focusing on expected consumer market trends during 2021. Data for this report was obtained by means of a key informant survey, identified consumer market trends from other recent consumer market reports and Big Data analyses of the South African consumer market. Such data sources revealed inter alia the following expected trends in the South African consumer market during 2021:
- The economic growth rate during 2021 will be about 3 percent during 2021 which is, however, from a very low base of -7 percent during 2020. However, about half of the key informants surveyed during the survey are of opinion that the economic growth rate during 2021 might even be lower than the 2020 economic growth rate.
- Although many key informants were unsure as to whether higher economic growth rates will be experienced during 2021 compared to 2020, they were fairly certain that higher levels of unemployment will realize during 2021 compared to 2020.
- The main reason for the low economic growth and rising unemployment rates during 2020 was Covid-19 and the resulting lockdown. Covid-19 and the resulting lockdown also had a strong impact on consumer behaviour during 2020 in response to a large number of consumers either temporarily lost incomes during 2020 or maybe lost their jobs giving rise to longer term income losses.
- Covid-19 and the resulting lockdown will have an impact on consumer finances during 2021. It is being expected that Covid-19 and the resulting lockdown will impact the four major categories of consumer finances, namely household income, expenditure, assets and liabilities.
- Key informants surveyed for this study are generally very pessimistic about the immediate future of consumers during 2021 by indicating their belief that higher consumer confidence will not be returning during 2021.
- Key informants believe that consumers will be cutting back on their spending during 2021, namely many consumers will be ‘buying down’ while focusing their expenditure on essential goods. The level to which consumers will be spending during 2021 will be determined by a large number of factors including the future trajectory of the Covid-19 virus and possible future stricter lockdowns as well as this year’s trajectory with respect to the economy, business incomes and employment.
- There is a strong increase in the interest of consumers to buy goods online. It is being expected that consumer interest in online buying will continue to grow during 2021. Key informants not only believe that an increasing number of consumers will be buying online but also believe that consumers will increasingly be moving away from in-store sales to online purchases.
- Consumers are also becoming increasingly more mobile in conducting their online purchases by using their mobile phones for such purposes. This appears to be part of a worldwide movement with shopping becoming much more mobile in the sense that shopping is being done on mobile phones anywhere at any time.
- Consumers are increasingly accessing retailers in an omni-channel fashion. The advantage of this is that consumers can choose which shopping channel they prefer thus optimizing customer shopping experiences and here especially the value of a specific retailer/brand in the eyes of a consumer. By creating omni-channel shopping environments retailers enable consumers not only to buy during normal shopping hours but to purchase goods whenever it is convenient for the customer.
- Key informants believe that that consumers want increasingly higher quality goods and services while being less willing to pay a premium for such higher quality products and services.
- Key informants believe that during 2021 an increasing number of consumers will be spending money on their homes to ensure good home office environments for working from home purposes.
- Key informants believe that an increasing number of consumers will be spending more money on digital Internet entertainment than on out-of-home entertainment such as restaurants, bars and theatres.
- Whereas many businesses expected that people would gradually return to the office during 2021, key informants surveyed for the purpose of this study do not only expect that during 2021 people will continue working from home but they actually expect that an increasing number of people will be working from home.
Whereas the prime focus of the findings above was on expected changes in consumer behaviour and tastes during 2021, key informants were also asked about expected changes in retailer behaviour in response to the changes in consumer behaviour and tastes shown above. It appears from key informant responses that the following changes in retailer behaviour can be expected during 2021:
- Retailers will increasingly be making use of Big Data (and here especially machine learning) derived insights for marketing and planning purposes.
- Retailers will increasingly be moving online to sell their wares during 2021.
- Retailers during 2021 will respond to various market disruptions driven by new technologies. Such rapidly evolving technologies are mostly driven by advancements in information technologies, communications, machine learning and robotics.
- Retailers will innovate in a variety of ways during 2021. Such retail innovations include inter alia the use of artificial intelligence in market analyses, the use of augmented reality to attract customers, the use of electronic links to direct customers to ecommerce websites, the use of speech recognition in customer analytics, the use of virtual reality in marketing campaigns and the increased use of wearable technology (wearables) informing marketing.
- Retailers will increasingly be making use of influencer marketing. Influencer marketing is successful at realizing four important marketing outcomes, namely growing brand awareness, enhancing the ability of consumers to use specific products and services, developing brand preferences as well as developing and strengthening product preferences.
- Retailers will increasingly be making use of peer-to-peer marketing. As the world of digital marketing is evolving and given that there is growing competition for customers among retailers, new types of marketing approaches are being developed making use of digital marketing. Peer-to-peer marketing is premised upon the fact that people generally trust recommendations by other people they know.
- Peer-to-peer selling will become increasingly prevalent. With the growing number of peer-to-peer sellers advertising on peer-to-peer websites/apps such as inter alia Facebook, Instagram, Twitter, WhatsApp groups, Facebook Marketplace, Bidorbuy, Gumtree, Carfind, Junkmail and OLX.
The findings of this study have a large number of implications for marketers. Such implications were highlighted and discussed in the report together with some strategic pointers as to how retailers can optimize their retail strategies for success.
For any enquiries regarding the research study, please contact Prof CJ van Aardt (Research Director, Bureau of Market Research) at email@example.com.