By Vijayanta Gupta, Global VP of Strategy and Industries, Sitecore
Today consumers expect more from the brands they shop with than ever before, demanding convenience, personalised experience and quality products and services. To attract and retain customers and be able to successfully compete, brands must deliver on these expectations. This involves taking a more customer-centric approach to brand engagement and commerce, by understanding what truly matters to consumers and making it the focus of their business strategy, from ensuring they offer real value, protect customer data and embrace new models of commerce that enhance the customer experience.
In this article, I explore the changes in both consumer behaviour and technology that we can expect to see in 2020, and what brands can do to ensure they embrace and capitalise on them.
The continued rise of the ethical consumer
Last year, nearly half (49%) of consumers under the age of 24 stated that they had avoided a product or service due to its negative environmental impact in the last year. In addition, consumers now expect more from businesses – with 81% of them saying it is the responsibility of companies to help improve the environment.
In line with this growing awareness, 2020 is likely to bring even greater consumer concern about the negative impact that their purchasing decisions have on the planet. As a result, more individuals will be willing to purchase more expensive products if they are ethically sourced, recyclable or zero-waste, and seek out new brands that meet these requirements – especially as eco-friendly options like electric cars become more accessible to many. To remain successful in the face of this changing consumer mindset, brands must place greater focus on telling the story of what they stand for and their environmental or sustainability policies, as simply marketing and selling a product will no longer appeal to many.
From brand-centric to customer-centric personalisation
Brands are also likely to strive to make personalised marketing more customer-centric. In the past, they have based personalisation efforts around the products they want to sell, showing certain products to individuals at the time and place that they are thought to be most likely to purchase them. However, consumer needs, preferences and requirements are now driving this communication between brand and customer, and brands are being forced to put their sales objectives within the context of delivering what the customer really wants.
Advanced technology will play a greater role in this use of personalisation, as more brands are set to invest in AI tools and algorithms which can support personalisation. However, the development of messaging and storytelling around brand purpose and values will likely remain in the hands of human marketers. I expect 2020 to be the year where we will start to see brands building as well as balancing between two distinct capabilities to gain competitive advantage – machine-driven, personalised customer engagement at scale, and human creativity-driven brand engagement that articulates and informs the brand purpose.
The data value exchange
The ‘conscious consumer’ is also likely to have more awareness around data privacy, cybersecurity and if, when, and where they share personal information. As brands require large amounts of consumer data to be able to put customer needs and preferences at the heart of marketing strategies, ensuring they access, use and store it securely and responsibly will be more important than ever – while offering value to the customer in exchange. 2020 could be a pivotal year in this space with the potential to trigger a snowballing effect of increased and consistent legislative protection for consumers privacy – especially with the California Consumer Privacy Act (CCPA) coming into effect in addition to the continued implications of adhering to GDPR requirements for the brands.
2020 – the year of ‘Super Apps’ and new business models
The ever-growing number of internet users has prompted the emergence of new business models such as the subscription services already offered in a variety of industries – from Netflix in media and entertainment to Stitch Fix in apparel retail through to services like Care by Volvo in the automotive sector, allowing brands to reach out to consumers directly. Another interesting example, in 2019, the Kellogg company launched a ‘direct-to-consumer’ kitchen in partnership with Deliveroo, offering a menu that is completely run by the manufacturer, meaning that Kellogg’s products would reach customers without using a retailer as the middleman, while extending its brand outside of the breakfast bowl. Just like the last mile broadband internet connectivity into our homes powered up the eCommerce revolution, this last mile delivery connectivity into the home of the consumer will spawn off new revenue streams, and possibly new business models, for existing as well as emerging brands.
Increasingly we will see Apps such as Deliveroo exploit their app platform to offer more services than just their core service, which will give rise to the increase in usage of ‘Super Apps’. The Super App phenomenon has already taken place in China and South East Asia with apps such as WeChat and Grab. WeChat can be used for messaging, paying utility bills, online shopping, ride-hailing, booking doctor’s appointments, and much more, while Grab can be used for ride-hailing, payments, food delivery and courier services. I expect the UK and other Western economies to catch up with this phenomenon in 2020 and consequently the consumer attention gravitating towards a handful of Super Apps on their mobile device in the long run.
Amplifying these apps as communication channels to deliver personalised content to consumers is going to become a really important tactic for brands in their efforts to reach their target audiences. ‘Super Apps’ can be a crowded space for brands to shine, so using personalisation is key to be able to differentiate your brand’s offering, right from the get-go.
A year from now I expect us to have at least three examples of ‘Super Apps’ and at least a dozen other ‘Kellogg – Deliveroo – type’ services available for UK customers.
Battling Covid collateral damage, Renault says 2021 will be volatile
By Gilles Guillaume
PARIS (Reuters) – Renault said on Friday it is still fighting the lingering effects of the COVID-19 pandemic, including a shortage of semiconductor chips, that could make for another rough year for the French carmaker.
Renault reported an 8 billion euro ($9.7 billion) loss for 2020 which, combined with gloomy take on the market, sent its shares down more than 5% in late morning trading.
“We are in the midst of a battle to try to manage a difficult year in terms of supply chains, of components,” Chief Executive Luca de Meo told reporters. “This is all the collateral damage of the Covid pandemic… we will have a fairly volatile year.”
De Meo, who took over last July, is looking at ways to boost profitability and sales at Renault while pushing ahead with cost cuts. There were early signs of improving momentum as margins inched up in the second half of 2020.
The group gave no financial guidance for this year, although it said it might reach a target of achieving 2 billion euros in costs cuts by 2023 ahead of time, possibly by December.
Executives said they were confident the carmaker could be profitable in the second half of 2021, but that they lacked sufficient market visibility to provide a forecast.
Renault struck a cautious note, saying it was focused on its recovery but warned orders had faltered in early 2021 as pandemic restrictions continued in some countries.
The group is facing new challenges as the European Union tightens emissions regulations and after rivals PSA and Fiat Chrysler joined forces to create Stellantis, the world’s fourth-biggest automaker.
The auto industry endured a tough 2020 but a swift rebound in premium car sales in China helped companies such as Volkswagen and Daimler to weather the storm.
Auto companies globally have since been hit by a shortage of semiconductors that has forced production cuts worldwide.
“The beginning of the year has shown some signs of weakness,” De Meo told analysts, but added the chip shortage should be resolved by the second half of 2021. “We have taken the necessary measures to anticipate and overcome challenges.”
Renault estimated the chip shortage could reduce its production by about 100,000 vehicles this year.
The group was already loss-making in 2019, but took a sharp hit in 2020 during lockdowns to fight the pandemic, which also hurt its Japanese partner Nissan.
Analysts polled by Refinitiv had expected a 7.4 billion euro loss for 2020. The group posted negative free cash flow for 2020.
The 2018 arrest of Carlos Ghosn, who formerly lead the alliance between Renault and Nissan, plunged the automakers into turmoil.
In a further sign that the companies have been working to repair the alliance, De Meo told journalists that Renault and Nissan will announce new joint products together in the coming weeks or months.
Renault has begun to raise prices on some car models, and group operating profit, which was negative for 2020 as a whole, improved in the last six months of the year, reaching 866 million euros or 3.5% of revenue.
Analysts at Jefferies said the operating performance was better than expected. Sales were still falling in the second half, but less sharply.
Renault is slashing jobs and trimming its range of cars, allowing it to slice spending in areas like research and development as it focuses on redressing its finances. It is also pivoting more towards electric cars as part of its revamp.
It was already struggling more than some rivals with sliding sales before the pandemic, after years of a vast expansion drive it is now trying to rein in, focusing on profitable markets.
De Meo told journalists on Friday that the French carmaker will make three new higher-margin models at its Palencia plant in Spain, where manufacturing costs are lower, between 2022 and 2024.
($1 = 0.8269 euros)
(Reporting by Gilles Guillaume and Sarah White in Paris, Nick Carey in London; Editing by Christopher Cushing, David Evans and Jan Harvey)
UK delays review of business rates tax until autumn
LONDON (Reuters) – Britain’s finance ministry said it would delay publication of its review of business rates – a tax paid by companies based on the value of the property they occupy – until the autumn when the economic outlook should be clearer.
Many companies are demanding reductions in their business rates to help them compete with online retailers.
“Due to the ongoing and wide-ranging impacts of the pandemic and economic uncertainty, the government said the review’s final report would be released later in the year when there is more clarity on the long-term state of the economy and the public finances,” the ministry said.
Finance minister Rishi Sunak has granted a temporary business rates exemption to companies in the retail, hospitality, and leisure sectors, costing over 10 billion pounds ($14 billion). Sunak is due to announce his next round of support measures for the economy on March 3.
($1 = 0.7152 pounds)
(Writing by William Schomberg, editing by David Milliken)
Discounter Pepco has all of Europe in its sights
By James Davey
LONDON (Reuters) – Pepco Group, which owns British discount retailer Poundland, has targeted 400 store openings across Europe in its 2020-21 financial year as it expands its PEPCO brand beyond central and eastern Europe, its boss said on Friday.
The group opened a net 327 new stores in its 2019-20 year, taking the total to 3,021 in 15 countries. The PEPCO brand entered western Europe for the first time with openings in Italy and it plans its first foray into Spain in April or May.
Chief Executive Andy Bond said its five stores in Italy have traded “super well” so far.
“That’s given us a lot of confidence that we can now start building PEPCO into western Europe and that expands our market opportunity from roughly 100 million people (in central and eastern Europe) to roughly 500 million people,” he told Reuters.
To further illustrate the brand’s potential he noted that the group has more than 1,000 PEPCO shops in Poland, which has a significantly smaller population and gross domestic product than Italy or Spain.
The company, which also owns the Dealz brand in Europe but does not trade online, has already opened more than 100 of the targeted 400 new stores this financial year.
Pepco Group is part of South African conglomerate Steinhoff, which is still battling the fallout of a 2017 accounting scandal.
Since 2019 Steinhoff and its creditors have been evaluating a range of strategic options for Pepco Group, including a potential public listing, private equity sale or trade sale.
That process was delayed by the pandemic, but Steinhoff said last month that it had resumed.
“The business will be up for sale at the right time. It’s a case of when, rather than if,” said Bond, a former boss of British supermarket chain Asda.
Pepco Group on Friday reported a 31% drop in full-year core earnings, citing temporary coronavirus-related store closures.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were 229 million euros ($277 million) for the year to Sept. 30, against 331 million euros the previous year.
Sales rose 3% to 3.5 billion euros, reflecting new store openings.
($1 = 0.8279 euros)
(Reporting by James Davey; Editing by David Goodman)
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