2023 holiday season predictions

Sales and discounts

Many luxury brands are skipping big sales and instead offering free shipping, gift wrapping, and early access to products. We expect more retailers across categories to shift away from deep markdowns and launch sales earlier. Beginning promotions before Black Friday and Cyber Monday will decrease the intensity of focus on those two days.

Black Friday rebound

For retailers with both online and brick-and-mortar stores, we expect an increase in in-person Black Friday shopping compared to the COVID-impacted years. However, foot traffic likely won’t fully return to pre-2020 levels. Look for pre-BF promotions like free shipping on early bird purchases.

Younger generations take center stage

Younger demographics like Gen Z and Millennials will significantly impact marketing strategies this holiday season. Our research shows that exclusive offers are the number one motivator encouraging Gen Z shoppers to join loyalty programs. Appeal to these cohorts with exclusive offers, partnerships with niche microbrands, influencer collaborations, interactive metaverse experiences, or eco-friendly messaging.

Tighter budgets and embrace of AI

With many brands facing tighter ad budgets, we expect a focus on highly targeted media buys, increased user-generated content, and prioritizing high-ROI tactics. AI will assist with optimizing efforts like personalized copywriting at scale and more efficient campaign experimentation.

5 marketing strategies for the 2023 holiday season

Since you’re busy with holiday planning—we’ll keep this short and sweet. Here are five quick tips to crush your marketing initiatives this holiday season and beyond.

1. Optimize for mobile

With the majority of holiday purchases happening on mobile, be sure to optimize messaging, creative, and campaigns for the small screen. 

• Conduct speed tests to ensure fast load times on mobile networks. 
• Confirm seamless checkout and forms on mobile apps and mobile web. 
• Prominently promote mobile-exclusive deals and savings throughout the shopping journey.

2. Personalization power

Leverage personalization in your messaging and offers with segmentation and customer data.

• Use 1:1 relevance in emails, social ads, and site experiences to provide value and boost engagement this busy season. 
• Personalized subject lines, dynamic content, and personalized product recommendations make each touchpoint more relevant.

3. Retargeting is crucial

Retargeting is crucial for re-engaging site visitors who left without purchasing and recovering abandoned carts. 

• Use tighter timing on browse and cart abandonment campaigns, personalized to each user. 
• Continue retargeting past the holiday season to maximize lifetime value. 
• Give special incentives for customers to come back and complete their purchases.

4. Strategic segmentation

Divide your audience into specific behavioral and attribute segments. 

• Key groups include gift givers, self-gifters, budget shoppers, repeat customers, and more. 
• Then, go beyond basic segmentation to truly customize messaging for each group based on insights into their needs.

5. Plan for post-holiday

Have a plan ready for January and February 2024. 

• Set up re-welcome campaigns, loyalty reminders, and re-engagement flows to build relationships with new holiday customers. 
• Offer incentives for them to make a repeat purchase or engage with your brand post-holidays. 
• For further reading, here are 11 tips for post-holiday customer activation.

The holiday season is an exciting and busy time for marketers. With thoughtful preparation and data-driven marketing strategies, you can connect with customers in meaningful ways that drive results. Meeting customers where they are this season will lead to holiday success.

Most importantly, don’t lose sight of your long-term goals. The holidays are a stepping stone to building customer loyalty and lifetime value. Keep engaging and delighting customers after the seasonal rush to continue nurturing those relationships into the new year.

The post Holiday 2023 predictions to inform your marketing strategy appeared first on Cordial.

By harnessing AI’s potential, retailers can build stronger connections through highly relevant recommendations, customized promotions, and tailored communication. Brands that fail to adapt risk losing customer mindshare as shoppers come to expect experiences attuned to their individual preferences. Brands that embrace this AI-powered approach will thrive in an increasingly personalized retail landscape. 

Tailored messaging that resonates

Generative AI unlocks the ability to produce customized content attuned to individual interests, needs, and contexts. Retailers can leverage these capabilities to deliver tailored promotions, recommendations, and messages that feel relevant to each customer’s lifestyle. While generative AI will allow marketers to tailor messages to customer cohorts without writing endless copy, predictive AI will facilitate granular audience segmentation of those customer cohorts and targeting to ensure communication aligns with the preferences.

Predictive intelligence informs timely intervention

Leading retailers have tapped into AI’s predictive powers for some time now, forecasting key behaviors like purchase affinity, churn risk, and more. But predictive intelligence allows more than just forecasting. It enables prescription too. Retailers can surface insights on customers likely to churn and prescribe relevant retention offers or other timely interventions.

Combining predictive analytics with the synthesis capabilities that generative AI enables a whole new approach to marketing. Instead of defining every element of every message in every campaign, the marketer can be the conductor or the orchestrator defining the broad strokes of the campaign but letting generative models interlace with predictive analytics to create 1:1 symphonies—hitting the right notes for the right customer at the right time.

AI-powered personal shopping

LLMS like Claude and GPT-4 foreshadow the next phase of AI-driven retail engagement. Customers will soon interact with trusted digital advisors intimately aware of their preferences thanks to full histories of their online behavior. These AI-powered personal shoppers will provide tailored advice as though they had years of experience catering to each individual; with full knowledge of every aspect of the retailers’ operational environment. Allowing merchants to serve customers’ needs while also maximizing the business outcomes they are looking for. 

And, if we want to play this out even further, we’re already seeing agents acting on behalf of customers: one day a merchant’s AI-powered personal shoppers will interface with a customer’s agent representative to deliver true autonomous serendipity.

The bottomless potential across retail

We’ve only scratched the surface of AI’s potential. We’re already seeing diffusion-based models generate lifestyle product images, and AI-based modeling agencies, but we haven’t seen these tightly coupled with optimized outcomes and deep knowledge about individual customers. Creating ensembles of models with business-oriented optimization functions is the near future.

AI will redefine brand loyalty

As AI transforms personalized engagement, it will also redefine brand loyalty. Retailers that leverage AI to create consistently delightful, hyper-relevant experiences will earn enduring customer allegiance. We’ve already seen this with onsite merchandising companies like constructor.io. And, shoppers will come to see AI-powered assistants as trusted advisors that understand their needs better than anyone else. Forming these intimate digital relationships through AI will foster brand loyalty that transcends fleeting discounts or promotions.

The future of retail will be defined by the depth of each brand’s relationship with its customers. AI represents the key to unlocking truly personal connections at scale. Retailers need to start testing AI capabilities now to prepare for the hyper-personalized future ahead.

The post How AI will revolutionize the world…and retail marketing appeared first on Cordial.

But as marketers, we know these codes are part of intentional strategies to:

• Drive orders and revenue,
• Drive traffic back to the store,
• Offload overstocked inventory,
• Incentivize first-time purchases,
• Or retain customers and build loyalty.

And although coupon codes are excellent conversion tools, your strategy can fall flat if you don’t anticipate common challenges. So when it comes to creating effective campaigns that leverage coupon codes, we’ve rounded up three of the top hurdles marketers face — with actionable tips to overcome them.

3 common challenges with coupon codes in marketing

1. Coupon sites share ineligible codes.

Unfortunately, coupon sites aggregate and often share coupon codes with consumers you might not otherwise target — and it can be a mixed bag. Although they might send traffic to your site, they could share ineligible or outdated codes that might only serve to create a bad user experience for your customer — and potentially give them a bad impression of your brand.

Also, from a purely practical standpoint, you don’t want customers wasting their time and yours (with unnecessary queries) entering bad codes that only will return error messages, cause friction, and (likely) cause cart abandonment.

How to circumvent code sharing

Deliver unique coupon codes that are specific to each individual customer, whether via online messaging or personalized direct mail automation. By creating a unique code (and offer) personalized to a customer, you not only circumvent the problem of the code being shared but also improve the chances of the customer making a purchase.

But, of course, you need an advanced customer data platform that can make it happen. Scroll down further to learn how sneaker retailer SNIPES uses Cordial to deliver unique codes.

2. Consumers forget they have a coupon code.

According to Statista research, about half (46%) of customers don’t use a coupon code because they forget they have a coupon code in the first place. Of course, you can determine with your first-party data which customers are more likely to respond to coupon code incentives, but you don’t want to let an opportunity for conversion just fade away.

How to remind customers effectively

Retarget with personalized trigger automations — online or via direct mail. When reminding customers of offers (i.e., their unique coupon codes), you can set up time-based messaging via their most engaged channels, such as in a standard three-part email follow-up series:

• Send an email after 24 hours of issuing code with a content block of “new arrivals.”
• Send an email three days before the code expires and include personalized product recommendations.
• Send a final email on the last day the code is valid that plays up FOMO with a content block of bestsellers.

In the process, you can leverage personalized content to make the customer feel like they are the only one receiving the offer — beyond just the code, but with content based on previous brand engagements.

3. Consumers can’t find what they want.

Also according to Statista research, about half (46%) of consumers as well don’t use coupon codes because they say they don’t find anything they like in the respective store, whether online or in-person. So if you’re not recommending products your customer might not be aware of (or might have forgotten you carry),  you’re leaving potential revenue on the table.

How to make recommendations

Don’t waste time with generic batch messages. Instead, use predictive intelligence to serve up personalized product recommendations via the channels your customers engage most. By leveraging your first-party data on a customer, you can complement the coupon code with recommendations based on the customers’s brand affinity (Do they tend to browse/buy some brands more than others?), category affinity (Do they tend to browse some categories more than others?), or other browsing and purchasing behaviors.

Plus, you can serve up “new arrivals” in your inventory based on when the customer last engaged with your brand — and new arrivals might not only include new products but perhaps new sizes, colors, and styles of existing products as well. And to add that extra sense of FOMO, you also can include bestsellers, or especially favorited/saved items, that have “only X left in stock!”

How SNIPES uses Cordial to send unique coupon codes

Cordial client SNIPES is a sneaker retailer in the e-commerce space that sends out unique coupon codes as part of their marketing campaigns. They have three primary goals for their coupon codes:

• Drive orders and revenue.
• Provide customers with a unique coupon code that would persist through the entire Welcome series journey.
• Prevent coupon aggregating software and sites from providing discount codes to ineligible customers.

Working together, Cordial and SNIPES created a process to achieve all their goals with simple recurring automations to deliver unique coupon codes to their customers:

• SNIPES imports a file of unique promo codes into a data supplement in Cordial.
• They use a special Smarty method to reserve a unique code from that supplement so it can be populated into a content block in their Welcome series.
• Cordial taps into a coupon bank to retrieve a unique code for each customer and delivers it by putting into the content of the customer’s message.
• When the coupon code bank needs to be replenished, a preset data automation sends the SNIPES team an email alerting them when they need to import an additional pool of unique promo codes into the coupon bank, and then a recurring automation drops a new file of coupon codes.

Learn more in our webinar

See how Cordial can help you leverage personalized trigger automations in real-time — for a wide variety of use cases — with our Architect technology that can unify your data from unlimited sources and transform it for marketing activation. Request a demo today.

The post How to overcome top challenges of coupon codes as marketers appeared first on Cordial.

Walmart hasn’t been shy about touting its omnichannel efforts and why catering to meet shoppers’ needs across in-store and online channels can boost profitability. 

“We’ve shared before — if people buy in-store and online with Walmart.com, they generally spend twice as much and they shop in-store more often,” McMillon said. The retailer giant is “very excited” about automation as it builds out its e-commerce fulfillment, McMillion added.

McMillon’s sit down with Morgan Stanley Analyst Simeon Gutman provided more details into the role automation plays, which fulfillment methods the retailer is relying on and how e-commerce connects to its alternative income streams and overall profits. 

High-tech supply chain

McMillon said his confidence in Walmart growing its top-and bottom-line growth is partly driven by the chance to improve productivity through automation, particularly with its supply chain. 

“There’s more in front of us to do with the supply chain in particular and we’re very excited about automation. And I think it’s going to really help our store associates and help us with productivity,” McMillon said.

He continued: “Specifically, what we’re seeing is — after a number of years of work — there are opportunities to use automated storage and retrieval systems in ambient distribution centers, food distribution centers, e-commerce fulfillment centers and eventually market fulfillment centers next to stores.”

Automation can create customized e-commerce orders for customers or as department- and store-specific pallets, McMillon said. In the U.S., the retailer already receives grocery products on pallets, which make freight handling easier. Now, the retailer wants to use that model for general merchandise and enable stocking from the pallet, he said. 

“It’s a different process, eliminating a lot of the hours that we invest in today in the back room of our stores,” he said.

Walmart is turning to automation to not only boost productivity but also to help reduce labor costs. “One of the biggest costs that we have in our e-commerce businesses is for store-level wage investments to pick orders,” McMillon said. 

McMillon said Walmart is working with four different partners on the four types of fulfillment centers. As Walmart has layered on those different types of fulfillment centers, starting with ambient and then adding food and e-commerce with different operating systems, the retailer has worked to sync them together and optimize inventory. Data and algorithm improvements and robotics with its supply chain are allowing for better demand forecasting, allowing for new ways to reduce costs, McMillon said.    

Walmart has also focused on outfitting its existing distribution centers with automated storage and retrieval systems to avoid having to build more facilities, McMillon added.     

In some cases, the retailer is choosing to add new facilities where they’re needed, including a recently opened one in Chicago — the first of four high-tech fulfillment centers Walmart is building over the next three years.        

“There’s not a lot of human engagement with that product,” McMillon said about the Chicago facility. “There’s still some, which eventually we’ll work through to an even greater degree, but it is really slick and also more accurate.”  

Walmart is also using store-level fulfillment in other cases, leveraging the last-mile advantage of store locations near customers and carving out space for micro-fulfillment centers (MFC) while retaining in-person shopping, McMillon said. 

This fall, the retailer bought MFC developer Alert Innovation, following work on a multi-year pilot of the company’s robotic grocery order-fulfillment technology, known as Alphabot. Walmart Chief Financial Officer John David Rainey told investors during its third-quarter earnings call that the retailer is expanding its buildout of MFCs that are attached to or inside its supercenters. 

Evolving business model

The multi-year investment in revamping its supply chain is happening in tandem with changes to the retailer’s business model to focus more on omnichannel strategy, McMillon said.

Walmart has long focused on its stores. But as the retailer built up its e-commerce business, in-store and online shopping felt siloed as recently as last year, McMillon said. Through organizational structure changes, the retailer has achieved a more seamless shopping experience by doing away with channels, McMillon said.

The company is using income from its fulfillment services, advertising and Walmart+ membership to help support its investments in areas that are not yet profitable, while also running its retail business, McMillon said. Among its alternative businesses, Walmart’s marketplace is the top priority due marketplace seller fees and its connection to the retailer’s fulfillment and advertising offerings, he said. 

Building out digital relationships with customers can help the retailer steer people toward its Walmart+ memberships. 

“The primary reason why someone would want to become a Walmart+ member is for free delivery and our food and consumables customer value proposition is attractive. … Our challenge is to take that frequently purchased set of items in that relationship and have it extend into more discretionary items and build the basket out over time,” McMillon said. 

Ultimately, Walmart can “see all the pieces” of the technologies it’s leveraging adding up to a profitable model, McMillon said.

So far, the work appears to be paying off: For its U.S. business, Walmart recorded e-commerce sales growth of 16% and 12% in its third and second quarters of fiscal year 2023, respectively — a jump from the 1% increase it recorded in its first quarter. 

“Now, I think we are truly an omnichannel retailer,” he said. 

This article was written by Catherine Douglas Moran from Retail Dive and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

The post How Walmart is pursuing omnichannel profitability appeared first on Cordial.

Come January, the holidays are a memory for most businesses, but not for the floral industry. As winter blows in and snowbirds start flying toward warmer climes, the major flower-powerhouses are amping up for their annual floral trifecta of holidays: Valentine’s Day, Easter, and Mother’s Day. So let’s stop and take in a few whiffs of what we can learn from this ever-blooming sector.

I love you. I’m sorry. Happy anniversary… There’s almost no time that flowers are a bad idea. In fact, while some other industries slowed down during the COVID-19 pandemic, the global flower market boomed — and is continuing to do so. Global Industry analysts StrategyR tracked the flower market and offered some impressive growth predictions. Cut flowers sales were estimated at $30.7 Billion for 2020 and are projected to reach a whopping $43.8 Billion by 2027. That’s a lot of petals.

So what exactly is the floral industry doing that keeps people buying, holiday after holiday, year after year?

For one thing, marketers in the floral industry continue to innovate on their approach more than on their actual products. At the dawn of internet marketing, it seemed as if everyone’s inboxes would overflow with exhortations to buy something new for every holiday. But over the past few years, brands seem more in tune and sensitive to their customer’s life cycles — including loss or complicated situations. Mother’s Day and Father’s Day were once considered universal times for florists to inundate inboxes with marketing messages, but most brands now have clear (if temporary) opt-out options.

Beyond sensitivity to loss or other life situations, the current levels of personalization go way beyond a thoughtful detail. A lot of targeted brand outreach is more about relationship continuity and education. “In general, it’s important to us that not all our customer outreach is aimed at sales, but that we’re actually providing some value for people who buy flowers, take care of their living plant pals, and are interested in learning about different varieties,” said Juan Palacio, Founder and CEO, BloomsyBox.com.

But that excellent approach isn’t limited to the flower industry. Not to brag, but at Cordial we make a point of highlighting intentional outreach over the random sales push. We use real-time data to deliver personalized messaging via email, SMS, MMS, web, mobile app, or automated direct mail.

In the same way floral marketers evolve along with their customers, we constantly update the way we help you connect with your own target demographic. Attracting customers and keeping their loyalty are two completely different challenges, especially around multiple holidays that inspire gift-giving.

With apologies to Shakespeare, while a rose by any other name would smell as sweet, it might not sell as well. Floral marketers understand that their consumers want to feel something when purchasing a bouquet or arrangement. And that involves significant personalization efforts.

6 personalization ideas from the floral industry:

1. Add a human side to your story.

Your customers want to feel like they’re supporting actual people and not just a faceless corporation. Palacio said that BloomsyBox is about to launch a storytelling campaign about the farms that grow and harvest their flowers. He said “because we personally find those human stories and perspectives interesting and know that our customers will, too.”

2. Share your customer’s ethos.

If your company is dedicated to less waste, you should highlight that part of your brand story to attract like-minded consumers. The Million Roses is a brand that creates preserved roses and flowers. That might be off-putting to some, but the company highlights the fact that these somewhat pricey blooms last longer and are more sustainable.

Their products are all handmade by floral artists and last up to three years. The company prides itself on providing a sustainable solution to the large-spanning carbon footprint issue of the floral industry. In press materials, they also share information on how their approach is a more desired option for combating climate change without giving up quality and the natural beauty of flowers.

3. Consider your customer’s intention.

Palacio said it isn’t just flowers that are personal, but also the “gifting intentions behind them” when crafting your messaging,

4. Be more inclusive.

BloomsyBox offers opt-outs for Mother’s Day for people who may have lost, don’t know, or don’t get along with their mom. Palacio said their Valentine’s messaging “is more LGBTQ-aware than it used to be,” too.

5. Share your history.

Some people don’t really care about the provenance of their posies but are more concerned about who else is buying them. Family-owned, female-run Pomp Flowers proudly shares details of their floral pedigree including their hand-raised sustainably grown arrangements. Pomp also has a strong legacy and a 30-year history of cultivating flowers on their family-owned farms in Ecuador and Columbia with expertise in over 600 flower varieties, all hand-raised and sustainably grown.

And they don’t shy away from letting people know about the experts who create “the optimal growing conditions from fertilization and irrigation to climate-controlled greenhouses.” But in a celebrity-driven culture, some people might be most impressed with the fact that Pomp is the go-to flower provider for major events like the Rose Bowl and the Tony Awards.

6. Make it easy.

In addition to selling flowers through their website, Pomp also has an Amazon Storefront which allows consumers to buy easily and without a ton of effort.

Read more about how Cordial creates highly personalized multi-approach campaigns

Some brands are already taking notice of the ways the floral industry markets in a way that feels incredibly individualized.

Floral inspiration

Some companies that are floral industry adjacent manage to evoke the beauty and timelessness of a gorgeous arrangement. And with that comes the urgency to gift the scent to someone else.

A great example of marketing inspired by the floral industry is Arquiste Parfumeur, who in some materials describe their scents as being better than a bouquet. In other marketing materials, they use descriptors like products that are “liquid florals” or “time traveling scents,” where the heady aroma of their flower combos can transport you mentally if not physically.

Arquiste’s floral fragrances have catchy floral names like Boutonnière, Ella, Fleur de Louis, Infanta en Flor and Flor y Canto, but it’s their St. Regis Caroline’s Four Hundred Candle that is a marvel of marketing. In naming the scented candle after the over-the-top balls by New York Gilded Age socialite Caroline Astor, the brand also elevates their product and makes the consumer feel more worldly and chic.

As described on the company website, “The scent captures at once the actual flowers used around her residence, the exotic woods of the ballroom, the potted palms and apple blossoms that lined the hallways, and the light crisp essence of champagne wafting through the crowds. With notes of rich American Beauty roses with green stems, white lilies and the delicate sweetness of quince, apple and cherry blossom.”

Use your channels wisely

Since the floral industry has multiple busy seasons, they have to approach their direct-to-consumer marketing in a way that is fresh and feels intuitive. Palacio said that at BloomsyBox they spend a lot of time and resources segmenting their databases to personalize emails as much as possible. An example of this is sending their customers emails based on past purchasing behavior so the company is serving products and content they can safely assume is of value to them.

“The last thing we want is to send marketing that doesn’t resonate or is a piece of communication that is immediately deleted or archived by our customers in their inbox.” BloomsyBox also values their customers’ trust. So in their SMS efforts, they offer repeat customers early access to new collections, special discounts, and promotions.

Many in the floral industry are experts at relating to their customer experience. We all celebrate many of the same milestones, which can make it easier to market them. Before crafting your next campaign or message, challenge yourself to:

• Provide value in each message.
• Aim for authenticity.
• State who you are. For example, Central Florida’s Love is Love florist describe themselves as being “not your typical florist for not so typical couple.” But they don’t even have to do that since their name alone explains their outlook.

Challenge expectation

Want to ensure your customers are reading your targeted content? Don’t give them what everyone else is. Palacio offered a fantastic example of the way BloomsyBox is shattering Valentine’s Day expectations. He cites consumer boredom with cliched red roses for Valentine’s Day.

“This year we’re launching a Valentine’s Day collection that has absolutely no red roses, with corresponding marketing messaging that talks about why we’re leaving them out.” In this way the brand is creating a fun experience, but one that also challenges customers to think beyond the expected experience.

Palacio said the company’s hope is to not only help educate customers about what the people in their lives really want, but also put out messages that are real and relatable. “It’s all in the service of supporting our community in creating memorable experiences with their loved ones. That’s all any of us are really after, right?”

The post Amp up your personalization efforts with tips from the floral industry appeared first on Cordial.

What is it? And where do you find it?

Some consumers might have those exact questions. A Piper Sandler survey of 7,100 U.S. teenagers from April found that 48% said they are unsure of or not interested in the metaverse. Even more, a September report from Wunderman Thompson Intelligence found that only 38% of global consumers were familiar with the concept.

Whatever it is, retailers are diving head first into it — and there are plenty of users watching.

Companies across the industry are increasingly holding activations on platforms deemed to be part of the metaverse. Definitions of what the metaverse actually is (or is meant to be) can vary, but generally, it is a virtually immersive version of the internet. Roblox, Decentraland and Sandbox are all spaces retailers are exploring to tap into the metaverse, even if they aren’t as interoperable as some want them to be at the moment.

Roblox may be one of the biggest platforms with 58.8 million daily active users, a 24% increase from a year ago, according to its latest earnings report. The platform is resonating with younger users as well: As of Q2, 24.2 million daily active users were under the age of 13, according to Statista.

With that age group destined to gain buying power over the next decade, it’s no wonder retailers are trying to reach them where they are.

Companies from Gucci to Walmart to Gap have launched activations on Roblox, ranging from well-designed virtual pop-up stores to interactive games.

But is the metaverse just a virtual billboard for brands, or is there a way to connect real-world merchandise and revenue to it? Here’s a look at how some retailers are using the space for tangible benefits.

‘Consumers continue to prioritize physical interactions’

Beyond developing aesthetically pleasing activations in the space, retailers have started to incentivize benefits such as real-world apparel collections, discounts and loyalty perks to it.

Accessories retailer Claire’s launched ShimmerVille in Roblox last month, with a focus on self-expression using virtual accessories that are also sold in its real brick-and-mortar stores. Victoria’s Secret’s youthful sub-brand Happy Nation collaborated with Roblox in June by launching a virtual obstacle course, where users could help donate actual pairs of underwear from the brand to Undies for Everyone, as well as view the latest capsule collection. Ralph Lauren announced a clothing capsule for players on the gaming platform Fortnite earlier this month, which is tied to a physical clothing collection with a limited edition version of the brand’s iconic logo.

These brands could be clued into what’s important for consumers when it comes to virtual worlds, according to Forrester data. In a survey from April, Forrester asked more than 1,500 adults to rank what mattered most to them when considering visiting a metaverse space. Behind respecting data and privacy, U.S. respondents indicated that “receiving an offer/discount/coupon on physical products from the brand” was the second most important considering factor.

In April, restaurant chain Chipotle even released a burrito-making interactive game within Roblox that yielded users in-game Burrito Bucks which could be exchanged for real-world entree codes.

“The whole point here is that out of a list of maybe 10 things, the top four were all related to physical environments,” Mike Proulx, vice president and research director at Forrester, said. “What this tells us is that consumers continue to prioritize physical interactions over immersive or virtual interactions. Where the space becomes interesting is when it becomes more of a hybrid.”

Deloitte’s Digital Principal Kevin Rose would agree that there is a lot of potential in connecting more tangible benefits with the metaverse. The space can also be great for product testing, according to Rose.

“If you think about the way you had to really test products in the past, the only real way to test features and attributes of many products was to develop a batch of those products and get them out to market, which is expensive,” Rose said. “But the ability to launch that from a digital perspective … allows you to do things that scale in a much cheaper way.”

Definitions of what the metaverse is and could be may differ, but Deloitte sees a hybrid environment as the more likely case in the future, meeting somewhere between fully immersive day-to-day life and augmented physical interactions.

Justin Hochberg, CEO and co-founder of Virtual Brand Group — the company that worked with Forever 21 to launch its Shop City on Roblox — agrees that product testing is a helpful way to use environments like Roblox, where dressing up avatars is a fundamental part of the experience.

“What about things that really are not part of your product category, but really could be if time and money were no object?” Hochberg said. “In the metaverse, I can create a race car as quickly as I can create a T-shirt … That is the power of using the metaverse as a virtual research and development lab. And we’re doing all of that to great success.”

What about an immediate ROI?

Whether or not these virtual worlds can bring in real revenue for brands in the near term is less decided by experts.

Certainly, there is money being put into platforms like Roblox. In its most recent earnings report, the virtual world showed revenue was at $517.7 million, up 2% year over year.

The metaverse could create $5 trillion in impact by 2030, according to a McKinsey estimate from June. The report said the metaverse would have a $2 trillion to $2.6 trillion market impact on e-commerce. And in March, Citi estimated the addressable market for the metaverse could reach between $8 trillion and $13 trillion by 2030.

But can brands see more immediate returns on their investments?

For Forrester’s Proulx, he sees it as more of a space to learn and test out at the moment, where brands can focus on garnering the attention of new audiences.

“In only rare circumstances is the brand going to see a monetizable return on investment,” Proulx said. “We’re bullish on testing and learning. But temper both your expectations and your investments in the metaverse… If you promise your CEO that there will suddenly be a 2% increase in revenue, that’s just not going to happen today. That’s not to say that it can’t or won’t happen in the future. But today, it’s just way too nascent.”

And Hochberg thinks the metaverse as it exists right now could be useful beyond marketing for brands.

“I think that is one of the biggest myths that is hurting the metaverse right now, is that it’s just for marketing,” Hochberg said. “In general, I think that that is a faulty assumption … What you’re telling me is that you’ve gone into a world that has no physical constraints, where you can create anything, engage people in any way and the only thing you’re doing is creating a more sophisticated Time Square billboard?”

Hochberg looks to his work with Forever 21 as proof of the revenue possibilities on Roblox.

When someone searches Forever 21 on the publicly available Roblox Avatar Shop, the top rows of results are all virtual avatar accessories and apparel, all sold by the retailer. These items are available for purchase using Robux currency (which is purchased with actual money) and can generate real-life revenue for the sellers. Thousands of black Forever 21 beanies sell on Roblox every day, according to Hochberg.

Not all brands on Roblox are opting to sell their own virtual goods. When searching for other brands who have held activations in the space, such as Nike or Gap, the top results are items designed and sold by individual creators rather than the brands themselves.

But whether or not profits can come from the metaverse immediately or in the future, many agree that the concept itself has lasting power, regardless of what it ends up looking like.

“Even though it seems like that hype cycle [around the metaverse] has ended, I would actually say that companies are probably as invested and as focused now as they’ve ever been in the last six months and I think that’s going to continue,” Rose said. “I think the reality of this is that these technologies are going to change our lives. This is here to stay. There are those people who thought that the internet was just a hype cycle … And I think this is going to have a similar impact.”

This article was written by Dani James from Retail Dive and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

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In fact, the one thing they might agree on is that they are all different and have niche interests that set them apart from each other, according to a report from Horizon Media in October.

Additionally, 60% of Gen Z agree that the brands they shop with are an expression of who they are and 77% don’t want to feel like they’re put in a box, according to 2020 survey data from Wunderman Thompson Intelligence shared with Retail Dive.

That sets up a conundrum for retailers hoping to reach them where they are, since “where they are” might be completely different depending on which Zoomer you speak with. The age group — defined by Pew Research Center as those born between 1997 and 2012 — has the industry in a chokehold, upending what traditional brands know about marketing and merchandising.

Retailers certainly care about what this generation wants. As this group gets older, their buying power gets bigger within the industry and so does their influence on how well brands perform.

Teens’ self-reported spending increased slightly by 3% year over year to $2,331 according to research firm Piper Sandler’s fall 2022 Taking Stock With Teens Survey of 14,500 U.S. teens. Female teens led that spending increase too, with that group’s overall spend up 10% year over year and clothing being 30% of their wallet share — the highest it’s been since 2012. 

Despite that, Gen Z is not immune to the throes of macroeconomic pressure. Inflation seems to be putting a dent in the group’s ability to save, according to Bank of America data from September that surveyed those ages 18 to 25. It found that 73% of Gen Z say it’s hard to save money right now, and 56% say inflation has created more financial stress in their lives.

With Gen Z’s spending power increasing and budgets potentially tightening, retailers might be wondering how they can earn the demographic’s loyalty. Taking a look at the brands Gen Z currently favors might shine a light on what actually motivates their purchase decisions.

‘A fantastic gardening shoe’

Despite loyalty looking different for this generation, many of their favorite brands are familiar faces (with a few exceptions).

Amazon, Walmart, Target, Dollar Tree and Nike were all ranked among the top 15 favorite brands by Gen Z, according to a survey conducted by research firm Morning Consult of about 2,031 Gen Z adults born between 1997 and 2004.

When compared to the favorite brands of millennials, though, several companies were much more favorable among Gen Z. These included Crocs, Fenty Beauty by Rihanna, Shein and E.l.f cosmetics.

Shein was a high-ranking apparel brand for Gen Z women according to Morning Consult’s data, and a similar pattern of results was found from Piper Sandler.

Nike, Lululemon and Shein were among the top brands to shop for clothing, according to Piper Sandler’s survey. Ulta, Sephora, Target, Walmart and Amazon were top retailers for beauty products, and 52% of all respondents said Amazon was their number one shopping website.

A brand winning with Gen Z in both studies is footwear company Crocs. Additional data from the Morning Consult Brand Intelligence platform, which tracks consumer attitudes, found that purchase intent for Crocs has been building up for years. In 2019, Morning Consult found that overall purchase intent was at 18% and by 2022 it reached 40%. 

Morning Consult attributes some of this growing interest to strategic and unique brand partnerships with Post Malone and Bad Bunny, as well as 7-Eleven and Hidden Valley Ranch.

“Crocs serve the purpose of a fantastic gardening shoe. They also serve as an extraordinary element of self-expression,” said Morning Consult Retail and E-commerce Analyst Claire Tassin. And through the use of Jibbitz (charms used to decorate Crocs), Tassin said they become “very visible. So wearing Crocs in and of itself out and about is sort of making a statement.”

That element of self-expression is a core part of the brand based on Crocs’ purpose webpage, which emphasizes creating a “welcoming environment for everyone.”

Diverse and inclusive self-expression is a value that somewhat sets this generation apart from others, according to Wunderman Thompson Intelligence Editor Emily Safian-Demers.

“I think this is a pretty universally acknowledged truth by now that among Gen Zers, they’re really rewriting a lot of the traditional identity narratives,” said Safian-Demers. “Identity for them is much more nuanced and multifaceted than it has been historically for older generations.” 

The focus on individual decoration and strategic celebrity marketing seems to be working for the footwear company as well. Crocs has been doing well by the numbers, with its namesake brand’s third-quarter earnings showing revenue jumped 14.3% year over year to $715.7 million.

Gen Z’s healthy skepticism

Even though Gen Z might still favor some traditional retailers, that doesn’t mean their affection is easy to earn. 

The generation is harder to please overall, according to Morning Consult. Their average favorability rating for brands across the country is 27%, compared to 33% for all adults and a rating of 36% for millennials. 

“We can just see that Gen Z gives brands lower favorability ratings,” said Tassin. “One of the hallmark characteristics that I see with Gen Z is some really healthy skepticism that I think is born from being our first truly digital native generation, where you can verify all the information that brands are putting in front of you.”

Ultimately, this generation has access to more information and brands to choose from than perhaps ever before. Tassin says this is one reason brands just need to work harder to gain that favorability.

Beyond just having more access to various brands, Safian-Demers agrees that Gen Z is adept at finding more information about a company — and they are quick to share such information with friends. 

“It’s maybe not just that they have more options available to them, but that they also have access to all of this information that people definitely wouldn’t have had access to pre-social media and pre-internet. For that reason, they’re able to see a little bit more deeply into brand behavior,” said Safian-Demers. “They’re able to dissect how brands are behaving, and if they’re actually putting their money where their mouth is when it comes to things like sustainability and diversity.”

Gen Z certainly cares about a variety of social causes that can impact their decision-making. The environment, abortion and racial equity were indicated as social causes teens expressed interest in for Piper Sandler’s survey.

This generation is also more passionate about inclusive branding, including more gender-free selections. A majority (61%) of Gen Z respondents in the Gen Z Fashion Report by student affinity network Unidays this March said they think brands should do more to prove that “style should not have a gender.” Just under half said they are more willing to buy from a brand that has better gender inclusivity through their marketing.

But exactly how much sway do these values have on purchase decisions?

With more sustainable products often costing more than other options, not everyone can pay for them despite their values. A study from last October by pricing consultancy Simon-Kucher & Partners showed that around a third of respondents were willing to pay more for sustainable products, but 60% of the participants said sustainability was an important factor in purchase decisions. 

At the end of the day, price is still a major determining factor, according to Tassin.

“I think that Gen Z, when they look at the drivers of environmental damage and what is causing our temperatures to get warmer, they are very much aware that these larger institutions have more influence than their own individual behaviors,” she said. “You also have to factor in the economics of it all, since Gen Z consumers are still starting out and they’re not making huge salaries.”

But those values Gen Z is attracted to — self-expression, transparency and authenticity — don’t completely go down the drain, Safian-Demers said, even if pricing is still such a large consideration for the group. How a brand actually engages and demonstrates transparency with Gen Z is instrumental to its success among the age group.

“It’s not just the words that brands are using or the imagery that they’re showing,” said Safian-Demers. “I think that the idea of inviting Gen Z into the process of the brand, into product development, product ideation and giving Gen Z a seat at the table is a really good way to engage this generation.” 

This article was written by Dani James from Retail Dive and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

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The rising popularity of secondhand retail is hardly news. Even this report notes previously published research, including a study from GlobalData and ThredUp estimating that resale will grow 16 times faster than the broader clothing sector. In fact, in the U.S., the secondhand apparel market will more than double by 2026, reaching $82 billion, according to ThredUp’s most recent report.

Still, WD Partners was taken aback by the depth and breadth of consumers’ enthusiasm for resale, according to Lee Peterson, executive vice president of thought leadership and marketing.

Secondhand sales have evolved from a niche aspect of retail into the mainstream, with a diverse and growing set of retail chains like Walmart, Ikea, REI, Amazon, Home Depot and a slew of specialty apparel players offering or at least experimenting with resale. That also includes many “sophisticated online retailers like The RealReal and Kaiyo,” WD researchers said in the report.

Resale e-commerce is likely to continue to grow and attract investors, though online sales remain unprofitable, they said. That gives physical stores an operational advantage.

“Everything is multi-channel now, so I could see some form of resale or even donations done online in order to be authentic about circular commerce, but clearly, the best results are going to be taking the hard road and doing it in stores,” Peterson said. “Which means training and programs and new ‘shops’. But according to this study, and I’m sure more to come, it’ll be worth it, just like BOPIS is now for retailers who resisted it.”

More, physical stores enable the treasure hunt valued by secondhand shoppers. Buying used items has become normalized — a way to save money and the planet — and is likely to drive traffic and bring new customers into most any store, according to the report.

“What’s evident from these stats is the fact that both department stores and specialty retail rank high, meaning that the mall itself would increase traffic by having used,” Peterson said. “Not only in existing stores, but by attracting tenants into their properties.”

This article was written by Daphne Howland from Retail Dive and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

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