10 Trends Shaping the Future of Consumer Engagement

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08/02/2022
We present a roadmap to the future of retail, adapted from Wunderman Thompson Intelligence’s “The Future 100: 2022” report.

What does the future of retail and commerce hold? Over the past two years, shopping habits have undergone a seismic shift. Lockdowns and quarantines pushed shoppers online en masse, sending the digital revolution into hyperdrive, upending standard paths to purchase and introducing a new commerce lexicon. From direct-to-avatar retail to virtual flagships, the e-commerce landscape is rapidly evolving. Newly digitized habits are also paving the way for the creator economy, with co-creative platforms and social media superfollowers. And in the world of IRL retail, as bricks-and-mortar retail picks back up, physical stores are being reformatted.

Read on for a roadmap to the future of retail, adapted from Wunderman Thompson Intelligence’s “The Future 100: 2022” report.

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Source: Together Labs, creator of avatar-based social platform IMVU

Co-Creative Platforms

The next generation of digital platforms is putting creative power in the hands of the user.

“For Generation Alpha and Generation Z, customization and creation are intricate parts of their gaming experience,” says Keith Stuart, games editor at The Guardian. “For them, customization and the play element are part of the same thing — self-expression and exploration.”

Snapchat believes that creativity is the driving force propelling the future of digital engagement. As a user, “you’re not creating content that people consume, you’re creating content that people then create with,” says Carolina Arguelles Navas, group product marketing manager at Snap Inc. “That’s really powerful. You’re putting out a piece of content that everyone personalizes and has a personal experience with.”

IMVU is a “next-generation social network” that revolves around creativity. “There are over 200,000 creators on our platform. Over the years we’ve amassed 50 million items in our catalog [almost all of which are user-driven],” says Daren Tsui, CEO of the social app and its parent company Together Labs. “We create 0.001%; everything else is done by creators.”

IMVU calls creativity “the new status symbol” for the next digital era — dethroning influence and income. When users come onto the platform, “making money is not the most important thing for them. It’s about being recognized for their creations,” Tsui explains.

Why it’s interesting: Online habits are evolving. As stated by digital fashion house The Fabricant, in the digital world “people are not passive consumers, but creative agents crafting their self-expression and curating their virtual identity.”

 

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Superfollowers

Social media apps are allowing users to monetize their content without using third-party apps, creating new tiers within their creator communities.

Twitter launched Super Follows in September 2021 — a new feature that allows content creators to tweet out exclusively to their superfollowers, who pay to view subscriber-only content. Super Follows users can charge from $2.99 to $9.99 a month through payment app Stripe, and can earn up to 97% of their subscription revenue after third-party fees until they reach earnings of $50,000 across all Twitter monetization products.

Tumblr also launched a new subscription feature in September 2021, open to all users in the United States. Its Post Plus offering allows creators to post only to subscribed followers, similar to Twitter’s Super Follows. Tumblr posters can charge from $1.99 to $9.99 a month, and can paywall existing content, not only new posts.

Why it’s interesting: Social platforms are evolving to offer more than entertainment in multimedia content. Boosted features and incentives to attract, gain and maintain a significant following are driving creativity and enhancing conversations for creators and consumers on social media.

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Source: American Eagle

Direct-to-Avatar Retail

From B2B and DTC to DTA — the latest business model sees brands releasing digital products direct to screens.

A host of apparel brands have begun releasing direct-to-avatar (DTA) collections. Nike released its first virtual sneaker collection in April 2022. At the end of 2021, Balenciaga released a collection of in-game clothing in Fortnite. Earlier in the year, Ralph Lauren launched a 50-piece digital wardrobe on social networking app Zepeto, American Eagle debuted its DTA apparel for Bitmojis, and Gucci and The North Face partnered on avatarwear for Pokemon Go.

Why it’s interesting: The future of consum-erism lies in virtual products, Kerry Murphy, founder and CEO of The Fabricant, predicts. “People are going to start seeing value in digital items, and realize that they’d rather interact with a digital item, or have an infinite wardrobe of digital fashion items but a very limited wardrobe of physical items,” he says.

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Source: Ikea

Retail Shapeshifters

Long-term challenges are forcing retailers to rethink their core offers, with some diversifying into novel areas.

In the face of falling foot traffic, disrupted supply chains and labor shortages, enterprising retailers are shifting gears, finding creative ways to diversify that go beyond the borders of their business.

In a swing away from flat-pack furniture, Ikea is aiming to build the world’s biggest renewable energy movement, making electricity from sustainable sources universally accessible and affordable.

In July 2021, John Lewis Partnership — British parent company of retail brands John Lewis & Partners and Waitrose & Partners — revealed plans to become a private landlord. A survey of its land portfolio identified excess space that could be used for at least 7,000 homes. The properties, ranging from studio flats to four-bedroom houses, will be built on the partnership’s sites, meaning householders could soon be living above a Waitrose supermarket or next to a distribution center. By 2030, John Lewis Partnership aims to have 40% of its profits coming from non-retail lines.

Why it’s interesting: In the new retail era, consumers no longer see brands as serving one core purpose. People want deeper experiences with the brands they trust, so there are opportunities to capture new revenue streams. Diversification could be key to the future of brick-and-mortar.

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Private Domains

Messaging platforms are becoming the next battleground for brands and loyalty.

Chat commerce (ccommerce, c-commerce or cCommerce) — also known as private domain commerce — is sprouting on messaging platforms.

In China, WeChat — which has 1.2 billion monthly users — has been especially successful in building relationships with luxury brands through livestreaming and private messaging. Consumers spend an annual average of $26,550 via WeChat, according to a 2020 report by Boston Consulting Group and Tencent Marketing Insight.

In Thailand, global brands like Burberry, Louis Vuitton and Chanel have launched official accounts on messaging app Line, engaging consumers with custom stickers, livestreamed fashion shows and digital ads. Line Shopping, the commerce arm of the chat platform, boasts more than 7 million users in Thailand alone, as of July 2021.

Why it’s interesting: As people increasingly converse on WeChat, WhatsApp and Line, brands are jumping on these chat platforms to build smaller but more intimate, personalized relationships with groups of consumers.

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Source: Fendi

Virtual Flagships

Digital flagship stores are taking over e-commerce storefronts.

Samsung opened a virtual replica of its flagship New York store in Decentraland in January 2022. In July 2021, luxury brand Fendi opened a 360-degree digital flagship based on its 57th Street store in New York, offering visitors virtual tours and access to its latest collections. Hermes has rolled out digital flagships in Singapore, the United Arab Emirates and Thailand.

Lancome debuted its first virtual flagship in Singapore, in summer 2020, offering 3D shopping experiences, consultations and educational events, and included a “discover zone” where visitors could take a personality test, designed by psychologist Perpetua Neo, to find their strength. The L’Oreal-owned skincare brand has since introduced virtual pop-ups for Australia, Korea and the United States.

Why it’s interesting: 81% of global consumers agree that a brand’s digital presence is as important as its in-store presence, a July 2021 Wunderman Thompson Data survey found. And according to predictions from eMarketer, the global e-commerce market will grow from $4.89 trillion in 2021 to $5.42 trillion in 2022. Virtual flagships are becoming the new storefront to entice shoppers and enhance a brand’s overall digital experience.

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Source: Patti & Ricky/Alexis Buatti-Ramos, Hyphen Photography

Gen Alpha Retail

Born between 2010 and 2025, Generation Alpha — Gen Z’s younger siblings — are already making waves in the retail world. Here are three ways in which Generation Alpha are driving the next era of retail:

Genderless shopping. PacSun launched a new gender-neutral children’s clothing brand, PacSun Kids, in June 2021, followed by its own gender-neutral label, Colour Range, in September and its first gender-free kids’ clothing store two months later. In October 2021, California became the first U.S. state to enforce genderless retail, thanks to a new law requiring large stores to have gender-neutral sections for toys and childcare.

Inclusive aisles. Brands and retailers are widening their offerings to be more inclusive of a range of physical and mental abilities. In January 2022, Nike launched FlyEase for kids, a range of hands-free inclusive sneakers and apparel. JCPenney launched children’s clothing with adaptive features in July 2021, and also partnered with adaptive fashion marketplace Patti & Ricky to expand its range of adaptive accessories for kids.

Sustainable play. In May 2021, Mattel launched a program that lets families give back their old Mattel products so the materials can be reused to make new ones. And Lego unveiled its first prototype brick made from recycled plastic in June 2021.

Why it’s interesting: Following in their older siblings’ footsteps, Gen Alphas are cementing the key retail ethics that Gen Zers pioneered.

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Source: Beales

Department Stores Reformatted

Retailers are rethinking the traditional department store model.

The latest department stores are more town squares than retailers, reflecting a shift in the retail landscape from big-box luxury to community microcosm.

Beales, which closed all of its U.K. stores in 2020, has reopened three locations under new ownership — and is looking beyond retail. The top floors of the Poole branch will be turned into a “health village” run by the National Health Service, with dermatology, orthopedics, ophthalmology, and breast cancer screening departments, as well as counseling rooms for those suffering from long COVID.

A new concept department store is reinventing a location formerly occupied by legacy British retailer Debenhams. Called Bobby’s, the new store opened in the U.K. town of Bournemouth in September 2021 and houses a beauty hall, an art gallery and ice-cream and coffee parlor, alongside shopping and local artisans, in place of floors filled with clothing, accessories and homeware. Future plans include a hairdressing salon, dental services, a microbrewery, and even a smokery.

Why it’s interesting: It’s clear that the traditional department store format is no longer working. Wunderman Thompson Intelligence reported the death of the luxury department store in “The Future 100: 2020,” following a string of closures and bankruptcies among big, long-established names. Now, the next generation of department stores are having to rethink and adapt.

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Source: Yuga Labs

NFT Marketplaces

Brands are finding new revenue streams in the evolving non-fungible-token (NFT) sector.

The New York Stock Exchange filed a trademark application in February 2022 for its own NFT marketplace.

Fractal is a new gaming NFT marketplace from Twitch cofounder Justin Kan, launched in December 2021. The platform raised $35 million in seed funding in April 2022.

Yuga Labs, the owner of Bored Ape Yacht Club, raised $450 million at the end of March 2022 to build its own NFT marketplace and metaverse. The goal is to create “an interoperable world” that is “gamified” and “completely decentralized,” Wylie Aronow, a cofounder of Bored Ape Yacht Club who uses the pseudonym Gordon Goner, told The Verge.

Sotheby’s is the first auction house to launch a marketplace dedicated to NFTs. Announced in October 2021, its Metaverse is backed by celebrities and supports numerous digital artists that it has worked with during the past year.

The Associated Press (AP) has launched an NFT photography marketplace, built by tech provider Xooa. The marketplace features work by AP photographers past and present, and will include Pulitzer Prize winners.

Why it’s interesting: NFT marketplaces are opening the door to the future of e-commerce. “There’s always been lots of hype around NFTs, but what investors are now seeing is that it’s actually durable,” Justin Kan told CoinDesk. “Even if it’s a bear market, even if the prices might go down, the idea that people want to collect digital assets on the internet, that’s going to stay. Digital items in gaming, it’s like a new category of e-commerce, basically.”

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Source: Burberry

Digital Twins

Retail stores and factories are being cloned for the virtual world, to promote familiarity and efficiency.

“In the future, every single factory and every single building will have a digital twin that will simulate and track the physical version of it,” Jensen Huang, CEO of Nvidia, told Time in April 2021. Huang’s vision of the metaverse is “ultimately about the fusion of the virtual and the physical worlds.” Currently, Nvidia and BMW are partnering on a digital twin of the carmaker’s factory in Regensburg, Germany, allowing the teams to virtually plan and play out new workflow logistics before implementing these changes at BMW’s physical facility.

Retailers are also opening digital twins of existing stores to promote familiarity and more natural navigation for shoppers. In March 2021, Burberry launched a digital replica of its flagship store in Ginza, Tokyo. And Coach collaborated with virtual store developer Obsess to clone its New York Fifth Avenue flagship store. “The digital showroom enables wholesale buyers to experience our new collections each season without having to fly in to see products in person, reducing the carbon footprint of our business and speeding the buying process,” explains Giovanni Zaccariello, senior vice president of global visual experience at Coach.

Why it’s interesting: Digital twin stores are innovating the retail sector, with the promise to solve logistical issues for the real-world and replicate the in-person shopping experience.

About the Author: Emily Safian-Demers is an editor at Wunderman Thompson Intelligence.

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