December is when companies like Lyst.com, which collects data on the searching and shopping habits of over 200 million consumers, compile lists of hot trends. Here’s some of what they said about 2022:
– Miu Miu is the brand of the year based on a 49% increase in searches driven by specific products like its mini skirt and ballet flats.
– Searches for the 1DR bag from Diesel increased by 248% making it the most wanted accessory.
– The Barbiecore trend, products that reference the world of Barbie and use hot pink and bubblegum colors, exploded after pictures of actress Margot Robbie wearing the trend appeared in June of this year. Searches for all things pink increased 416%.
– Model Bella Hadid drove the greatest number of searches for what she wore. Her outfits created a 1900% increase searches for what she wore on average.
Trends like this are interesting but when our firm represents retailers or brands in the sale of their businesses, short-term trends never generate increases in value because they’re not replicable in future years.
Retail investors and acquirers care about what will create enduring increases and build long-term value.
Buyers are motivated to pay more when companies tap into long-term trends in consumer behavior and create sustainable earnings growth.
That’s harder to do now than ever. A study by AccentureACN +0.6% shows that consumers think that paradoxical behavior is acceptable. An example is that a majority of consumers want to adopt a more sustainable lifestyle but 65% choose lower-cost brands like fast fashion products that are unsustainable. Consumers are not consistent and that’s confusing for brands and retailers.
As a result, companies and consumers are often focused on different things. According to Accenture, consumers’ #1 priority is convenience. For retailers and brands, convenience is #4. Consumers’ #2 priority is trust but for retailers and brands, that’s #6.
A study by analytics company Placer.ai ranks the #1 trend in retail right now as retail media networks. If you’re not familiar with the concept, that’s where big retailers take advantage of their traffic both online and in-store to let companies show advertising to their customers. Big retailers like AmazonAMZN -2.2%, Best BuyBBY +0.9%, WalmartWMT -0.9%, TargetTGT -1.2% and Albertson’s are focusing on developing these networks.
Why is this happening now?
First, it’s an incremental moneymaker for the retailers who are looking for every possible advantage to increase their profitability.
Second, and most important, communication to consumers about brand values is critical. At a time when consumer choices are so broad and consumers vary their shopping behavior hour to hour, being able to communicate a brand’s consistent values is a critical component of success and, when it’s time for a company to be sold, a huge component of value.
Retail media networks are the #1 trend now because almost every business, in retail and otherwise, is content-led. The communication your business has with customers that conveys your values and what’s important to you as a product or service provider creates affiliation with your consumer and keeps them coming back.
In a world where consumers say and do different things on different days, they will find you when they are ready for what they know you are offering if your message is consistent and true.
What we’ve found in selling companies is that when brand and retailers effectively communicate with their customers about their purpose and their role in the world, the consumers who identify with those values keep returning. Those consumers share a set of beliefs and they don’t make price their first consideration.
Companies that communicate their values effectively and consistently have high maintained margins and low marketing cost, or to put it another way, they are very profitable.
So what’s the most important trend for 2023? For my money it’s this: Understand what your values are and communicate them clearly to your ultimate consumer.
If you do that, when your customers are ready to buy they will pay your price and they will tell their friends in person and on social media. When it’s time to sell your company, buyers will see the uniqueness of your message, your relationship with consumers and they will compete to pay up to invest or acquire.