InsightsPOSTED February 12, 2019

Crystal Ball 2019: Think like a startup

SHARE: Twitter Share LinkedIn Share Facebook Share

Female in office

With 2019 ramping up, expect new trends throughout the news, social media, technology and more. At APEX and ruckus digital we will be sharing our predictions on some of these trends that we think will define 2019 (or at least part of it).

In a recent conversation with Reuters Breakingviews’ U.S. editor John Foley, Canopy Growth’s Bruce Linton commented on the vast shift he has felt from the industry since January 2018 and today.

In response to Foley’s suggestion of 2018 being the year that the cannabis industry put on a “suit and tie,” Linton shared his own experiences of being invited to keynote events that were otherwise closed off to a cannabis giant like Canopy. Doors that seemed closed shut have blown open since fall 2018.

While the shift Linton referred to is largely due to the 2018 legalization of cannabis, this phenomenon of a large perception do-over isn’t unique to the corporate world alone.

We hear – and talk – a lot about how disruption has put pressure on brands and retailers to evolve their business models, so that they better match the needs and wants of their 24/7, digitally-savvy, mistrusting target consumer audience. But another impact of disruption to the retail sector that is talked about less is the shift it has made to consumer mindsets.

Take the mattress industry as an example. Six years ago, a mattress was something done strictly in-store, with plenty of time to test out various types of bedding technology. But the entrance of direct-to-consumer (DTC) brands like Casper and Endy has somehow made it fathomable (and even hugely appealing) to buy a mattress online. It has also put pressure on incumbent brick and mortar giant Sleep Country to create its own DTC brand, Bloom.

The same goes for skin care, meal prep and even apparel.

Gone are the days of trusting only through product trial. A McKinsey report states that the subscription e-commerce market has grown by more than 100 per cent per year over the past five years, with the largest retailers in that category generating several billion dollars in sales in 2016, up from $57 million in 2011.

Direct-to-consumer brands like Birchbox and Dollar Shave Club have embraced subscription models to boost customer retention and drive recurring payments. The curation model, that BirchBox and brands like Frank and Oak use, in which customers receive certain products based on their preferences, is the most popular type of subscription service.

So what qualities do these companies have in common, that other brands can embody in 2019?

  1. Consumer trust has significantly changed, and brands are becoming open to mirroring that change. According to PwC’s 2018 Global Consumer Insights Survey, more than one third of consumers rank ‘trust in brand’ as among their top three reasons that influence their decisions to shop at a particular retailer, other than price. The soaring importance of social media and the power of the influencer is a no-brainer – but we also know that many consumers value positive word-of-mouth and recommendations from friends and family.

We also know that consumers look for authenticity in a brand. That needs to trickle from the top down of a company. For example, many leaders in the cannabis industry are making female-focused products. Brands like Van der Pop and Milkweed are designing smart and tasteful accessories for women, in the hopes of shifting the negative stigma around cannabis use and making women feel comfortable with weed. A huge part of these brands’ success lies in the fact that women are at the helm of these companies, endorsing the products they’re developing. In the case of cannabis especially, we’re seeing how important it is that leadership mirrors the end user.

  • Agility is crucial when consumer behaviour is more unpredictable than ever. How we buy is changing much faster than what we buy, and successful brands are recognizing that consumer behaviour is ever-evolving. While we still feel the thrill of a Sephora jaunt, there’s also something to be said about the convenience of receiving a customized product selection by Birchbox each month.

But convenience isn’t necessarily the answer, or what companies should rely on to drive their business model. Neither is value, or quality.

As customer expectations are becoming more complex, brands must recognize that they can’t view the market through a traditional lens of quality vs. convenience vs. value. Brands have to instead recognize that consumer behaviour is unpredictable and be willing to quickly innovate and adapt to their needs.

  • Drive by demand, not by product. Too many supply chains are still driven by product – rather than demand – and are not aligned closely enough to the business’s strategic goals.

Successful brands are those that take data, analytics and the feedback loop to innovate faster and create a genuinely demand-driven supply chain. Take Billie, the women’s answer to Dollar Shave Club. The start-up immediately recognized the feedback women were voicing to have a similar subscription razor-delivery program for women, and delivered. Successful organizations are those that use data analytics and the feedback loop to anticipate customer preferences, trends and behaviours and develop actionable insights. In fact, according to the 2017 Global Consumer Executive Top of Mind Survey by KPMG, 84 per cent of high-growth companies use data analytics.

Thinking like a start-up isn’t just about marketing. It’s being able to recognize and adapt to changes in consumer behaviour, using consumer feedback and data analytics to stay ahead of the competition, and reinventing the supply chain for speed and efficiency, to become truly demand-driven. It’s the only way to not get left behind.

Melissa Vekil is a senior consultant at APEX PR, and Rohini Mukherji is a vice president at APEX PR. Check out more of our Crystal Ball series to know what other trends to expect in 2019. Need help with your brand strategy? Drop us a line.

Leave a Comment