Spotlight on the New Age Consumer
The shift in shopping habits and marketing is not new, but the pandemic has clearly accelerated trends that were already in place. One part of this - the move to online shopping - is expected to have made irreversible changes to shopping habits for a large part of the population. The reshaping of the High Street and how the High Street is fighting back (e.g. with local shopping apps and search tools like Buymie, a Sure Ventures investment) will be interesting.
Perhaps more interesting is the change that can be observed in consumption habits. Goods are increasingly being sold through Direct to Consumer (DTC) channels, with marketing efforts including viral videos, the use of social media influencers, and targeted advertising. Mous Products Ltd, the tech accessories company LGB has been working with in the last quarter, is very much a millennial company in this sense. They do not need shops. They are also more socially conscious. We understand from our engagement with Mous that the next trend will be ‘factory to consumer’, which is an exploding trend in China.
Climate change and sustainability also seem to be featuring higher and higher in consumers’ priorities. It now seems almost inconceivable to look at new investment opportunities without considering ESG factors. The implications are everywhere, including changes in dietary habits - on the market this can be seen in the high valuations attached to companies like Agronomics.
Marketing and advertising are also changing fast. Martin Sorrell’s S4 is predicated around being digitally native - whether the result will really differ from the direction of travel of the WPPs and Omnicoms remains to be seen, of course. And new ways of advertising are emerging: the theoretically almost infinite capacity of video games to support virtual billboards has yet to be properly exploited (though at least 17 companies are trying). The flipside of this is that it’s easy to overload the consumer and fail to get a response, or even to get a negative one. The clickbait native advertising that infests the internet (“You’ll not believe that…. “) will surely turn out to be a transitory phase. But there are smarter ways to get to market.
We will continue to look for beneficiaries of these trends.