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    March 6, 2023

    Andrea Leigh of Allume Group: Shifting Ecommerce and Retail Media Trends — And How Brands Can Prepare for What’s Next

    Written by: Satta Sarmah Hightower
    "The shopper is starting their shopping journey online on more than 60% of occasions now. Even if they're not buying the product online, they're starting the journey there. We have to be thinking digital-first in everything — in the assortment strategy, in the product development cycle, supply chain, media — all of these things."                                  — Andrea Leigh, founder and CEO of Allume Group

    It’s often said that the only constant is change. For brands trying to navigate today’s ever-evolving ecommerce landscape, that’s especially true.

    New trends are constantly emerging, and staying one step ahead of them is essential for any brand to maintain its competitive advantage. Fortunately, brands don’t have to do all this forecasting themselves. Andrea Leigh and her team at Allume Group, an ecommerce educator and strategy advisor, tackle this for them.

    Leigh joined a recent episode of the "Unpacking the Digital Shelf" podcast, "Retailer, Shopper, and Economic Trends," to share what ecommerce and retail media trends are reshaping the industry — and how brands can successfully conquer them. 

    What’s Next in Retail: 5 Emerging Ecommerce and Retail Media Trends

    As a brand, better preparation starts with a good understanding of current and emerging trends. Five particularly notable emerging ecommerce and retail media trends include inflation, brand switching, retail media growth, brick-and-mortar’s (renewing) popularity, and headwinds faced by manufacturers.

    Trend #1: Inflation Continues to Impact Demand

    Retail has experienced year-over-year revenue growth notes The New York Times, but it’s largely driven by inflation and increased prices at checkout.

    Even though inflation is gradually declining, it's still impacting consumers every day.

    Allume’s "Q3 2022 eCommerce Insider Quarterly" report notes that 49% of consumers are dipping into savings to cover everyday expenses, and more than 70% of them are worried about how they're going to pay their bills. These shifts are likely contributing to slower growth for retailers coming out of the pandemic.

    Also noted by Allume’s report, ecommerce peaked during the pandemic, accounting for 16.4% of retail sales. However, that figure has now stabilized at about 14.5%.

    The bottom line is that consumers will continue to be price-sensitive, and their shopping habits will reflect this.

    Trend #2: Brand Switching

    Higher prices also may be contributing to less brand loyalty. Leigh says brand switching has become more common as consumers become "more 'choiceful' and purposeful in their shopping behavior."

    Recent reports from Morning Consult and Nielsen, cited in Allume’s report, indicate that between 40% and 70% of shoppers say they’ve already switched to lower-priced brands. Leigh says that in the current economic climate, brands need to be even more mindful of consumers’ wallets and offer them more choices.

    "It’s about making sure that you have a lot of choice in your assortment for shoppers and room for them to trade down because the brands that are really successful right now do have those types of choices."        — Andrea Leigh, founder and CEO of Allume Group

    Shoppers are finding new brands on social media, retailer websites, and third-party ecommerce marketplaces like Amazon, followed by physical retail locations and traditional media.

    A growing number of consumers are also turning to influencers, because it’s more efficient to get recommendations online. They also may get a more thorough review of the product compared to if they asked different friends and family members for advice.

    "I think that's really interesting and exciting and presents a lot of opportunity for brands to really go where their shoppers are, from both an advertising and an organic content perspective," Leigh says about how discoverability has changed in recent years.

    Trend #3. Retail Media Growth

    Retail media platforms continue to grow, giving brands more options to expand their reach.

    "If you look at the ecom[merce] retailers there, pretty much everyone has a retail media platform now. If you rewind two years, we were not in this place," Leigh says.

    She adds that several factors are driving this trend. For one, consumers are shopping more online, so they’re primed for these advertisements. Many retailers are also experiencing higher growth in their ecommerce business.

    However, expanded shipping and delivery options — like buy online, pick up in store (BOPIS) or ship to home — are also more expensive for retailers, so they need to find new revenue streams to offset these costs.

    "It's a monetization play for the retailers, but it's also a great opportunity for the brands to get in front of the shopper where we know they're discovering products," Leigh says.

    Trend #4. A Pivot Back To Brick-and-Mortar

    While online has grown over the last three years, some ecommerce platforms are shifting some of their focus back to physical retail.

    Instacart, for example, is focusing more on delivering better in-store experiences. The company is working on a new product for grocery stores called Carrot Tags that allow consumers to use its mobile app for wayfinding in-store.

    Leigh says the product will help to seamlessly connect the offline and online shopping experience and bring grocers and other retailers closer to achieving true omnichannel commerce — or what she calls "omnicommerce."

    Trend #5. Manufacturers Face Several Headwinds

    It’s not just shoppers and retailers caught up in shifting ecommerce and retail media trends; manufacturers are confronting several challenges too.

    Allume’s analysis found manufacturers are primarily worried about profitability, ongoing supply chain issues, and change management. The cost of raw materials continues to increase, hurting manufacturers’ bottom line.

    Leigh says manufacturers are also dealing with a range of supply chain challenges — from not being able to get product to issues with their current assortment.

    On the change management front, manufacturers must navigate a shifting media landscape. Traditional media spend declined as of Q3 2022, Allume’s report shows. Budgets have shifted to online video, social, ecommerce, influencers, and other digital media, so brands need to adapt their strategy and diversify their approach.

    Looking Ahead for Brands

    It’s clear shoppers, brands, and retailers will continue to confront a range of challenges. But for brands in particular, it will pay to be nimble.

    To sustain their business during uncertain times, Leigh echoes her point that brands should continue to offer consumers as many pricing options as possible. They also should reinforce value messaging in their branding and marketing.

    She says companies shouldn’t be shortsighted and should meet consumers where they are, but they also should continue to focus on their long-term goals and reinvest in areas that will drive future growth.

    This may mean a lot of testing and learning, as well as re-negotiating with vendors to free up those reinvestment dollars. It also means adopting a digital-first mindset.

    "The shopper is starting their shopping journey online on more than 60% of occasions now," Leigh says. "Even if they're not buying the product online, they're starting the journey there. We have to be thinking digital-first in everything — in the assortment strategy, in the product development cycle, supply chain, media — all of these things."

    To hear more of Leigh’s insights on ecommerce and retail media trends, listen to the full episode of "Unpacking the Digital Shelf."