NEW YORK, Nov. 9, 2020 /PRNewswire/ -- Eight months in quarantine have accelerated the United States' transition to a "storeless" Direct Brand Economy five times faster than pre-pandemic rates.
That is just one of the critical trends identified in the 2021 Brand Disruption Report released by IAB today.
A New Retail Paradigm:"Storelessness"
Most categories of consumer goods and services are now "majority digital," with more consumers shopping by e-commerce than shopping solely at brick-and-mortar stores. Research by McKinsey projects that virtually every consumer category will experience 15-45% growth in permanent online shopping.
E-commerce is now 23-25% of all retail commerce in U.S. — more than 7x what it was in 1995.
Brick-and-mortar store closures in the U.S. are likely to top 25,000 this year, nearly 3x last year's record number of closings. Notable bankruptcies: Brooks Brothers, J. Crew, J.C. Penney, Lord & Taylor, Nieman Marcus, Pier 1, Sur La Table.
The Instant Gratification Imperative
Target's same-day delivery grew 350% during COVID, while Target's BOPIS ("buyonline, pickup in store") grew 700%. 43% of the top 500 U.S. retailers now offer BOPIS, up from 7% last December.
Walmart and Amazon are competing to make two-hour delivery the norm in major markets. Delivery partnerships for rapid fulfillment are now essential for all brands.
Stress-Investing in First-Party Data
"Storelessness" combined with government privacy regulations and browser/OS data restrictions are driving 60% of marketers to stress-invest in first-party data.
Massive Growth in Directly Shoppable Media and Advertising, as well as FAST
Directly "shoppable media" — livestreams, social commerce, virtual consultations, and shoppable ad formats — will be the fastest-growing advertising categories for the foreseeable future. Companies including L'Oréal and General Mills are already making the shift.
This year, global livestream-generated sales are expected to double to $120 billion. In China, one event, Singles Day 2019, generated $2.9 billion in sales.
Free, ad-supported streaming TV (FAST) is a high-growth medium, and the introduction of shoppable formats will make it quite formidable.
"This is the biggest inflection point in advertising and marketing since the rise of national broadcast networks" said Randall Rothenberg, IAB Executive Chair and lead author of the report. "Brands must become data companies that make things, not the other way around. Consumer-facing companies cannot remain competitive without growing their 1st party relationships and 1st party data."
About IAB The Interactive Advertising Bureau (IAB) empowers the media and marketing industries to thrive in the digital economy. Its membership is comprised of more than 650 leading media companies, brands, and the technology firms responsible for selling, delivering, and optimizing digital ad marketing campaigns. The trade group fields critical research on interactive advertising, while also educating brands, agencies, and the wider business community on the importance of digital marketing. In affiliation with the IAB Tech Lab, IAB develops technical standards and solutions. IAB is committed to professional development and elevating the knowledge, skills, expertise, and diversity of the workforce across the industry. Through the work of its public policy office in Washington, D.C., the trade association advocates for its members and promotes the value of the interactive advertising industry to legislators and policymakers. Founded in 1996, IAB is headquartered in New York City.