By Lisa Lacy, Campaign US
Broader marketing, technology and generational shifts continue to influence the space.
2023 was dominated by headlines like Prince Harry’s memoir, Beyonce and Taylor Swift’s tours, the rise of Ozempic, the Titan submersible, Barbenheimer, Twitter/X and ongoing global conflict.
The highs and lows were many.
In the commerce space, there were fewer surprises. Rather, three trends from prior years continue to wield influence:
Retail media: It’s all anyone talks about
Retail media continued its reign as one of the most significant commerce trends in 2023 – and shows no signs of slowing down in 2024.
2023 was the year retail media arguably graduated from a lower-funnel to a full-funnel tactic, said John Schorr, managing director of Omnicom’s connected commerce practice, Transact. He noted retailers have evolved their data sophistication and offsite targeting capabilities, which has been especially valuable to CPG brands.
“The ability for a brand to connect to a retailer’s shopper audience across the web has created a paradigm shift and has disrupted the way digital media is being planned and activated,” he said. “While retail media was once relegated to a lower funnel conversion-driving tactic, it is now embraced as a critical component when planning brand and national media.”
Zach Weinberg, VP of growth at performance marketing agency Kinesso, agreed advances in audience targeting, purchasing signals and new channel integrations – which now include on-site and off-site advertising, as well as CTV, audio, programmatic and digital out of home – make retail media a “massive opportunity for brands.”
“By going beyond their own platforms, retailers are hoping to reach and resonate with non endemic brands in exchange for data-rich audiences, especially knowing the momentum we’ve seen in frictionless commerce experiences where a consumer can go from awareness to conversion in seconds,” said Lauren Lavin, executive director of commerce at GroupM North America.
CTV is bringing that gap even further, as brands can use retailer’s loyalty and purchase card data to target ads more effectively and dynamically on screen.
“There are opportunities for more robust analytics and measurement tools that retailers and brands can use to then track and analyze the performance of those ads,” said Jeff Malmad, global head of commerce at media agency Mindshare.
That’s in part why we’re seeing partnerships between retailers and media owners, like Walmart and NBCU and Instacart and Roku.
But while retail media is maturing, it’s not without its challenges. Schorr pointed to a lack of measurement and standardization stemming from fragmentation; each retailer is rolling out its own network and is at a different stage.
As a result, brands and agencies are still waiting for standardized measurement and greater transparency around metrics like incrementality, audience targeting, delivery reporting and adjacency and placement controls.
From here, Malmad expects to see even more retail partnerships “go beyond what you think they traditionally sell – and make it easier for you to buy things online or in-store.” One early example is Amazon’s partnership with Hyundai, which will enable shoppers to buy cars on the platform in 2024.
AI: Another big trend
No surprises here – AI was the big storyline in shopping in 2023.
Malmad pointed to generative AI-powered shopping and employee assistants like Ask Instacart or Walmart’s My Assistant, as well as the integration of gen AI into retailer search capabilities as key examples of how AI is infiltrating commerce. He predicts AI will become more prevalent as retailers use it to provide additional value to customers.
“Anyone who is shopping or hosting for the holidays is looking for all the help they can get,” he said. “For example, when a brand or retailer can use AI to easily provide food inspiration or recipes based on what you already have in the fridge, that’s win-win all around.”
Research from Rokt and Harris Poll found 88% of Gen Z consumers believe AI can improve their shopping experiences and 55% want AI assistants to simplify product discovery and anticipate their needs.
Social commerce: The next generation of shopping
Speaking of which: The growing influence of Gen Z – and the expansion of social commerce – was another major commerce trend in 2023.
“Gen Z is the largest ever generation globally, representing a massive spending power potential,” Weinberg said. “As they enter adulthood and acquire disposable income, brands vying for their loyalty stand to reap significant rewards.”
These digital natives’ shopping habits are heavily influenced by social media and online trends, which means “capturing their attention requires mastering these digital channels,” he added.
But because their habits have a ripple effect on older generations, “capturing their hearts and minds translates to wider market influence and brand loyalty, Weinberg said.
“Gen Z represents a cultural shift in consumer behavior,” he added. “Capturing their wallet share isn’t just a trend. It’s about understanding the future of how people shop and ensuring brands remain relevant in the evolving e-commerce landscape.”
As a result, brands will invest more in social commerce in 2023, as platforms like Amazon and Walmart double down on influencer programs.
“These retailers are going all-in to establish influencer programs to drive purchases within their ecosystems,” Schorr said.